ZTE Corporation has released its financial results for the first quarter of 2026. The report indicates that ZTE achieved revenue of 34.99 billion yuan, representing a year-on-year increase of 6.1%. Net profit attributable to shareholders of the parent company was 1.31 billion yuan.
Compared to competitors Nokia and Ericsson, which also recently published their quarterly reports, ZTE's Q1 2026 revenue has reached a similar scale. Nokia reported revenue of 4.5 billion euros, approximately 35.66 billion yuan, while Ericsson's revenue was 49.3 billion Swedish krona, roughly equivalent to 35.73 billion yuan.
However, the similar revenue figures mask different growth trajectories for the three equipment providers.
An analysis of the financial reports reveals clear differences in the revenue structures of ZTE, Ericsson, and Nokia. Ericsson's first-quarter revenue of 49.3 billion SEK remains heavily reliant on 5G expansion in North America, closely tied to the capital expenditure cycles of telecom operators. Nokia reported revenue of 4.5 billion euros, a 2% year-on-year increase. Within this, mobile infrastructure revenue declined by 3%, while network infrastructure revenue—including optical transmission, IP networks, and fixed networks—grew by 12%, indicating a shift in growth momentum towards wired transmission driven by AI and cloud computing.
Focusing on ZTE, the company's Q1 revenue of 34.99 billion yuan represents a 6.1% year-on-year increase, bringing its scale close to the two international giants. However, net profit attributable to shareholders fell by 46.58% year-on-year to 1.31 billion yuan. The primary reason for this profit decline is the continued reduction in capital expenditure by China's three major telecom operators, whose planned investment for 2026 is approximately 259.6 billion yuan, a further 9% decrease year-on-year. This contraction in communication infrastructure investment directly impacted ZTE's domestic network product revenue. As this segment typically carries higher profit margins compared to the still-ramping computing power products, its reduced weighting in the overall revenue mix inevitably lowered total profits.
Despite the year-on-year pressure, a sequential profit recovery trend is evident. ZTE's net profit in the fourth quarter of 2025 was 296 million yuan, meaning the Q1 2026 figure represents a 343% quarter-on-quarter increase. This improvement is primarily driven by gradually enhanced operational efficiency and product competitiveness. ZTE's implementation of refined management controls, including a cost-quotation linkage mechanism and proactive management of inventory and price cycles in the supply chain, is beginning to yield positive results.
The concurrent pressures on annual profit and the signs of quarterly improvement reflect ZTE's ongoing strategic transition from a pure-play communications equipment provider to a comprehensive service provider focused on "AI infrastructure + smart terminals." This shift is noticeably affecting the company's profit structure.
Examining ZTE's revenue streams, the contribution from computing power products rose to 27% in the first quarter. The company's mobile phone business achieved double-digit growth against market trends, and international market sales also expanded significantly. ZTE's revenue structure has undergone a notable transformation. In addition to the increased share from computing power, both its home and personal terminal business and its international operations posted double-digit growth, collectively helping to offset the pressure from declining domestic operator infrastructure investment.
A year earlier, in the same period of 2025, ZTE had not yet separately disclosed its computing power revenue. At that time, its "second curve" businesses, which included computing power and terminals, collectively accounted for just over 35% of total revenue. Within a year, computing power has become a major pillar of the company's income.
The sources of this growth are twofold. Firstly, a core driver is the construction of AI training clusters by leading internet companies. Secondly, the expansion of computing power networks by operators themselves, coupled with the deployment of intelligent computing centers in sectors like government and finance, constitutes a third growth area. Regarding mobile phones, while global smartphone shipments declined by 6% year-on-year in Q1 2026 according to Counterpoint data, ZTE's handset shipments grew by double digits both domestically and internationally, fueled by its AI phone and gaming phone product lines.
