Good afternoon, everybody. Thanks for joining us. I'm Sandeep Deshpande. I cover the European technology space. I'd like to welcome Justin Hotard, CEO of Nokia. Thank you, Justin, for joining us this afternoon. Thank you all for joining us. I will just jump into the Q&A. Maybe a few of you can ask a few questions as well. I mean, clearly the interest, Justin, in Nokia is your exposure in the AI and cloud market at this point, et cetera. I wanna just, you know, at OFC, you announced a whole bunch of new products. That is potentially gonna change your outlook in the optical market going into 2027. Maybe you can talk through some of those new products that you've announced and how you see that impacting your revenue in the next few years.
Yeah, absolutely. Thanks, thanks again for having me, Sandeep. I think if you look at what we announced in optical at OFC, first was the first big shift in this was really the benefit of bringing together Infinera and Nokia. That was number one. Number two was we, by doing that, we enabled us to build a very differentiated portfolio. Four DSPs, 13 unique platforms. The key thing for us in announcing that was giving us an opportunity to engage early with customers on those products and bringing them to market. Now, we announced that most of those will be in market in 2027, obviously leveraging the DSPs.
Each one targets a different unique application across the stack, spanning from what we see in scale-across all the way to what we see in ultra-long-haul networks.
You see that ramping up from the second half of 2027 into 2028.
Yeah, we'll see volume ramp in second half of 2020. You know, early units in first half and volume ramp in second half of 2027.
Understood. Maybe, moving on to the Q1 results. I mean, you had this amazing set of results for people like myself who have covered Nokia for a long time. I mean, this was an amazing set of numbers from Nokia in Q1, given how your orders in AI and cloud were, et cetera. You had this EUR 1 billion in orders in Q1, which is almost 40% of the orders you received all of last year, et cetera. Maybe the question I have is what changed in Q1 which caused this huge increase in the order intake?
Yeah, I think first of all, if you look back at Q4, we actually had pretty strong order momentum in Q4 as well. I mean, the first thing we did, the big thing that we changed is we actually started to give you visibility into the segment.
Yeah.
That's probably the first step. The second thing is obviously what we're seeing is really strong momentum on the back of the demand we see in 800 Gb. You know, we've had traction in 400 Gb, but just a reminder, we really weren't a player. No presence in 400 Gb pluggables. Some presence in 400 Gb in terms of, you know, ILAs and some of the other, you know, other systems in that space. The momentum we're starting to see and the demand we're seeing for 800 Gb was really what drove the order, you know, the order forecast in optical.
On the IP side, you know, we've had a little bit of traction there, largely in routing with AI and cloud, not in the order book in Q1. What we also announced during earnings was also that we've got a few design wins getting into IP networks, including on the switching side. That's been really encouraging for us in terms of the opportunity that we see.
Yeah, since you raised the IP networks market, I mean, you mentioned that you've got a couple, I think, of design wins in the first quarter. You also clarified that they were not in the orders in Q1.
That's right. That's right.
You expect to see these in the orders later this year?
Yes.
I mean, clearly you're not gonna answer this question directly, but in terms of the orders in Q1, would that be the sort of orders you expect for the rest of the year, or this was a big one-off in terms of this 1 billion EUR in orders?
Yeah, I mean, I think a few things on the orders as we look ahead. I probably won't give you a direct answer on that, Sandeep. As you rightly said. The way I would look at it is, there's a couple things that are happening. One is I think we're starting to see more orders into 2027. If you look at what happened in Q1, and you obviously the second half of 2025 as well, what we had there was really most of the orders that give us visibility and confidence into the assumption we have on revenue growth for 2026. Now we're starting to see things that are maybe a little bit in 2026, but much more demand into 2027. What I anticipate is that as we see more orders come in this year, we're gonna continue to see some of the timeline elongate.
