Memory chip price hikes squeeze profit margins, sending Ericsson’s stock sharply lower.

Swedish telecom equipment giant Ericsson’s stock plunged sharply on the Stockholm market, logging its biggest drop in 18 months. The move came after the company warned that its core network business would face margin pressure this quarter due to surging component costs. Ericsson’s shares fell as much as 10% on the Stockholm exchange. Outgoing CEO Börje Ekholm said the company’s input costs are rising, partly driven by a surge in demand for AI-powered storage chips that has pushed up prices of related components. Citigroup analysts noted the market’s biggest concern is that margin pressure could persist until 2027. Citi analyst Andrew Gardiner stated: “We believe the biggest challenge is the building pressure from component costs. The short-term impact is not the main issue; more importantly, this pressure could intensify further in 2027.” Ericsson’s adjusted EBITA for the second quarter dropped 7% year-on-year to 6.88 billion Swedish kronor, slightly above the Bloomberg market consensus forecast of 6.82 billion Swedish kronor. As weak capital expenditure by telecom operators continues to weigh on the broader telecom equipment sector, Ericsson has been cutting costs in recent years. The company laid off roughly 5,000 employees in 2025 and plans to continue similar-scale staff reductions this year.