Nokia (NOKIA) J.P. Morgan 54th Annual Global Technology, Media and Communications Conference summary

Product innovation and market outlook

• Announced a differentiated optical portfolio leveraging Infinera integration, with four DSPs and 13 platforms targeting diverse applications, set for market entry in 2027.

• Volume ramp for new optical products expected in the second half of 2027, with early units in the first half.

• Strong demand for 800 Gb optical solutions is driving order momentum, with significant design wins in IP networks anticipated to enter the order book later in the year.

• Capacity expansion in indium phosphide manufacturing underway, with a new six-inch fab ramping up and plans to achieve 25x capacity by 2027, primarily for internal use.

• Vertical integration and tailored product design are seen as key competitive advantages in both optical and IP switching markets.

Financial performance and order trends

• Q1 saw €1 billion in AI and cloud orders, nearly 40% of last year’s total, with continued strong order momentum and visibility into demand for the rest of the year.

• Orders are becoming lumpier due to longer lead times in AI and cloud, while shipments are expected to remain linear.

• Revenue guidance for IP and optical businesses is 18%-20% growth, with supply chain constraints as the main risk, not demand.

• Operating margin guidance for 2028 remains at 13%-17%, with ongoing investments in R&D and manufacturing scale.

• Accelerated realization of synergies from the Infinera acquisition, with a shift in focus to cost of goods sold and earlier synergy capture.

Supply chain and manufacturing

• Industry-wide supply constraints persist, especially in leading-edge nodes, memory, and indium phosphide, but vertical integration is expected to aid scaling.

• The new San Jose fab is progressing as planned, with most capacity dedicated to photonic integrated circuits for pluggables.

• Current capacity expansion is aligned with internal demand forecasts, with no immediate plans to sell components externally.

• The company is focused on de-risking the indium phosphide ramp and maturing manufacturing processes to meet accelerated market demand.