You know, we've traditionally been a company that's just shared order numbers. Part of that is if you look at our historical business, particularly in telco, but also mission-critical enterprise, we've really not been a business that's had long lead time orders. We typically have had things within 12-month windows. In telco, we'll win a frame agreement, for example, but then the orders come in, and they're usually fulfilled in, like, a six-month period. What's changing in AI and cloud is that we're now seeing orders, obviously orders grow and orders increase, but also orders elongate. One of the things we're gonna try to do is think, we're gonna think through how we dimensionalize that for you guys, so you can get visibility to how much we see over what duration, and we'll think through that.
Whether we give you kind of a, you know, a 12-month, you know, rolling forward, you know, four quarter forward, forecast or something like that, just to have a sense of what that is, 'cause I do think things are gonna get lumpier, particularly given the constraints that we see in the supply chain, both in optical and IP.
You talk about lumpier in terms of orders or lumpier in terms of shipments or rather revenue recognition?
Lumpier in terms of orders.
Oh, okay.
The reality is, I mean, the constraints right now are all on supply. The shipments I think will be quite linear, but I think orders will be quite lumpier.
Understood. I mean, now coming back to those two or two customers that you've got in the first quarter, I mean, would this be correct to assume that, you know, you've announced in the past you have Microsoft as a customer in this market, et cetera. Is it beyond Microsoft, or is it, you know, essentially more wins at that customer, et cetera?
Yeah, I think we've announced that we have a win in the past with Microsoft around SONiC. What I can confirm for you is these are different design wins, incremental design wins. In terms of customer details, as you know, we won't disclose that at this time.
Understood. In terms of the wins in the switches, again, I mean, where are you winning? Are you winning inside the data center with top-of-the-rack switches or spine switches, or is this scale-across switches is where the wins are?
Yeah, I mean, I think, you know, not gonna disclose too much on that front, but I think let's just say we're pleased with the progress we're making across the portfolio, including inside the data center.
Understood. Now, when I do the numbers on this, I mean, clearly, you're, again, not gonna entirely answer this question. I understand that, Justin. You had an order intake of EUR 2.4 billion in AI and cloud last year.
Yeah.
You reported only EUR 350 million in revenue in Q1 as such, really.
Yep.
Which is a very small percentage of those orders that you received last year or even as a percentage of the orders received in Q1. How would this order intake now, I mean, you know, translate into sales through this year? Because, you know, if you just, you know, those of us who model, I mean, you know, EUR 350, EUR 500, EUR 600, you know.
Yeah
you put that through, you would come to even a much bigger growth for your AI, rather your, you know, you've guided 18%-20% growth in IP and optical, plus optical businesses.
Yeah.
I mean, we can come to a number which is much bigger, given that if that EUR 1 billion order number was to be replicated through this year, you should have a run rate of EUR 4 billion in this business next year, potentially, in revenue. I mean, any comments on this?
I mean, I think there's a lot of really good modelers probably in the room.
and listening. I think you've dimensionalized it in a good way. I mean, look, I think for us, this is a huge focus. Obviously, the growth that we saw year-over-year was very strong on revenue. I'm pleased with the progress we're making, but a lot more work to do to continue to scale. Again, the other thing I'll just reinforce is that if you look at where we are in orders through Q1, we've got visibility to demand through the year. It's really, you know, when I think about it, you know, from my perspective, I always think about, you know, risks, right? You know, risks and opportunities.
If I look at the assumptions we gave you on growth for the year, what I would think about is, you know, is that we're basically, you know, the only risk we really have is on supply chain. That's not to say that we have risk. It's just that that's where the risk is. It's not on demand. If, you know, to maybe to put it another way, if we had additional supply, we probably could, you know, we could probably fulfill that given the demand that we have.
I was in a meeting just before this with one, your main competitor in the switches market. I mean, a large part of the meeting was discussing supply. Maybe you can address, I mean, how are you face, you know, TSMC is a huge bottleneck for many of your chip suppliers. How, where are you on this supply side?
