Nokia CEO Pekka Lundmark kicked off the company’s Q3 2021 earnings call this morning, talking at great length about the company’s Fixed Network business.
The group has been on a roll, due to so much demand for fiber technologies such as passive optical network (PON).
Its network infrastructure business reported sales of $2.22 billion (€1.9 billion) in Q3, up 6% year-over-year. “Within the network infrastructure group, the Fixed Networks division was really the standout through this quarter with fantastic 29% growth,” said Lundmark, and this was “despite actually quite tough comparables in the third quarter last year.”
He said moving forward, comparables will get more challenging. But the Fixed Networks business is basking in the sunshine right now.
He noted the launch of Nokia’s FP5 routing silicon, which he called “perhaps the most important technology highlight of this quarter.” The FP5 features a 4.8 Tbps network processor, doubling the 2.4 Tbps available on the FP4, and is the first chip in Nokia’s lineup to support 800-gig Ethernet routing interfaces.
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Lundmark said FP5 is not only power efficient and has a lot of capacity, but it's also flexible in terms of programming capabilities to support constantly evolving network needs. And it has advanced security and encryption capabilities that are built-in on the chipset level.
Next, Lundmark touted the company’s GPON and XGS-PON business, which use its Quillion chipset.
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“We are currently number one in GPON Fixed Access,” he said. “And we are a very clear leader in XGS-PON.”
XGS-PON is 10 gigabit symmetrical passive optical network. “We actually have 40% market share outside of China in XGS-PON."
The same Quillion chipset for XGS-PON will be used for its 25 gig (25G) PON. “In this segment, we believe that we are 18 months ahead of competition,” said Lundmark. “We have one live network with Proximus in Belgium and over 20 trials. And the best part of this is that this is really available today if customers want this technology.”
Finally, Lundmark said fixed wireless access is looking like a bright, new opportunity for Nokia. The company already has more than 25 deployments. It's using its “home access box” for fixed wireless, and it’s working on a new approach to make millimeter wave radio viable in fixed wireless access.
“We have a new clever antenna design and algorithms where we provide extremely high gain, 360 degree field of view, and continued optimization of the various propagation paths for the signal,” said Lundmark. “This means that we can establish a good connection even with weak or reflected signals and still allow for consumer indoor self-install, which is of course critical to make the business case work.”
Q3 numbers
Nokia reported Q3 sales of $6.31 billion (€5.4 billion) up 2% from the same quarter in 2020. The company reiterated its full year guidance for net sales of $25.35 billion - $26.51 billion (€21.7 billion – €22.7 billion).
One hitch in Nokia’s business is supply chain shortages of components, related to semiconductors. The company is not quantifying the threat. But Lundmark said, “It is meaningful, and it is actually increasing. It's quite possible that this situation will get worse before it gets better.”