Nvidia is paying $1 billion (€860 million) for a 2.9 percent stake in Nokia. The deal is intended to accelerate the development of next-generation networks using AI. Data centers play a crucial role in this.
Consultancy firm McKinsey expects capital expenditure on data center infrastructure to exceed $1.7 trillion by 2030. This is mainly due to the expansion of AI. Nvidia has a near-monopoly on supplying chips for data centers and already has deals with parties such as OpenAI and Microsoft.
Since taking office as Nokia CEO in April, Justin Hotard, formerly head of Intel’s data center and AI group, has focused on expanding Nokia’s data center business. Talks with Nvidia had been going on for some time, but Hotard accelerated the process. “Jensen and I have been talking for a little bit and I love the pace at which Nvidia moves. It’s a pace that I aspire for us to move at Nokia,” Hotard said.
Nokia uses Marvell chips for many products. Marvell chips are probably cheaper than Nvidia chips, but Nvidia has a large share of the US data center market, for example. Nokia and competitor Ericsson both make network equipment for data centers and are benefiting from increased AI usage.
Partnership with strategic importance
The collaboration between Nvidia and Nokia focuses on AI network solutions and data center products. The goal is to integrate Nokia’s data communication products into Nvidia’s future AI infrastructure plans. CEO Jensen Huang emphasized during a speech in Washington that the deal helps put the US at the center of the 6G revolution.
“Thank you for helping the United States bring telecommunication technology back to America,” Huang said to Nokia CEO Justin Hotard. The latter emphasizes the American character: “The key thing here is it’s American technology delivering the base capability, which is the accelerated computing stack from Nvidia, now purpose-built for mobile.”
This is a non-exclusive partnership in which Nvidia becomes Nokia’s second-largest shareholder. The new equipment will contribute to revenue starting in 2027, first with 5G and later with 6G. Nokia is issuing 166,389,351 new shares to Nvidia, which the American company is subscribing to at $6.01 per share.
Nokia and Nvidia will also collaborate with T-Mobile US to develop AI radio technology for 6G. Trials will start next year.