Nokia doubles down on Nvidia.
- Nvidia is present at scale at this year’s MWC, and although it does not have a stand, its fingerprints are all over the booths of its partners as it seeks to become the hardware and software platform of mobile communications.
- Nokia is also hitting above its weight this year as its decision to go all in on Nvidia in Q4 2025 puts it in pole position if Nvidia’s platform proves to be better than the proprietary offerings of everyone else.
- At the end of last October, Nvidia and Nokia announced a partnership where Nvidia invested $1bn in new Nokia shares, giving it the resources to support the transition it announced.
- Nvidia has launched Aerial RAN, which is a platform based on Grace Blackwell that has been optimised for wireless networks and will be capable of supporting 6G when it arrives.
- Nokia will be migrating all of its software onto this platform and will become a provider of networking software as opposed to a vertically integrated wireless systems vendor.
- Nokia has been unable to really capitalise on the move away from Huawei in overseas markets (which was why I sold my position), and so has remained subscale, which has put it in a difficult position.
- Going with Nvidia, offers a way out of this problem as long as the Nvidia platform proves to be much more economical and effective than the in-house offerings from Ericsson, Samsung and so on.
- At MWC, the industry is seeing much greater alignment in terms of how AI should be used to optimise network performance, and I suspect that there is quite a lot of low-hanging fruit here.
- This is what the AI-RAN Alliance is all about, which has 130 members which includes all of the major players except Huawei.
- The industry is in agreement that mobile networks need to be software-based, especially if one is going to start using AI algorithms to optimise network performance.
- This is because AI algorithms need to be constantly updated, meaning that a software-based system is the only way that this can be achieved.
- This is Nvidia’s pitch to the industry because its systems are designed for AI, and with it being at least one generation ahead of everyone else, it can make a case to be the most economical to run despite its 75% gross margins.
- So far, only Nokia has made the commitment, as Ericsson is still doing its own thing and is using Nvidia only where it needs to run AI on its base stations.
- This amounts to a big gamble by Nokia because if it turns out that an in-house platform remains the way to go, it will be uncompetitive and subscale.
- However, Nvidia’s arguments for the data centre still hold water, and so there is a reasonable chance that this will translate well into the mobile base station.
- From what I can see, AI in mobile networks is in much more focus than the next mobile standard, 6G, but it remains to be seen what day 2 will bring.
