Recently, there has been a lot of news in the telecommunications industry.
On the one hand, the three major telecom operators have successively released their first-half performance reports, showing a general decline in profits and an overall pessimistic outlook. On the other hand, Nokia, as an equipment vendor, officially announced a major adjustment to its business in China, launching a plan to close its Hangzhou R&D center, which is expected to result in 1,600 layoffs.
In today's article, I would like to first discuss Nokia's layoffs with everyone.
Personally, I believe this is not just a corporate layoff, but a signal of the changing landscape of the entire telecommunications industry, with impacts far more profound than what meets the eye.
█ Four Decades of Deep Engagement, Yet Unable to Escape the Final Curtain
Nokia is one of the world's top four telecommunications equipment vendors, with a history of over 160 years and significant influence in the industry.
Those outside the industry might think Nokia is the last remnant of the mobile phone manufacturers of the past, but in reality, the current Nokia has pure telecommunications equipment DNA in its veins. Well-known telecommunications brands such as Alcatel, Lucent, Siemens, and Motorola, which are familiar to the older generation, were integrated into the current Nokia through mergers and acquisitions in the past.
Nokia has been deeply engaged in the Chinese market for over 40 years, deeply participating in the construction of China's 2G, 3G, 4G, and 5G generational communication networks, witnessing and contributing to the entire process of China's telecommunications industry growing from a blank slate to a rising power.
In 2015, Nokia acquired Alcatel-Lucent. In 2017, Nokia restructured its domestic business and jointly established a new Sino-foreign joint venture with Huaxin Post and Telecommunications, a subsidiary of China Poly Group, namely "Nokia Bell (Nokia + Shanghai Bell)."
"Nokia Bell" holds the status of a joint venture central state-owned enterprise. Nokia did this hoping to leverage this status to better conduct its business.
At the end of 2025, Nokia spent 4.1 billion RMB to acquire the 50% stake held by Huaxin Post and Telecommunications, completely turning "Nokia Bell" into a wholly-owned subsidiary.
At the time, many people did not understand the purpose of this move. Now it seems that the equity adjustment was entirely to prepare for large-scale layoffs.
In fact, Nokia has been continuously adjusting its business and optimizing its personnel in recent years. In 2020, Nokia had 13,700 employees in China. By 2025, there are only 7,200 left, a decrease of nearly half.
The reason is obvious—declining market share and insufficient revenue to support massive R&D and operational costs.
Nokia in the 2G and 3G eras once occupied half of the Chinese market relying on its technological advantages. However, entering the 4G era, its market share was gradually eroded by Huawei and ZTE. In the 5G era, this downward trend has become even more pronounced, with its market share dropping directly below 3%, basically withdrawing from the mainstream competition.
The reasons for losing market share are multifaceted. To sum up, Huawei and ZTE's products and technologies are indeed very strong, capable of providing deep customization for domestic operator customers, and their prices are more competitive. Furthermore, as local enterprises, Huawei and ZTE can provide more comprehensive service support and faster response times.
Besides products and services, another important factor is the impact brought by geopolitics.
After the rise of Huawei and ZTE, Western countries led by the United States have been suppressing and restricting them, and many countries have explicitly banned the use of Huawei and ZTE's equipment. We also had to take some reciprocal countermeasures. But we have been very restrained, not engaging in a "one-size-fits-all" comprehensive ban like some Western countries, always leaving some market share.
Due to the above reasons, Nokia's market share in China has continued to decline, and its revenue has also significantly decreased. In 2018, Nokia's Greater China revenue was 2.2 billion euros. By 2025, it was only 913 million euros, a 58% drop over seven years.
Revenue decline inevitably leads to scale reduction. The closure of the Hangzhou R&D center this time is a continuation of the business adjustment plans in recent years.
The Hangzhou R&D center does not only serve the Chinese market but is part of Nokia's global R&D system. Previous business adjustments mainly involved sales and technical support departments. This time, directly closing the Hangzhou R&D center, giving up valuable talent reserves and years of resource investment, is enough to show Nokia's determination to completely withdraw.
█ Exiting China Is Not an Isolated Event
Nokia's exit from China, while having the factor of shrinking domestic market share, has deeper reasons lying in the adjustment of its own global business layout.
The telecommunications industry is currently in a global downward cycle. Especially in the mobile communication field, the peak of domestic 5G construction has passed, while international operators have not been as aggressive in 5G network deployment as imagined, with more pragmatic and cautious investment willingness.