Yeah, I mean, I think for us, it's a, you know, a little bit broader across the business, but obviously, I mean, I think everything you've heard of from an industry perspective around supply lead times, you know, tied to, you know, leading-edge nodes at fabs, you know, TSMC, of course, that's a driver for, you know, for us as well. The other things we're focused on are, you know, in different parts of the business, but important ones are memory. You know, memory has an effect. There's, you know, memory content in routers, there's memory content in some of our consumer premise equipment on fiber on fixed networks and fiber networks. There's memory, you know, there's some memory content in radios.
We still have a small business in our core, in our core software platform where we resell third-party hardware that are servers. Obviously have memory content. That's a business that we're continuing to de-emphasize and wanna shift to direct fulfillment, you know, provided it's the right thing for our customers. Those are places where we have memory dependency. Then obviously, as you've heard from many of the industry players in optical and certainly in indium phosphide, you know, we're scaling at a tremendous pace as an industry, right?
In indium phosphide manufacturing, I think it's, you know, if you look at it's just a massive, you know, it's a 100 to 1,000x scale that we're talking about in terms of meeting the demand in the market over the next few years and from where we were just a couple of years ago. Obviously, that drives constraints across that side of the supply chain, and that's one of the things that we need to mature as a, you know, as an industry, but as well as a, as a company playing in that. We look across all of that as well as scale for contract manufacturing, you know, particularly in optical, where we're moving into this volume. It's a very different, you know, it's a different problem set than it was just a few years ago.
All of that are areas that we think about in terms of constraints as well as smaller components and, you know, in different parts of the risk. I don't think there's anything from our perspective that's unique vis-à-vis where the rest of the industry is. I would say we feel pretty good as a systems provider, particularly in optical, of having vertical integration, particularly as we ramp pluggables, because we do think that's an advantage to scale and to ramping.
I mean, one of the things which came up during this conference, I mean, one of your suppliers, Lumentum, was here yesterday. At their fireside chat, they mentioned that many of your other competitors placed orders quite early in the supply. One of the points he made was Nokia is suddenly emerging as a major player in this market. The question is whether you played or placed orders well enough in time to get your supply because you seem to be a late, sudden bloomer in this market. You were not very much in the data center market till 1 year ago, right?
Yeah. Well, again, we weren't in the 400 Gb transition, right? If you think about the transition on pluggables and the early part of the scale-across demand, it's all been on 400 Gb. The pluggables, you know, side of that and the system ramp has happened. We were smaller. We're now catching, you know, we believe we're well-positioned in catching, you know, pretty strong demand trends in 800 Gb. Obviously, we're also, you know, we're also working on scaling those relationships to support that demand. You know, Michael and the team are obviously great partners and, you know, we're working closely with them.
In your own indium phosphide capacity, I mean, you've got your new six-inch fab ramping up in San Jose later this year. Where are we in that ramp in terms, because normally semiconductor fab ramps have problems. Even Lumentum has had problems ramping up its capacity. He was talking about they have choices whether they will go back to four-inch or six-inch, you know. The question is, there are issues there in overall in the industry in ramping up. How comfortable do you feel with your own ramp up at this stage? It's clearly early days yet.
I mean, we're early. I think we're pleased with the progress. You know, we'll continue to provide updates on our progress, we still feel good about early ramp at the end of the year and then scaling that production volume through next year. It's aligned to the supply that we see. You know, a key thing for us in this, and maybe just one thing to remind everybody of, is the majority of the volume that we're building is this, and particularly in that facility, is this photonic integrated circuit for pluggables. It's a bit different in two dimensions.
One, it's a full photonic integrated circuit, so the, you know, the die size is a little bit bigger, so that creates a different, as those of you that understand semiconductor manufacturing, you understand the yield dynamics of that. The other side is it's largely one platform. As we look at the, you know, as we look at the business, that probably has a little bit of a different dimension than others, right, and on both sides. So far we feel pretty good about where we are and, you know, as we make progress there, we'll continue to, you know, continue to share that and unpack that for you so you have visibility.
