Summary of Key Points
Nokia's closure of its R&D center in Hangzhou and the layoff of 1,600 employees is not just a simple case of corporate downsizing; it signals a dramatic shift in the telecommunications industry landscape. On one hand, Nokia's market share in China has been squeezed to less than 3% by Huawei and ZTE, and its revenue has declined by nearly 60% over the past seven years. On the other hand, the global telecommunications industry is entering a downturn, with geopolitical factors dividing the market. Nokia has turned to NVIDIA for support in its focus on AI-RAN (Artificial Intelligence for Radio Access Networks), shifting its resources to higher-profit markets in North America and Europe. This move affects not only employment and the industry ecosystem in China but also reflects a broader trend of weakening cooperation between China and Europe in the telecommunications sector, as well as North American tech giants attempting to reshape the global supply chain.
I. Nokia in China: From Dominant Player to Nearly Disappeared
Nokia was once the dominant player in China's telecommunications market, holding a significant share during the 2G and 3G era due to its technological advantages and playing a key role in the country's telecommunications development. However, with the advent of 4G, Huawei and ZTE began to erode Nokia's market share:
- Competitive劣势 in products and services: Huawei and ZTE were able to provide operators with customized solutions at lower prices, and as local companies, they responded more quickly to market needs (for example, Huawei engineers could arrive at the scene within hours, whereas Nokia's international processes were slower).
- Geopolitical backlash: Western sanctions against Huawei and ZTE also impacted Nokia, leaving it with even less market space.
- Revenue struggles: Nokia's revenue in the Greater China region plummeted from 2.2 billion euros in 2018 to 913 million euros in 2025 (a 58% decrease), and the number of employees was reduced from 13,700 in 2020 to 7,200 in 2025. In 2025, Nokia acquired HuaXin Technologies, turning the joint venture into a wholly-owned company, which facilitated further layoffs.
II. Nokia's Global Strategy Shift: Partnering with NVIDIA and Focusing on AI and European Markets
Nokia's layoffs are part of a broader global strategic adjustment:
- Industry downturn: The peak of global 5G construction has passed, and operators are reluctant to invest further. The market is divided into competing camps based on geopolitical factors (with Huawei and ZTE dominating the Chinese market and Nokia, Ericsson, dominating Europe and America), ending the era of free competition.
- New CEO's direction: The new CEO, a native of the United States with a background in data centers, has aligned Nokia with NVIDIA to develop AI-RAN technologies, with NVIDIA investing $1 billion in the partnership. This move aligns Nokia with Wall Street and makes it an agent of American tech capital.
- Resource consolidation: Nokia has streamlined its operations, focusing on two main businesses (mobile infrastructure and network infrastructure), with resources concentrated in higher-profit regions like North America and Europe. The global workforce was reduced from 103,000 in 2018 to 78,000 in 2025, with another 2,000 layoffs planned in Europe.
III. Implications for China
The layoffs in Hangzhou have broader consequences for China:
- Direct job losses: 1,600 people have lost their jobs or faced job transfers. While the compensation package is relatively generous (including additional years of salary and stock options), older employees may struggle to find similar positions. Despite the many tech companies in Hangzhou, Huawei and ZTE are strict in their recruitment processes, and the work culture in foreign companies may differ significantly from that of local firms.
- Industry salary trends: Laid-off employees from large companies may seek employment in smaller firms, intensifying competition and leading to overall salary reductions. This could also affect suppliers and subcontractors in the industry.
- Weaker bargaining power for operators: With fewer foreign suppliers, Huawei and ZTE may gain more influence over pricing, potentially increasing procurement costs and limiting technological innovation due to reduced competition.
IV. Major Changes in the Telecommunications Industry
Nokia's withdrawal highlights profound changes in the global telecommunications industry:
- Weakening of Sino-European cooperation: In the past, China and Europe (along with Nokia and Ericsson) collaborated on setting telecommunications standards (such as 3G). Now, North America's adoption of AI-RAN aims to break this pattern by decoupling components of base stations, allowing more American companies to enter the industry and gain more influence.
- The importance of global cooperation: We cannot rely solely on Huawei and ZTE; we need competition from foreign companies (Nokia's technology can stimulate innovation). Chinese companies should also expand their presence in other regions (Europe, Asia, Africa, and Latin America) to avoid being marginalized.
- AI as a game-changer: Nokia's partnership with NVIDIA indicates that AI could revolutionize the telecommunications industry. If AI-RAN becomes widespread, traditional base station technologies may become obsolete, and those who master AI capabilities will have a competitive advantage.
Conclusion
Nokia's layoffs mark the beginning of a major reshuffle in the telecommunications industry. In the face of geopolitical challenges and the impact of AI, we must remain open to new opportunities. By allowing both foreign and domestic companies to compete and collaborate, we can strengthen our position in the global market and avoid being reliant on a single technology provider. Only through openness and innovation can we thrive in this turbulent era.