Today's global mobile communication market presents a clear geopolitical landscape. In other words, the market has been artificially divided into different camps. Politics has surpassed products and services to become the core factor influencing market share. The unified market form of free competition among global manufacturers in the early years no longer exists.
As the world's largest market, China has provided growth soil for Huawei and ZTE. In particular, Huawei, with the Chinese market as its foundation, combined with overseas existing markets and emerging markets, holds about 30% of the global RAN (Radio Access Network) market share, ranking first.
Ericsson, relying on the high-end operator markets in North America and Europe, follows closely with a share maintained at 28%-32%. Nokia and Ericsson have similar target markets, with North America as the core, Europe as the base, and the broader Asia-Pacific as the increment, holding a share of about 15%-19%. Among them, North America is Nokia's largest source of global revenue, contributing about 32% of its revenue.
Europe and the US are high-value markets, bringing considerable profits to Ericsson and Nokia. However, the overall downward trend in global mobile communication infrastructure investment, coupled with increasingly fierce market competition, has forced these two European giants to adjust their business directions.
In early 2026, Nokia announced a thorough architectural restructuring, cutting the original four business groups into two: Mobile Infrastructure and Network Infrastructure. Simply put, Mobile Infrastructure is to continue working on the 5G/6G base, especially 6G, to lay out for the future. Network Infrastructure targets optical communication and data center communication, with the obvious goal of AI, aiming to reap the AI dividends.
Nokia's new CEO, Justin Hotard, is an American citizen with a background in data centers. After taking office, he immediately allied with NVIDIA to jointly develop the AI-RAN platform, using GPUs to replace traditional base station dedicated chips. NVIDIA also invested 1 billion USD directly into Nokia's equity.
From a certain perspective, Nokia seems to be leaning towards Wall Street, becoming a proxy for US tech capital in the telecommunications infrastructure field.
Justin Hotard's attitude has also been relatively "hawkish." At the earnings call in July this year, he stated: "Why should we allow high-risk vendors like Huawei into European networks, especially when they don't allow us into their market, given that our market share in China is less than 3%."
Against this backdrop, it is not surprising that Nokia's senior management made the decision to close the Hangzhou R&D center and further shrink its business in China.
Nokia's current strategy is very clear: desperately cutting costs, concentrating resources on the two high-profit markets of North America and Europe, and simultaneously seeking new growth curves by embracing AI computing infrastructure.
Nokia's layoffs are not limited to China. Nokia's global workforce has dropped from about 103,000 in 2018 to about 78,000 in 2025. Not long ago, Nokia announced further layoffs in Europe, adding about 200 million euros in restructuring expenses for this purpose. Preliminary estimates mean another 2,000 positions will be cut.
This "downsizing" strategy has already brought short-term improvements in financial data. But it is easy to "reduce expenditure," whether it can achieve "increase income" remains a question mark. Whether Nokia's embrace of Wall Street and its alignment with NVIDIA and AI-RAN can ultimately achieve performance growth still requires further observation over time.
█ Withdrawal of Foreign Enterprises Requires Rational Perspective
Many people are indifferent to Nokia's withdrawal from China, and some even think that this is Chinese enterprises defeating foreign enterprises and "driving" them out of the Chinese market.
This view with nationalistic emotions is irrational. Nokia's withdrawal from China is not something to be happy about for us.
First, the most direct impact is the loss of thousands of jobs. Once the Hangzhou R&D center is closed, it is expected that 1,600 employees will face layoffs or transfers. Behind this is the realistic pressure faced by 1,600 families.
According to reports, the layoff conditions offered by Nokia are quite good, with some employees receiving "N+2" compensation (some say "N+3"). The length of service is calculated until the end of the year, all unused annual leave is cashed out, stock options are settled uniformly, and social security and housing provident funds are paid for two extra months, which is considered very generous.
According to past conventions, layoffs will provide opportunities for transfer, meaning they might be transferred to Nokia's R&D centers in Europe or other regions. Generally speaking, younger people are more willing to accept such opportunities, while older employees with families tend to accept layoff compensation and then look for opportunities in the employment market again.
In Hangzhou, where major tech companies gather, professional and technical talents with foreign enterprise backgrounds have relatively smooth mobility channels. There are rumors that tech companies like Luxshare Precision intend to absorb some of the technical talents leaving Nokia.