In terms of that capacity, I mean, I think at some of the previous meetings you've talked about that you will have as much as 25x your capacity by 2027 versus what you had in 2025.
Yeah.
This is quite a lot of an additional capacity. Are you gonna consume that all yourself, or are you gonna also be a component business selling this externally?
Today, I mean, today, when we look at the capacity we've talked about, it's all been in line with selling our own pluggables and given the demand we see right now, you know, we're largely consuming that demand within, you know, within forecast. You know, that's not to say we won't do something different in the future, but right now that's what we're focused on, and obviously delivering, you know, delivering for our customers.
I just want to now touch base on margins in this AI cloud/IP networks.
Yeah
optical networks. Optical networks as a standalone business, has been indicated to be double-digit margin post synergies, by Nokia by 2028, et cetera, really. The scale of the revenue growth is much faster than what was expected when you gave that guidance. Does this change the guidance, firstly? Secondly, where are you on those synergies because that is also critical in terms of you achieving that double-digit margin.
Yeah, I think first of all, in terms of, you know, guidance or assumptions that we outline, you know, we set a set of those assumptions out for CMD through 2028.
Fundamentally, those will hold. Those were at the NI level, and we provided some visibility to IP and optical growth underneath that. That, you know, those continue to hold. Obviously, you know, as we talked about, we're not gonna update those every quarter. You know, we'll give you visibility, you know, into what we see going into next year and provide an update and, you know, on it from that perspective, and we gave you an update obviously on what we see this year versus expectations. In terms of the synergies, I think very clearly, if you go back to the case that I inherited on the acquisition, it was largely a consolidation case. If you think about it was, you know, there were sort of three elements to the case.
One was consolidate two players to become, you know, a number one, number two player, you know, certainly in the Western market, but one of three big players globally. The other part was get increased exposure to the U.S. market, both in AI and cloud, but also in telco, 'cause Nokia was relatively less exposed. Infinera was more heavily exposed to those two segments. Third was then largely around synergies, and it was EUR 200 million, you know, EUR 200 million in three years. Focused about 2/3 on OpEx and a third on cost of goods sold.
As I came in and we started to see the opportunity and scale-across and what, you know, the relevance of what we were doing in pluggables, I talked to customers, obviously part of the decision we made around the leadership and the pivot we made was we basically made a complete flip on the integration plan. We said we're gonna go 2/3 COGS because we see higher revenue than we expected, which led to obviously the updated guidance we shared first at CMD then we've updated for this year in Q1. Second thing we said was we're gonna still hold to getting the G&A synergies, which is really where 1/3 of the OpEx comes out. More broadly across the company, as we've talked about, we need to continue to become a leaner, more agile company.
This was one of the places where we need to make sure we capture the synergies. It's something that as a company we haven't done consistently in the past on acquisitions. The discipline that we have right now is maximizing those two. What we decided was not to sacrifice R&D. Instead of cutting R&D, we basically merged the R&D teams together. The first thing we did was, first decision we made was to move some of the Nokia engineers to go work on getting the 800 Gb pluggable out. Feels like that was a pretty good decision in terms of synergies. We were able to be, you know, get much more competitive and catch up in that market where we were quite, you know, quite far behind.
Second decision we made was to keep the two DSP teams, and that's why you see us building four DSPs. Typically, the two companies would each have released two DSPs that were largely the same. Now we're able to deliver four DSPs in the same period, so that's the shift. That, you know, that's really the net-net of what we did from an integration plan to capitalize on the opportunity. The last thing that happened, I'll just touch on this, is David alluded to this in CMD, is we, you know, we basically said we're 9-12 months earlier in terms of realizing the synergies. We've accelerated our commitment against the synergies.
Obviously we're, you know, we're in a position where we're delivering far greater growth than we anticipated, as you touched on earlier, Sandeep.
As a tech analyst, we learn that, you know, when companies scale up like this in revenues.