During the quarter, the Nubia Neo 5 series gaming phone launched in Southeast Asia, and the AI emotional companion pet, iMoochi, began a crowdfunding campaign in Japan. ZTE has now established a comprehensive product matrix spanning large, medium, and small screens for AI cloud computers and mobile internet devices, marking a shift from single-point breakthroughs to multi-pronged expansion.
In the international arena, while Ericsson and Nokia were affected by weak wireless network investment in North America, ZTE's international revenue achieved double-digit growth. This was driven by capitalizing on the window of opportunity for 5G and fiber optic deployment overseas, aligning with international demand for computing infrastructure, and deepening collaboration with Chinese companies expanding globally.
In terms of revenue scale, ZTE is now approaching the 35-billion-yuan level of Ericsson and Nokia. Industry observers note that by leveraging growth from computing power and terminals, ZTE is carving out a distinct growth path.
ZTE is advancing its "All in AI, AI for All" strategy, centered on a comprehensive five-layer AI capability stack that covers core competencies, infrastructure, platform capabilities, applications, and terminals, enabling end-to-end coverage.
On the product front, for computing networks, ZTE launched a 576×800G port chassis-based intelligent computing switch in Q1, designed to directly support ultra-large-scale AI computing clusters through two-layer networking. Simultaneously, the release of the OEX super-node orthogonal backplane-free interconnect architecture addresses the triple bottlenecks of density, bandwidth, and reliability in connecting GPU clusters scaling to tens of thousands or even hundreds of thousands of units. Furthermore, its intelligent computing cross-domain interconnection solution supports ultra-long-distance computing power scheduling over 300 kilometers, involving协同 coordination between switches, optical transmission, and computing power scheduling platforms, with direct applications in national data center initiatives and regional computing network construction.
Regarding ecosystem adaptation, ZTE has established deep partnerships with over 1,000 ecosystem partners, achieving full-stack adaptation for more than 200 mainstream large models. The company also launched the Co-Claw all-in-one intelligent computing appliance, which offers out-of-the-box functionality and is embedded with cloud computers, smart home devices, AI phones, and other full-scenario terminals, forming an AI productivity ecosystem with "device-edge-cloud"协同.
Industry analysts suggest that full-stack adaptation for over 200 models significantly lowers the deployment barrier for enterprise customers. The model adaptation phase can typically account for 30-40% of the initial human and time costs in an AI deployment; higher adaptation completeness translates to faster customer implementation. ZTE's differentiation lies in its combination of underlying communication network capabilities and integrated computing equipment solutions. This dual strength is difficult for vendors focused on a single business line to replicate, particularly in scenarios requiring integrated communication-computing and cross-regional computing power scheduling.
ZTE's global efforts are also gaining recognition. In the first quarter, the company collaborated with XL SMART in Indonesia to complete the country's first comprehensive 5G network commercial deployment. By January 2026, network deployment was finished in 24 key cities, involving the integrated upgrade of over 20,000 4G sites and the deployment of more than 7,000 new 5G base stations. This network was certified by Ookla as the "Fastest 5G Network in Indonesia." In Turkey, ZTE partnered with Türk Telekom to complete the world's first live network trial integrating C+L full-band at 1.6Tbps. During MWC 2026, ZTE signed a strategic cooperation agreement with Telkomsel to collaborate on AI-native networks and smart campuses.
Gartner forecasts that the compound annual growth rate for overseas operator capital expenditure from 2025 to 2029 will be approximately 4.5%, while the global server market is expected to grow at a CAGR of 19%, with AI servers reaching 25%. This indicates that the external market opportunity continues to expand. The global expansion of Chinese enterprises also opens up synergistic opportunities for ZTE, which has listed "deepening cooperation with Chinese companies going global" as a key driver for its international revenue growth.
Analysts conclude that beyond the quantitative milestone of revenue approaching Ericsson and Nokia, ZTE's surge in computing power contribution, resilient handset growth, and synergistic international market progress collectively define a differentiated growth strategy. The company's full-stack AI capabilities are progressively extending from infrastructure construction to all aspects of terminal application scenarios.
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