Ericsson ends up on the wrong side of memory-chip price spike. The stock slumps.

By Steve Goldstein

Ericsson shares slump after revealing rising component cost increases.

Ericsson shares on Tuesday saw their worst reaction to earnings in nearly three years after the telecom-equipment maker revealed that rising component costs were eating away at margins - likely the huge surge in memory-chip prices.

Ericsson (ERIC), in its earnings release and in a conference call with analysts, didn't specifically blame the rising chip prices that have propelled the share prices of Samsung Electronics (KR:005930), SK Hynix (SKHY) and Micron Technology (MU) higher.

But Deutsche Bank analyst Janardan Menon specifically asked about rising dynamic random-access memory prices - and the fact that Ericsson's Chinese equipment rivals can source memory chips from Chinese suppliers at lower costs.

"And there may be, as you say, a little bit lower cost inflation in the Chinese ecosystem. And as you know, we cannot rely on that ecosystem to export to a number of countries we're in. That forces us to look at the product design in a different way," said CEO Börje Ekholm, who last month announced he was retiring.

Ericsson reported a 7% decline in adjusted earnings before interest, tax and amortization to 6.88 billion Swedish crowns ($710 million), as revenue fell 6% to 52.69 billion crowns.

The earnings actually beat analyst estimates while revenue was 2% below consensus, according to UBS. But the analysts said Ericsson's outlook implies a low single-digit percentage downgrade to 2026 earnings-per-share estimates and low- to mid-single-digit percentage reductions to 2027.

Ericsson shares (SE:ERIC.B) fell 8% in Stockholm, its worst earnings-day performance since the 9% slide after it reported results in Oct. 2023, according to FactSet.

Ericsson said it will pursue "internal measures and pricing actions" to offset the component cost inflation.

-Steve Goldstein

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07-14-26 0619ET