Ericsson shares fell sharply following a warning from the Swedish telecommunications equipment maker that escalating costs for memory chips are straining its operations. The decline occurred on July 14, with the stock dropping approximately 13.5 percent to its lowest level since February. This move marked the steepest single-day loss for the company since early 2025.
The price increases stem from a global expansion of artificial intelligence data centers, which has tightened the supply of memory chips. This shortage has already prompted other technology firms, including Apple, to raise product prices. Ericsson indicated that the financial impact on its second-quarter fiscal 2026 results was limited due to a resilient component supply chain, but the trend signals broader industry pressure.
Chief Financial Officer Lars Sandström told Reuters that the race to build AI infrastructure is affecting the entire sector. The company also noted that costs for custom chips used in its telecom equipment are rising. These factors have raised concerns that profit margins could face further pressure in upcoming quarters.
Investors are also processing a major leadership change at the company. Per Narvinger is scheduled to replace current CEO Börje Ekholm on October 1, 2026. Ekholm’s retirement coincides with these financial headwinds and shifting market sentiment.
Founded in 1876 and based in Stockholm, Ericsson designs hardware, software, and services for mobile networks. The firm has contributed to the development of wireless generations from 2G through 6G. It is also expanding into cloud networking and enterprise wireless solutions. Despite its global role in communications infrastructure, the stock has underperformed this year.
