- Q1 sales were dragged down by a weaker North America market as major U.S. carriers ease up on 5G spending
- Ericsson will put more focus on other geographies that are still upgrading to 5G standalone
- While the RAN market remains “flattish,” Ericsson is looking at mission critical and enterprise markets for growth
The outlook just got a little darker for Ericsson, which today reported a 10% year-over-year decrease in reported net sales in Q1, to about $5.4 billion.
The drop is mostly tied to lower North American sales due to consolidation and lower customer spending. Going forward, the company expects to be less dependent on the North American market.
“I think North America always will be important. From a mix point of view, it will be less important going forward,” Ericsson President and CEO Börje Ekholm told investors during the Q1 earnings call.
That strategy seems wise considering the Big 3 U.S. mobile carriers have largely migrated their networks to 5G standalone (SA) networks vs. the earlier 5G version of non-standalone (NSA), with T-Mobile leading the way. There are still regional U.S. carriers that are moving to SA, but the big guys are the money makers, and they’re all planning lower spending on infrastructure this year.
Outside North America, operators historically haven’t been as quick to upgrade to next-generation technologies like 5G and 5G SA.
During the Q&A, Ekholm was asked if perhaps an uptick in upgrades outside North America could pick up some of the slack.
Ekholm said even though North America is a front-runner market, it’s still not fully migrated to 5G SA. The only market that’s fully 5G SA is China, and that’s increasingly dominated by Chinese vendors Huawei and to a lesser extent, ZTE.
“We see a number of operators today increasingly focused on migrating from 5G non-standalone into 5G SA and then 5G Advanced. It's still largely a work in progress,” he said.
5G SA allows operators to offer more lucrative services, like network slicing to an enterprise, rather than simple speed enhancements to consumer devices. 5G SA and 5G Advanced are also the stepping stones to 6G.
“While not everyone has transitioned today, they will need to go that way and so it will provide an interesting opportunity for us as operators upgrade. That's why we've invested in positioning us well on 5G core, and we’re now starting to see growth coming through on 5G core. So it's actually, I think, a net-net positive for us as we move forward,” Ekholm said.
Higher chip costs, thanks to AI
Like other vendors, Ericsson faces increasing costs in semiconductors, in part caused by AI demand. Ekholm said they plan to offset these expenses by working closely with customers and suppliers and through product substitution.
“Looking ahead, while we continue to expect a flattish RAN market, our focused strategy, leading portfolio, and strengthened positions in mission critical and enterprise give us confidence in our ability to grow faster than the mobile networks market and drive long-term success,” he said in a statement.
By the numbers
Ericsson’s adjusted operating profit was $566 million, excluding restructuring charges, for Q1 2026. Net income was $97.2 million, and organic sales grew 6%, driven by India and Japan.
Ericsson shares were trading down about 5% today, at around $11.49.