Yep
I mean, the gross margin doesn't necessarily, because you're outsourcing a lot of the manufacturing, the gross margin doesn't change much. If you're gonna do 42%, 43% gross margin, that might be 45%, it's not gonna become 50% or 60% gross margin, as such. Because of the gearing in the OpEx, the operating margin.
Yeah
goes up a lot. I mean, when you see your guidance at the moment to 2028 is 13%-17%, which is better than where you are today, no doubt, or rather in 2025. It doesn't show any dramatic gearing. Is it that you're gonna spend a lot more OpEx in the next few years? Because you seem to seeing orders and, you know, which will eventually translate into sales, we should see Nokia seeing much better operating margin in the NI business.
Yeah. Again, a few things on this. First of all, I'm gonna go back to CMD where we provided the multi-year guidance, right? Are the set of assumptions for the multi-year against the operating profit guidance. First of all, there, we had a set of assumptions on growth and performance. We had already assumed that we were investing the R&D, you know, the making the R&D investment on optical, and also reallocating capital to invest in IP networks at the time. If you think about that, you know, this is important because it's across NI. If you think about that, you know, that was the assumption then. Since then we've talked about we're incrementally investing, and that's largely around scaling manufacturing, scaling capabilities in that in optical. We're continuing, obviously, to maintain the investment in IP.
Also we haven't, you know, we're also going through all of the, you know, the investment or the efficiencies investment we're making to drive cost out of the company at a corporate level for G&A and driving productivity. We're also, you know, the other thing we talked about a little bit is we, you know, we also made the decision around the integration of our joint venture in China to then, you know, go ahead and capture synergies on that. We have quite a few things, you know, kind of on the move that touch the business. Therefore, you don't see, you know, this big swing in terms of the operating profit drop for this year. What we haven't done is come back and said anything about future years right now.
To be honest, you know, my focus, you know, first quarter into the year is not to update three-year assumptions because I'm not gonna do that every year. I do think this is a year where we've got a lot of work to do to position the company for longer term, you know, for longer term operating leverage and structural growth. It's not just within the business, it's also across the business, across the company, as we drive the efficiencies, drive simplification of systems, modernization of systems, complete systems integrations that, you know, in some cases go back to the Alcatel-Lucent acquisition so that we can build a much cleaner, simpler company.
Of course, in parallel to all of that, execute, you know, the exit and the transition of the portfolio businesses that we outlined at CMD, of which we've, you know, we've announced now that we've got a transaction for one of those with the FWA business and Inseego.
If there are any questions on NI, maybe we can take a couple of questions before I go to mobile infrastructure.
I just had a couple of questions. The AI boom is ramping.
Sorry.
Sorry. Just had a couple of questions. The first is now that the AI boom is ramping up, how do you see the economics of the industry in terms of the split in profits between infrastructure providers such as yourself and data centers? Is there a risk of commoditization of the infrastructure players? The second question is on indium phosphide. You mentioned a boom in indium, a boom in indium phosphide demand. Do you see a bottleneck in indium phosphide demand? You think independent foundries could help you offload some of that demand? Or you're just gonna try to do everything yourself and is it gonna be another bottleneck like memory where everything just goes crazy?
Okay. I think, those are two questions. Two questions. No problem. First of all, on the first one, you know, look, I think there's always a place for innovative infrastructure companies to make, you know, to capture value. I think what you have to be really disciplined on is where's our differentiation and value capture, and that's my focus right now. You know, we've got multiple vectors of that across the board. You know, my message, which has been clear across the company, is we need to focus our R&D capital where we can differentiate, where we think we can differentiate for the long term. Where we're not differentiated, we need to, you know, we need to transition and partner.
In this space, you know, I think we've got multiple vectors for differentiation, and how that, you know, we'll let that play out over time, but, you know, we'll continue to stay focused there. On indium phosphide manufacturing, look, it's not that easy to say I mean, two things. One, it's not that easy for someone to just ramp up an indium phosphide fab. I think that's number one. If you at a component level, the reality is I think you've got a few scale players in the U.S. You have some manufacturing in China. You don't have much else.
