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Nokia announced a collaboration with Broadcom for the development of chips for Nokia’s 5G equipment. Next to Intel and Marvell, Broadcom is now the third supplier working on 5G chips for Nokia.

The two companies will collaborate on the development of new custom system-on-chip (SoC) solutions. The company has been struggling for some time with the development of its Reefshark chips. Nokia initially chose Field Programmable Gate Arrays (FPGAs) for its 5G equipment. Customers would be able to reprogram these chips on their own, but the high costs and additional supply problems meant that the company had to do things differently.

“We still support the decision to go with FPGAs because it was the right thing to do at the time,” Sandro Tavares, Nokia’s head of mobile network marketing, told Reuters. “When we announced the shift in strategy, the market evolved faster, and we needed to speed up the process of developing new vendors.”

New strategy

The company previously mentioned that it was unable to release its 5G products on time due to a delay with one particular vendor, which later turned out to be Intel. Nokia is now using cheaper custom chips to reduce costs and is also adding more vendors to diversify its supply. In March, the Finnish company Nokia announced a partnership with Intel for the same reasons.

Nokia said 17 percent of 5G devices in the first quarter were fitted with the custom chips, an increase of 10 percent compared to the end of 2019. By the end of the year, Nokia intends to include the chips in more than 35 percent of 5G products, and by the end of 2022, all equipment should contain the custom chips. Nokia expects the company’s gross margins to improve as the company ships more 5G products with the new chips.