Nokia as an investment (Part 4)

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Here is a more detailed description of Nokia’s optical solutions strategies from the investor meeting.

Nokia and LPO (Linear Pluggable Optics)
Nvidia and many hyperscalers (such as Meta) favor LPO solutions because they remove the power-hungry DSP chip from the optical module and shift the workload to the switch ASIC.

  • Nokia’s response: Nokia introduced ICE-D (Intra-Data Center) technology, which is specifically designed to support the LPO architecture.
  • Specifics: Nokia is now able to manufacture monolithic InP chips (laser, modulator, and detector on the same chip) at its own San Jose factory, optimized to operate “linearly,” meaning without an internal DSP in the module. This enables up to 75% lower power consumption per bit.
  1. Nokia and CPO (Co-Packaged Optics)
    CPO is Nvidia’s “ultimate” vision, where optics are brought directly next to the GPU or switch chip in the same package.
  • Nokia’s response: Nokia announced a new class of “Double-sided pluggables” modules. These are designed to serve as an interface with CPO- and LPO-based switches.
  • Specifics: This solves the data center “transition period” problem. Nokia provides the components that allow a CPO-based switch to communicate with the rest of the network using standard interfaces.
  1. “Building Block” Strategy: Flexibility is Nokia’s Advantage
    Nvidia is known for potentially changing its strategy on the fly (such as switching from copper to LPO optics in certain links). Nokia addressed this uncertainty with a new modular development approach:

  • Nokia no longer develops a single closed product per use case. It has developed four new DSP types and several optical front-ends that it can combine.

  • Result: Nokia can deliver the same basic building block as a traditional pluggable module (for long distances), as an LPO version (for short data center links), or as part of a CPO ensemble.

    Summary for the investor:
    Concrete evidence was provided that Nokia is no longer locking itself into just one way of building a network. It is the only Western player that controls the entire chain: its own 3 nm silicon (FP6), its own InP optics (Infinera/ICE-D), and its own manufacturing (San Jose).
    This makes Nokia’s optics “agnostic” – it works regardless of which interface standard (LPO or CPO) Nvidia or Microsoft chooses.

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