I think the reality is the problem ahead of scaling, you know, scaling supply is also one of maturing the manufacturing process, because we're going from tens of thousands of units to hundreds of thousands to millions to potentially tens of millions in a period that's incredibly accelerated. I think the key thing for all of us is to figure it out and, you know, as an industry to figure it out, right, and solve that problem. I don't think there's other people that will solve it better. Are there lessons we can learn from other parts of the industry? Of course. Are we working on learning those lessons? Absolutely. I'm sure that my peers that manufacture indium phosphide would tell you the same thing.
The second part of that though is in any situation like this in semi, and you guys know this 'cause it's long cycle investment, you know, for, you know, for short cycle demand. When you have this kind of demand spike, you're gonna have constraints, right? That's just the economic reality of the dynamic. It's not solvable. Even if we're scaled as an industry and we have spikes, we're probably gonna see this problem. I think that's the, you know, that's the reality of where we are. Our focus right now is how do we de-risk that ramp as much as possible? How do we scale and mature it and ensure we can deliver on the, you know, on the inherent demand in the market? 'Cause that's what's most important. Thanks.
Yeah. Question on the competitive environment, both in optical and data center switching, right? How do you look at that, and what gives Nokia right to win?
Yeah. First of all, in optical, I think we have a few, you know, a few different elements. One, if you look at the business, we've got a broad business across systems, components, you know, software. The fact that we've got the DSP capability that we have, the engineering resources we have, we're able to build far more tailored products. At the scale that we're talking about, literally, you know, we think of every application inside of a customer as a product. Which by the way, is exactly how the customers think about it. If those of you that understand what's happened in storage or compute in the past in AI and cloud, you know that the hyperscalers look at it that way as well.
I think that's one advantage we have, and the other, I believe, is the vertical integration, particularly as we ramp in pluggables, is a competitive advantage for us. It simplifies the design, and for us, it gives us the ability to optimize between the DSP and the photonic integrated circuit. On an IP switching side, you know, a couple things there. One, we make our own silicon on routing. That's obviously a core part of the scale-across story is routing. We believe that's an important advantage for us. But also we've got, you know, we think we've got a very competitive and robust system design and software stack, and that's the feedback we get from customers, and the ability to tailor that to specific applications.
Thank you, Justin. I just want to go on to mobile infrastructure.
Oh, we're gonna talk about mobile.
Yes, we need to talk a little bit about mobile. So on mobile infrastructure, you've talked about this new strategy where you're gonna go to standard product from an ASIC-based solution. Clearly that could be considerably margin accretive to Nokia going forward, given the cost of developing ASICs there. My question there would be, can Nokia remain competitive in the mobile market? If I remember when Nokia transitioned to 5G, the issue was you did not have a ASIC solution in time, and that made you lose share to Ericsson and Huawei at some customers. How do you see this competitive environment playing out in a standard product world, a standard chip world, as such?
Yeah. I think first of all, just for everybody's recollection, Sandeep, I obviously wasn't there at the time.
Yeah.
You know, my understanding of it is if you go back to the story of what happened at that point, this was the company had a misexecution with a third-party partner, right, which was Intel at the time.
Yes
on the ASIC. It fell back to FPGA, which wasn't competitive. Intel wasn't building a general purpose product at the time. They were building an ASIC.
ASIC.
This had to do with a fab transition. It didn't have to do with the product. Obviously, you know, I feel pretty good about our partner's ability to execute on their silicon timelines. I'm not worried about risk there. They're excellent at this. Also, we're not on the leading edge, you know, compute platform. If you think about our first product is gonna be, you know, kind of at the tail end of what they're building.
in terms of their silicon timeline. That's more favorable. The other fundamental piece, if you look down the road, is the cost of building an ASIC is going up, you have to amortize that cost against your volume. You have two penalties you gotta consider. One is the capital involved, deploying the capital involved with building that unique ASIC, then the amortization of all of the mask cost and everything else against the volume that you're gonna see. The reality when you look at radio, and baseband is we're just not gonna see that. I mean, there's already a movement underway. There was a movement underway with x86 around general purpose silicon.
