Swedish telecommunications equipment manufacturer Ericsson reported rising operational costs driven primarily by increased semiconductor prices linked to artificial intelligence demand.

Chief Executive Borje Ekholm cited mounting input costs as a key challenge for the company, with semiconductors representing a particular area of concern. The cost increases stem partly from heightened demand for chips used in AI applications, which has created supply chain pressures across the technology sector.

The semiconductor cost pressures come as Ericsson continues to pursue growth in its networks business. The company's financial performance has been affected by these rising material costs, which have become a broader industry concern as AI development accelerates.

Ericsson's experience reflects wider challenges facing technology companies as competition for semiconductor components intensifies. The AI boom has created unprecedented demand for specialized chips, driving up prices across various technology sectors and affecting companies that rely on these components for their products.