Cannibalization Effect: AI Boom Hits Ericsson's Telecom Profits

The hardware supercycle enriching TSMC and ASML has its dark side. On April 17, 2026, as part of its quarterly earnings report, Ericsson stated that component costs are rising.

The reason is Big Tech's colossal demand for AI chips. Data centers are literally sucking up the lithographic capacity of the entire planet, leaving manufacturers of traditional telecom and networking equipment facing component shortages and inflation. This macroeconomic signal shows that generative AI has begun cannibalizing other electronics sectors. While OpenAI buys $20 billion worth of chips, the traditional B2B sector is forced to put up with reduced margins and supply chain issues.

Source: Ericsson / Reuters