When we look at what's gonna happen into the next generation with leading-edge silicon, we can get so much more. We can get equivalent performance and so much more upside by building on general purpose. That's before we even start talking about the capabilities we'll see on AI. Probably later this year, as we go into trial with customers, you'll see us come out and talk about some of the performance specs and metrics, but we think it's extremely competitive. The shift for us, much like you saw the shift for us in core, is to become much more of a software business on the baseband side, and that's really where we spend most of our investment anyway and where we deliver most of the value for customers.
The other side of that, which I think is really important, is we also need to change the arc of the industry's capital deployment. What I mean by that is we, you know, today the way that we invest in this infrastructure is we basically require a customer to build a completely new radio network every time they make any kind of generational shift, and I think that's something that has to change in this industry. I think if you look at, you know, one company here that's, you know, that's, you know, quite visible on this, albeit not with us, is AT&T, who's committed to Open RAN and been a leader in this. I think to their credit, I think that's the right strategy because we need interoperability at the radio.
I mean, it's almost like the analogy I'll give you know, is it's almost like if you came into a data center and said, "I'm gonna put, you know, more power into this data center. Oh, by the way, you gotta upgrade all your electrical subsystems and transformers." I mean, that's the logic of what we're doing right now. We're taking something that, you know, you should be able to upgrade at a compute, you know, on a compute cycle on the baseband 'cause it's a computer, and we're saying you need to upgrade that like it's industrial hardware, which sits up on an antenna, which is the radio. Unless there's some compelling reason to replace the radio, generational transition, new spectrum, massive reduction in power efficiency, which there is, I mean, generation to generation, there's power benefits.
Unless you're getting some massive benefit, forcing the upgrade of the entire system seems very complex. I think this is something the industry needs to change because our customers ultimately aren't returning their cost of capital. You know, I think this is where we need to pivot strategically as an industry. I think we're leading this pivot. I think what we're gonna be able to deliver, based on the early, you know, the early validation and tests we've been doing over the last couple of years with NVIDIA on AI RAN is powerful. I think it positions us to be much more software-centric as I've, as I've outlined.
Candidly, I think this is an industry we, you know, we also need to ensure is healthy because from everything I see, I don't see mobile, you know, networks going away. In fact, I see them being far more critical in an era where you've got physical AI, you've got dynamic connectivity, and the reliability and the security and the importance that these networks play in economic and national security for countries is only gonna increase.
Just quickly, we've got a minute left on the potential for Nokia to gain share in Europe, because, you know, there's quite a lot of Huawei in the network still, and European Union is thinking of removing Huawei. Is this a potential in the next couple of years, or you think this is still further out?
You know, look, I think for me, my focus right now is on planning for the market we're in. If there's a, you know, accelerated demand increase in Europe because, you know, Europe decides that sovereignty extends to their radio networks and that national security on a radio network is very important, I think we'll be well positioned to win a share of it. It's not something in our base plan.
Understood. Then finally, clearly, I mean, you know, gaining share overall, I mean, not just Huawei, but in the U.S., for instance, where Nokia used to be a much bigger player in the mobile network market. Is this somewhere high on your list, or is this not very high on your list at this point, really?
Look, all three major operators in the U.S. are very important customers of Nokia's. You know, the two of them are not radio, major radio network customers, but, they're very important customers to us. They're important partners. Obviously, we wanna grow our market share with them across all parts of our business. That's, you know, from, you know, as the CEO of Nokia, that's my focus. You know, my focus, they're some of the biggest customers in the world. They're very strategic. They're leading in, you know, different ways. They're innovating, they're leading, and we wanna continue to be a great partner for them and grow our business with them.
Thank you so much, Justin.
All right. Thanks, Sandeep. Thank you.