Nokia Hires 350 R&D Experts to Fix 5G Problems

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Nokia has hired 350 employees for research and development in Finland this year as it tries to fix a 5G chip problem that could derail its mobile business, the company confirmed in an email to Light Reading.

Following reports in the Finnish press, the equipment vendor said it had been recruiting mainly for system-on-a-chip development but declined to provide staff numbers for its overall R&D function.

The update comes after Nokia's share price fell 27% last week when the company revealed that its use of certain components in 5G products had squeezed third-quarter profits, with the gross margin at its networks business falling five percentage points compared with the year-earlier period.

CEO Rajeev Suri had hoped the use of field programmable gate arrays (FGPAs) -- chips that can be reconfigured after the design stage -- would provide flexibility and give Nokia a 5G time-to-market advantage over competitors Ericsson and Huawei.

But FGPAs are more expensive than alternative application-specific integrated circuits (ASICs), meaning Nokia's 5G products are less profitable than rival gear. Suri also said Nokia had also been let down by one of its FGPA component suppliers, which one analyst on the earnings call appeared to identify as Intel.

Its problems have forced Nokia to lower its outlook and pause dividends while it pumps extra funding into 5G R&D.

Nokia cut overall R&D expenses by 6% last year, to about