Nokia closes China research hub, recalls asking Europe why it uses Huawei

Nokia is closing its radio technology research and development centre in Hangzhou by the end of 2026, resulting in the loss of approximately 1,600 jobs. The company attributes this decision to align its China operations more closely with its global business model, as the Chinese market has been shrinking for years. Nokia Beijing, Chengdu, Qingdao, and Shanghai locations may also be affected by this closure.

The timing of this decision brings back an argument Nokia CEO Justin Hotard made in September 2025 at a press conference in Oulu, Finland. Hotard questioned why European vendors are allowed in European networks when Nokia holds a less than 3% share in China. At that time, Nokia executives claimed European vendors would be pushed out of China due to national security concerns. The Hangzhou closure is the manifestation of this warning.

Nokia's revenue in Greater China has dropped more than 58% since 2018, from nearly €2.2 billion to €913 million in 2025. This decline began in 2020 when Nokia lost out on key radio access network contracts with China Mobile, China Telecom, and China Unicom. Danish analyst John Strand has stated that China is no longer a viable market for vendors like Ericsson and Nokia.

Huawei controls approximately 60% of Germany's 5G sites, and only 13 out of the EU's 27 member states have fully or partially adopted the bloc's 5G security toolbox as of 2025. Brussels now aims to make it mandatory for all member states.

Although the retreat is costly for Nokia, it is bringing positive results in other areas. The company's AI and cloud orders have surged, increasing by 105% year-on-year in the second quarter, reaching €2.8 billion. Nokia's stock has risen by 67% this year as the company bets on AI-RAN to drive its future growth. However, China's early adoption of 5G-Advanced across 330 cities puts Nokia at a disadvantage in developing 6G technology.