Nokia exits China, joins Nordic defense pact and bets on AI

Nokia ↗ 2.47% is executing one of the most consequential strategic shifts in its recent history, dismantling its decades-long presence in China while channeling resources into artificial intelligence infrastructure and European defense technology.

Exiting China

The Finnish telecom equipment maker plans to close almost all of its mainland China sites by the end of 2026, according to a South China Morning Post report confirmed by Reuters. Nokia is shutting its research and development facility in Hangzhou — eliminating roughly 1,600 jobs — along with offices in Beijing, Chengdu, Qingdao and Shanghai. The company had approximately 7,200 staff across mainland China, Hong Kong and Taiwan at the end of 2025.scmp+2

The retreat reflects years of declining competitiveness against domestic Chinese rivals. Nokia's Chinese market share has dwindled to roughly 3 percent, with revenue from the region falling from $2.5 billion in 2018 to $1.06 billion in 2025. Only after-sales services are expected to remain, amounting to what one source described as "basically a gradual exit from the market". The company expects €350 million in integration charges related to the wind-down, though the restructuring is projected to generate more than $400 million in annual savings.ad-hoc-news+2

A Nordic Defense Alliance

On Tuesday, Nokia joined Ericsson Telefonaktiebolaget LM Ericsson ↘ 0.18%, Kongsberg, Patria, and Saab as founding members of the Nordic Compass Defence Track, an initiative aimed at strengthening regional defense capabilities through joint industrial projects. The launch took place during a high-level meeting in Helsinki where representatives met Finnish President Alexander Stubb.defence-industry+2

Mikko Hautala, Chairman of Nokia Defence, said the initiative reflects how "defence is increasingly based on digital technologies alongside traditional military capabilities". Ericsson CEO Börje Ekholm emphasized 5G as "part of the digital backbone of modern defence". The alliance's first proposals will be presented at the Nordic Compass Summit in Gothenburg on November 4-5, 2026.nordicdefencesector+1

The AI Bet

Nokia's pivot toward AI infrastructure is underpinned by a $1 billion investment from Nvidia ↘ 0.35%, announced in October 2025, which gave the chipmaker roughly a 3 percent stake. In July, Nokia launched what it described as the industry's first commercial AI-RAN platform, built on Nvidia's Aerial software stack and designed to double the capacity of existing spectrum by 2028. The company's AI and Cloud segment booked €2.8 billion in second-quarter orders, with revenue in that division more than doubling year-over-year.nokia+3

Nokia shares closed Wednesday at €8.95, up 60 percent year-to-date but roughly 40 percent below a 52-week high reached in June — a gap that reflects both investor enthusiasm for the strategic direction and lingering execution risk as the transformation unfolds.ad-hoc-news