AI is driving up costs and putting pressure on Ericsson's profits

"The rising costs of AI are beginning to have a visible impact on Ericsson's results, with first-quarter profits falling short of analysts' expectations due to more expensive chips."

"According to CEO Börje Ekholm, the increase in semiconductor prices directly translates into higher procurement costs, putting pressure on margins as suppliers pass on these increases."

"CFO Lars Sandström indicated that customers will have to absorb part of the additional costs, shifting some of the financial pressure toward the entire supply chain."

"Ekholm emphasizes that Ericsson has deliberately focused on strengthening its foundation in recent years, with a strategy centered on diversifying and strengthening the supply chain."

Ericsson's profits fell short of expectations due to rising AI-related semiconductor costs and weaker demand in North America. CEO Börje Ekholm noted that higher procurement costs are being passed on by suppliers, affecting margins. CFO Lars Sandström indicated that customers will absorb some of these costs, impacting the supply chain. Despite a dip in North American revenue, Ericsson remains focused on the U.S. market, leveraging a major deal with AT&T. The company emphasizes resilience and cost control through supply chain diversification amid economic uncertainty.

Read at Techzine Global