NOKIA

Company partners with Broadcom to diversify 5G chip supply

Nokia on Monday announced a partnership with Broadcom to develop chips for 5G equipment in its third deal in the area, following partnerships with Intel and Marvell.
Nokia initially chose a type of chip - FPGAs (Field Programmable Gate Arrays) - for its 5G devices that customers could reprogram, but last year's high costs and supply barriers forced the company to change course.
"We still maintain the decision to opt for FPGAs because it was the right thing to do at that time," Sandro Tavares, head of mobile network marketing at Nokia, told Reuters.
"When we announced the change in strategy, the market evolved more quickly and we needed to speed up the process of developing new suppliers," he said.
Nokia, which competes with Sweden's Ericsson and China's Huawei [HWT.UL], said its 5G products would not reach the market in time due to delays by a supplier, identified by analysts like Intel.
The company now uses cheaper custom chips to reduce costs and add more suppliers to diversify its supply.
Tavares declined to comment when Nokia's 5G equipment with Broadcom chips would hit the market or if Nokia would add more suppliers.
By the end of this year, Nokia plans to have custom chips in more than 35% of its 5G shipments and achieve a 100% rate by the end of 2022.
Nokia said it hopes to improve its gross margins as shipments of 5G products with custom chips increase.

Reuters