April 17 (Reuters) - Sweden's Ericsson reported a first-quarter core profit that slightly missed market expectations on Friday, as a sales decline in North America caused by tariff uncertainty and
Ericsson lags profit expectations as AI demand drives up chip bill
Ericsson's First-Quarter Financial Performance and Market Challenges
By Gianluca Lo Nostro and Agnieszka Olenska
Profit Results and Market Expectations
April 17 (Reuters) - Sweden's Ericsson reported a first-quarter core profit that slightly missed market expectations on Friday, citing increasing chip costs caused by artificial intelligence demand and a sales slowdown in North America.
Impact of AI Demand on Semiconductor Costs
The network equipment maker is facing rising input costs partially due to high demand for AI technology that is driving up prices of semiconductors, CEO Börje Ekholm said in a statement.
Supplier and Customer Collaboration
"We are working together with our suppliers to mitigate this. But also, we will need to work with our customers to share the burden on this," finance chief Lars Sandström added in an interview with Reuters.
Financial Figures and Analyst Expectations
Ericsson reported an adjusted operating profit of 5.2 billion Swedish crowns ($566 million), excluding restructuring charges, for the first quarter of 2026. Analysts polled by Infront were expecting 5.4 billion crowns on average.
The company's shares were down 1.6% in early Stockholm trading.
Ericsson's Strategic Focus on the U.S. Market
Ericsson, one of the main Western suppliers of network equipment alongside Finland's Nokia, has been betting heavily on the U.S. market even as transatlantic ties have become strained under President Donald Trump's rule.
Major U.S. Deals and Market Exposure
The Swedish group has significant U.S. exposure especially after winning a $14 billion deal with operator AT&T in 2023, which could help outweigh slower telecoms investments in other markets.
North American Sales and Market Conditions
Quarterly Sales Decline
Sandström said sales in North America fell by a mid-single-digit percentage in the quarter, compared to a strong year-ago period that was boosted by tariff-related demand. Underlying market conditions in the region remain solid, he added.
Overall Net Sales Performance
The group's quarterly net sales fell 10% from a year ago to 49.3 billion crowns, below an Infront poll estimate of 50.7 billion crowns.
Market Reactions and Analyst Commentary
Analyst Insights
In a note to investors, J.P. Morgan said the results were "soft to in-line" and warned there could be a read-across effect on Nokia's shares due to the weakness reported in North America. Nokia fell 1.5% in early Helsinki trading.
Exchange Rate Information
($1 = 9.1869 Swedish crowns)
Reporting Credits
(Reporting by Gianluca Lo Nostro and Agnieszka Olenska in Gdansk; Editing by Milla Nissi-Prussak)
