Nokia CEO Justin Hotard called on European officials to look into potentially removing what he described as “high-risk vendors.”

Speaking at a press briefing ahead of the opening of Nokia’s new research campus in Oulu, Finland, Hotard said that Nokia’s share in the Chinese market had fallen below three percent – questioning why their vendors were free to operate in parts of Europe, “particularly when they do not allow us to play in their markets.”

Huawei has been banned from playing a part in the 5G network infrastructure of several European countries, including the UK, Sweden, and Latvia. Most recently, both Huawei and ZTE components were barred from 5G networks in Germany. The US exerted considerable pressure on European nations to exclude Chinese firms, with the Federal Communications Commission (FCC) supporting a multi-billion-dollar “rip-and-replace” program to eliminate equipment from China-based vendors from US telecommunication networks.

“I spent half my childhood in Europe, and there was a time when there was a wall that divided Europe,” Hotard said. “That physical wall was very clear; the walls of today are digital, and we need to make sure those walls don’t get erected digitally.

“It is important to realize that we are talking about critical national and international infrastructure. Of course, there’s a level of economic competitiveness, but we need to be investing in this, because we need to be able to sense whether there’s unintended aircraft in an area and our core networks that need to be a part of it.”

Beyond removing so-called “high-risk vendors,” Hotard also called for Europe to ease competition rules.

“The markets here are both very small, in some cases, based on the size and population of a country, and then there just isn’t sufficient scale to support the capital necessary to buy spectrum and to operate a network. And that constrains innovation,” Hotard said.

In a later conversation on stage with Finnish President Alexander Stubb, Hotard named both Huawei and ZTE as the high-risk vendors, adding: “If you look at where China has been successful, it is an autocracy, and it’s top down, and they’re vertically integrated, and you can look at Huawei’s success and credit for that. That’s not the way the West wins. The way the West wins is we all come together and partner and do what we’re best at.

There’s a phenomenal opportunity for Europe and hopefully for us as a part of that, to be a more balanced and thoughtful participant and bridge the global South, where, by the way, it’s interesting with India, because every tech company in the world, including us, is incredibly dependent on the talent of India, and increasingly on the market of India.”

During a ceremony inaugurating the site, President Stubb pitched Europe as a key ally if the US wants to take on China. He warned that the US “cannot be a superpower without allies.”

“The global East wants to change the world order,” President Stubb said. “The global South will decide. [Hotard] spoke of India … when you have the US imposing tariffs on India, India reacts strongly by making a showcase presence in the Shanghai Cooperation Organization and other places.”

The Finnish President said Western powers should “actually play ball” with the global South, “rather than trying to force the global Ease into place, which they’re not going to do.”

Call for competition boost

Competition laws are under the microscope in Europe, with the highly anticipated European Commission report from Mario Draghi calling for radical regulatory overhauls to boost the competitiveness of the bloc’s telecom sector.

Hotard’s predecessor, Pekka Lundmark, signed an open letter in support of that report’s findings. Nokia’s current CEO suggested at the event in Oulu that loosening the continent’s competition rules would allow for market consolidation.

“Just look at what’s happening in India in a very different cycle, the profitability of their networks, the performance and growth of those businesses, [with] Reliance Jio talking about in a potential IPO, and look at the results of the American carriers,” Hotard said. “Both are much, much larger-scale markets; there’s a signpost there around the health of the market and investment here; we’re at one percent penetration of 5G standalone. India and the US are much higher.”

R&D philosophy: Lessons from Intel experience

Hotard’s appearance in Oulu was around 160 days since he took over from Lundmark, joining the Finnish firm from US chipmaker Intel.

Hotard’s former employer had issues with getting their innovations actually working, such as its 13th and 14th Gen Raptor Lake processors’ infamous instability issues, alongside suggestions that it spent far too much on projects, only to scrap them entirely. Figures from TechInsights recently surfaced suggesting that Intel spent a whopping $16.5 billion on research and development (R&D) in 2023 – that would put it at 28 percent more than Nvidia and some 156 percent more than AMD.

Nokia, meanwhile, spent less (around $4 billion in 2023) but is still doubling down on R&D to fuel its future, with its facility in Oulu set to act as an R&D and manufacturing hub for its radio offerings.

When asked by SDxCentral how Nokia’s R&D-focused approach differs from his former employer, Hotard emphasized the importance of strategic investment choices over pure spending levels.

“If you go back and look at the amount of investments that have happened, sometimes it’s not about whether you neglected, but did you make the right investments?” Hotard said.

The new CEO stressed that Nokia’s approach centers on combining “fundamental research” with an “ecosystem mindset” to ultimately determine where to invest directly in technology differentiation versus where to partner and leverage external capabilities.

He pointed to Nokia’s recent acquisition of Infinera as an example of this strategic approach, suggesting it brought complementary technology that expanded both the size and scope of Nokia’s network infrastructure business.

In addition to getting spending right, Hotard outlined the need to work with the right partners on the right technologies.

“That’s probably the big lesson for me in coming in,” Hotard said. “Who are the partners we need to partner with to make sure we’re leveraging the best of the market’s capabilities?”

Hotard said that the fruits of R&D spending won’t show up for a handful of years, adding that Tommi Uitto, Nokia’s mobile networks president, told him that the decisions he made five to seven years ago in terms of R&D are “just showing up in products today.”

“It’s about focus, and it’s not just focus on where we are investing, but it’s focused on what we are investing in, in the stack, and be really smart about that,” Hotard said. “Where we see opportunities to drive long-term growth and value, we’ll invest R&D. But it’s always about that balance and discipline. And I think it’s a little bit, honestly … it’s not about what you know, what the absolute metrics are. It’s about where you are investing in, and really digging into that.”

Investment plans

In terms of future projects, Hotard said Nokia would invest in places that “we think have geopolitical stability.”

The Nokia CEO described the US as its “second home” with more employees there than in its native Finland, adding that it will “get the right talent that fits what we need and where we have home markets.”

Hotard added that tariffs “don’t really affect” the Finnish firm, as the company “doesn’t ship much” between the EU and the US. Instead, he likened an initial impact related to components coming out of Asia.

“We’ll continue to look at smart ways to regionalize manufacturing and regionalize assembly,” Hotard added. “That’s a part of the journey we’re on as a global company right now. As we look ahead, we’re going to be in a world where, geopolitically, we’re going to be going to have a more resilient, more distributed, more localized supply chain that’s starting with assembly today. We’ll see how that plays out across the broader component and raw material ecosystem as well.”