Ericsson Puts a Number on Component Costs, and the Number Is Going Up

Ericsson’s new chief executive used his first quarterly earnings call to describe a market that is not growing and a bill that is. Per Narvinger, reporting results for the third quarter, said the RAN market is broadly flat and component costs are rising as a result of the AI boom, and he said the company has so far offset them through what he called tactical actions, including upselling and substituting products.

Those actions stop being enough. Narvinger said Ericsson will need structural measures, and the company has already begun raising prices, alongside changes across its portfolio, supply chain and efficiency. Chief Financial Officer Lars Sandström told the same call that the industry is entering a period of higher input costs and that the financial impact will continue to build in the coming quarters.

The reported quarter gave Ericsson room to absorb some of it. Revenue grew 6 percent to SEK 59.5 billion, with networks up 9 percent and cloud software and services up 3 percent. Enterprise sales fell 10 percent, and the share price rose nearly 10 percent on the day.

Inside the networks business, adjusted gross margin held at 50.3 percent year over year and adjusted EBITA margin moved from 20.3 percent to 23.1 percent, which the company attributed to high sales and good cost control.

Supply-chain evidence from outside Ericsson points the same way. Data Centre Dynamics reported speakers at Capacity Europe 2026 describing generators that take two years to arrive and high-voltage transformers that need 12 to 18 months, with procurement teams at Greenscale, Start Campus, Telehouse and Kentik now securing factory slots before designs are frozen. Greenscale’s supply chain director said the industry should worry about capacity and not about cost. Telehouse’s head of engineering and design said a hyperscaler can step in and order hundreds more units, which is why slots must be defended.

Ericsson is simultaneously reshaping who sits where. The enterprise wireless business is being dissolved, with neutral host and private 5G moved into the networks division and the Cradlepoint wireless WAN business left as a standalone unit under the Americas market area. Two regional divisions covering Northeast Asia and South East Asia, Oceania and India will merge into a single Asia-Pacific group, and two regional executives leave at the end of the year.

The cost pressure arrives in a market that Dell’Oro Group sizes for the whole industry. The research house put worldwide telecom capex up about 5 percent year over year in the first half of 2026, with equipment revenue growing at a similar rate, and its October 6 report describes operator spending shifting from coverage toward capacity, modernization, automation and efficiency. Dell’Oro projects capex growth of only 0 to 1 percent a year between 2025 and 2030, with capital intensity easing to around 14 percent by 2028 from a peak of 18 percent in 2022, and equipment revenue growing 2 to 3 percent a year through 2030 as cloud providers add demand in categories that used to belong to carriers alone.

Supplier’s note: Price increase notices from radio vendors reach us as a spares request and nothing else. We hold radio units, remote radio unit mounting brackets, line cards and rectifier power modules in stock in Shenzhen and Hong Kong, with ready-to-ship units leaving inside two working days and full pallet orders taking one to two weeks where a specific band variant has to be pulled from allocation. Where an OEM unit price has moved past what a project budget allows we quote cross-reference equivalents from comparable gain and power classes and record the VSWR, insertion loss and output power figures for every unit on the test bench before dispatch. Engineers tell us the field failures cluster on corroded feeder connectors, cracked gaskets and power supply boards damaged by unstable grid input, so every radio order ships with spare gaskets and a matched power module. Wholesale carriers, tower contractors and network integration firms running site upgrades are the usual buyers, and orders arrive as mixed pallets for 20 to 80 sites, priced per site once freight, duty and the current vendor surcharge are quoted.