When Nokia began planning its 5G networking equipment last year, it made a decision that the company would come to regret. It used its line of "ReefShark" chips, used for its 5G radio, baseband and massive MIMO antennas, and chose to include field programmable gate array (FPGA) silicon. This addition enabled the chip to be programmed by the customer, hopefully allowing Nokia to bring 5G equipment onto the market before its competitors.
An expensive mistake
However, at the time Nokia didn’t take into account that producing FPGA chips would cost the company more money, and consequently reduce its profit margin. As we reported earlier in the week, Nokia had to reduce its earnings predictions after its Q3 results.
Nokia now wants to start production of customs chipsets and has had to hire 350 employees to help to develop said chips. This development could take two years to produce the SoCs to replace the FPGAs.
“Relentlessly executing against that plan”
Nokia has contracts to deliver 5G networking equipment to all four major U.S. carriers and it cannot afford to delay. However, it could have happened already as the company was said to be responsible for Sprint's delay in rolling out 5G service to four cities back in August.
This could simply be down to a lack of leadership. However, now Tommi Uitto, President of Mobile Networks at Nokia, is running the 5G game.
"Tommi and his team have developed a comprehensive plan to ensure Nokia is competitive in 5G, and they are relentlessly executing against that plan,” said Nokia CEO, Rajeev Suri.
The positive note is that Nokia has highlighted the problem, and is now working to rectify it before it’s too late. Hopefully, investors haven’t lost hope already.