AI-Driven Chip Costs Weigh on Ericsson Profit Despite $14B AT&T Deal
Ericsson posted first-quarter adjusted operating profit of 5.2 billion crowns, missing the 5.4 billion crown forecast as AI-driven semiconductor costs rose. Net sales of 49.3 billion crowns fell short of the 50.7 billion estimate while Ericsson relies on a $14 billion AT&T network equipment contract to drive U.S. growth.
1. Q1 Profit Miss
Ericsson reported adjusted operating profit of 5.2 billion Swedish crowns for the first quarter, compared with analysts’ average forecast of 5.4 billion crowns. The company cited AI-driven increases in semiconductor costs and a sales slowdown in North America as key factors behind the profit miss, while net sales reached 49.3 billion crowns against an expected 50.7 billion.
2. U.S. Strategy and AT&T Contract
The Swedish group is leveraging a $14 billion network equipment deal with AT&T secured in 2023 to strengthen its U.S. footprint. Despite strained transatlantic ties and rising input costs, Ericsson views the AT&T contract as a crucial anchor to offset slower telecom investment in other regions.