Ericsson profit misses estimates as AI-driven chip costs rise
Synopsis
Ericsson’s Q1 profit missed estimates as AI-driven chip costs and slower North American sales pressured margins.
Ericsson reported a slight miss in first-quarter core profit, as rising semiconductor costs linked to artificial intelligence demand and weaker sales in North America weighed on performance.
Key highlights
- Ericsson Q1 profit misses analyst estimates
- Rising semiconductor costs linked to AI demand
- Sales slowdown in North America weighs on results
- Strong US exposure remains key growth driver
- Net sales fall short of expectations
Profit falls short of expectations
The Swedish telecom equipment maker posted an adjusted operating profit of 5.2 billion crowns for the first quarter, below analyst expectations of 5.4 billion crowns.
AI demand pushes up costs
The company flagged increasing input costs, particularly in semiconductors, driven in part by surging demand for AI-related technologies.
Chief executive Börje Ekholm said higher chip costs were impacting margins.
North America sales slowdown
Ericsson also pointed to softer demand in North America, a key market for the company, contributing to the weaker-than-expected results.
Reliance on US market
The company continues to rely heavily on the United States for growth, supported by a major contract with AT&T.
Ericsson remains one of the leading Western network equipment providers alongside Nokia.
Revenue also misses estimates
First-quarter net sales came in at 49.3 billion crowns, below the expected 50.7 billion crowns.
What happens next
Ericsson is likely to monitor cost pressures and demand trends closely, particularly in the US market, as AI-driven semiconductor demand continues to shape the industry.
FAQs
Q1: Why did Ericsson miss profit estimates?
Due to higher semiconductor costs and weaker North America sales.
Q2: What is driving the chip costs higher?
Rising demand for AI technologies.
Q3: Which market is key for Ericsson?
The United States remains a major growth driver.
Q4: How did revenue perform?
Net sales also came in below expectations.
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