Ericsson reported second-quarter operating profit of 6.52 billion Swedish crowns (US$671.7 million).
issued Tuesday, July 14, 2026 · 4:20 p.m.
[STOCKHOLM] Swedish telecoms equipment maker Ericsson on Tuesday (July 14) reported second-quarter core profit that beat market expectations, supported by cloud services and orders, but warned it was under pressure from rising component costs related to AI demand.
Although high profit margins in some businesses exceeded analysts’ expectations, the company’s sales in its mainstay mobile device business are declining in major markets such as North America.
Ericsson is under pressure as the global AI ramp-up hits suppliers, but said the resilience of its component supply chain limited the impact on its financials in the second quarter.
Ericsson announced second-quarter adjusted operating profit fell to 6.52 billion Swedish crowns ($671.7 million), higher than analysts’ average forecast of 6.42 billion, according to LSEG research.
Quarterly net sales fell 6% year-on-year to 52.7 billion crowns, lower than the LSEG survey’s forecast of 53.6 billion crowns.
Net sales from Ericsson’s profitable network business (its largest by revenue) fell 8% in the quarter, but the company expects above-seasonal growth in the third quarter.
Ericsson expects higher component costs from building AI will put pressure on the company to raise prices.
“The whole build-out of AI is putting quite a bit of pressure on the entire industry, including our company,” CFO Lars Sandström told Reuters.
Apart from memory prices, it is also impacting the custom chips the company uses to build communications infrastructure, he said. Memory makers have prioritized orders from AI chip makers in recent months, leaving little supply for electronics makers who are being forced to raise prices.
Outgoing CEO Borje Ekholm said the company would continue to pursue internal measures and pricing measures to offset the impact in the coming quarters.
“We are taking short-term measures across our business, including commercial actions such as product substitution, as well as supply chain activities and target cost initiatives,” Ekholm said on a conference call.
Last month, Ericsson announced Ekholm’s departure and a number of employees were informed of their layoffs as part of a restructuring.
Sandström said there will be further restructuring, including layoffs, later this year. Reuters
