Ericsson warns that profitability in its networks business will fall slightly next quarter due to a 4% organic sales decline in Q2 and rising component costs.

The Swedish telecom‑equipment firm said sales fell in North America and Europe, offsetting growth elsewhere. North American operators had previously invested heavily in 5G, but that momentum is cooling.

Adjusted gross margin for the networks unit was 50.4% in Q2, within the 49–51% guidance. For Q3, Ericsson expects the margin to be in the 48% to 50% range.

The company cited higher semiconductor and component prices as a key headwind and noted that licensing revenue also dropped.