Nokia is reportedly gradually withdrawing from its China business, which is the latest move in a series of strategic adjustments made by the device manufacturer to seize what CEO Justin Hotard called the “AI super cycle”.

During Nokia’s Q2 earnings conference call, Hotard highlighted the company’s AI-RAN platform and the demand created by AI for Nokia’s optical networks. He also mentioned that “after obtaining full ownership by the end of 2025, we will integrate our Chinese business into Nokia’s global operating model. As we discussed before, we will continue to adjust our operational structure to reflect market conditions and enhance competitiveness.” These adjustments involve thousands of layoffs. According to Light Reading, Nokia first reported that it had closed its research and development center in Hangzhou and cut 1600 jobs. Then the South China Morning Post quoted sources saying that Nokia would close almost all its sites in Chinese Mainland by the end of this year.

Nokia has been developing mobile infrastructure in China for many years, including its exit from the mobile phone business over a decade ago. Recently, Nokia has also divested other underperforming assets, including the fixed wireless access customer terminal equipment business recently sold to Inseego. CFO Marco Wiren stated that the edge business of the enterprise park may also be sold.

Overall, Nokia’s mobile infrastructure business is growing slower than its network infrastructure division, which includes optical networks. Nokia’s optical networking business grew by 20% year-on-year in the second quarter, mainly supported by cloud customer demand. Nokia stated that sales in the AI and cloud segments increased by 105% year-on-year to 446 million euros, accounting for 9% of total sales. Investors are paying attention to this – Nokia’s stock price has risen 60% so far this year.

Nokia’s network infrastructure division accounted for 42% of revenue in the most recent quarter, a year-on-year increase of 12%. Mobile infrastructure accounted for 55% of revenue, an increase of 7%.

What does Nokia focus on?

In terms of research and development, Nokia seems to be focusing heavily on the field of network infrastructure. The company has recently launched a multi-channel series online amplifier solution, allowing customers to exponentially increase the number of fiber pairs per rack. We have also introduced an out of band management solution that replaces copper cables with passive fiber optic networks. Both of these solutions are directly aimed at AI data center operators and will compete with similar solutions from optical network giant Ciena.

At the same time, hardware research and development in mobile infrastructure remains at a more cautious pace. During the recent earnings conference call, Hotard told analysts that Nokia is deepening its cooperation with AI chip giant Nvidia, focusing on software defined solutions and gradually abandoning proprietary base station chips.

The core network part of Nokia’s mobile infrastructure business is much smaller than the wireless access network part, and may still benefit from research and development investment.

The Omdia analyst team has recently completed its annual evaluation of mobile core network providers, and based on dimensions such as cloud native generation maturity, core-as-a-service, signaling, automation, AI/ML, and analytics, has rated Nokia as a leader in product portfolio breadth and competitiveness. But in terms of business performance, Nokia lags behind Huawei, Ericsson, and ZTE.

The Omdia Mobile Core Network Research Report (August 2026) states that “there will be a slight decline in market share in 2025, and the number of 5G transactions with CSPs in 2026 will be less than in 2025, resulting in a decrease in supplier business performance ratings. ”The report also pointed out that Nokia won fewer new customers than its competitors in 2025, and the total number of 5G core commercial transactions at the end of the year was less than the other three suppliers.

Omdia pointed out that non Chinese mobile core network providers have advantages in certain “policy driven” markets, particularly in the United States, United Kingdom, Canada, Australia, and New Zealand. Meanwhile, analysts have seen Chinese suppliers “winning important 5G core deals in emerging markets, sometimes at the expense of Western suppliers”.