Many people think Huawei and ZTE should go and poach this batch of talents. But in reality, Huawei and ZTE are also strictly controlling their social recruitment at present. Thinking back to the past, if competitors laid off employees, companies would set up stalls at each other's doors to recruit. The situation is different now; everyone is having a hard time, and recruitment is very cautious. Employees accustomed to Nokia's foreign enterprise work pace are not very favored by Huawei and ZTE.
Some telecommunications professionals feel that Nokia's layoffs have nothing to do with them. This is not necessarily true. Generally speaking, when large enterprises lay off employees, the personnel will flow downwards, entering small and medium-sized enterprises or startups, thereby intensifying internal competition in these enterprises and lowering the overall salary level of the industry.
Layoffs in large enterprises will also affect related enterprises in the upstream and downstream of the industrial chain, such as outsourcers and suppliers, leading to further deterioration of the overall industry situation.
The second important impact brought by Nokia's withdrawal is the further intensification of the fragmentation of the industrial landscape and the risk of supply chain homogenization.
Please remember that at this current stage, globalized cooperation and division of labor, as well as market-oriented healthy competition, are beneficial to us. Our production capacity needs the international market to digest. Our technology also needs to continuously iterate and upgrade in the competition in the global market. This is true not only in the telecommunications industry but also in fields such as automobiles, photovoltaics, and consumer electronics.
The anti-globalization trend promoted by foreign countries, along with policies such as trade protectionism and "decoupling," is detrimental to us.
From a global perspective, although China is the largest telecommunications market, it is only a part of the global map. High-value markets in Europe and the US, as well as emerging markets in Asia, Africa, and Latin America, still have huge profit margins. We cannot just focus on the domestic market; we still need to go global and participate in global competition. Integrating into the global industrial chain, letting foreign enterprises in, and letting domestic enterprises go global are extremely important for the development of China's telecommunications industry (and the same applies to other industries).
From the perspective of the domestic market, the withdrawal of foreign-funded enterprises, although not having a significant impact on market share, means fewer technology suppliers for operators, and their bargaining power will be weakened. In the long run, this may lead to increased procurement costs and homogenization of technology routes. Whether you buy it or not is one thing; whether it exists or not is another.
Foreign enterprise products may not have the strongest technical specifications, but they can often provide a different technical route and mindset, which can break technological solidification and stimulate innovation vitality.
Nokia's strategic shift also represents an important signal: the global telecommunications industry landscape is undergoing profound changes, and the "coopetition relationship" between China and Europe in the field of mobile communication technology standards is facing challenges.
Over the past few decades, the landscape of the entire mobile communication industry has been characterized by China and Europe cooperating to jointly hold the main voice in technology standards. The formulation of the 3G standard back then, including dealing with the challenges of CDMA (3GPP2) and WiMAX, was the result of cooperation between China and Europe. The four mainstream equipment vendors, two from China and two from Europe, also illustrate this point.
Ericsson and Nokia, for us, are both competitors and important partners. The two enterprises have greatly helped China's telecommunications cause. They have always valued the Chinese market and maintained a good relationship with us.
In the early stage of the domestic telecommunications industry, these foreign-funded enterprises brought mature communication technologies, advanced R&D concepts, standardized industry standards, and cutting-edge operational experience. Moreover, they cultivated a large number of technical talents for domestic local enterprises and built a bridge for China's telecommunications industry to connect with the world. Ren Zhengfei also said before that Huawei's ability to reach today is inseparable from learning from Western teachers.
In recent years, whether it is O-RAN, open RAN, or AI-RAN, the essence is that North American tech giants are trying to break the dominance of Europe and China in the field of mobile communication standards, reshaping the entire industrial chain by promoting the openness and decoupling of technology architectures.
Everyone should also be able to feel that the challenge from North America is becoming increasingly severe, and the traditional Sino-European cooperation ties are being weakened. Especially under the AI wave, the traditional landscape may really be broken, and technology standards may also face fragmentation.
Facing this changing situation, we need to seriously think about how to respond.
█ Conclusion
In short, the iteration of communication technology often means the reshaping of the industrial landscape. Against the backdrop of geopolitics controlling the market and the trend of the AI wave impacting mobile communication technology, the challenges we face are unprecedented.
Current technological leadership does not mean permanent technological leadership. Only by maintaining an open mindset and adhering to globalized cooperation can we go steadily and far in global competition, ensuring continuous innovation vitality and industrial competitiveness.
This is a turbulent era. What the final result will be can only be answered by time.