AI in Networks Market
Indosat Ooredoo Hutchison, Nokia and Nvidia AI-RAN research center in Indonesia amongst telco skepticism
Indosat Ooredoo Hutchison (Indosat) Nokia, and Nvidia have officially launched the AI-RAN Research Centre in Surabaya, a strategic collaboration designed to advance AI-native wireless networks and edge AI applications across Indonesia. This collaboration, aims to support Indonesia’s digital transformation goals and its “Golden Indonesia Vision 2045.” The facility will allow researchers and engineers to experiment with combining Nokia’s RAN technologies with Nvidia’s accelerated computing platforms and Indosat’s 5G network.
According to the partners, the research facility will serve as a collaborative environment for engineers, researchers, and future digital leaders to experiment, learn, and co-create AI-powered solutions. Its work will centre on integrating Nokia’s advanced RAN technologies with Nvidia’s accelerated computing platforms and Indosat’s commercial 5G network. The three companies view the project as a foundation for AI-driven growth, with applications spanning education, agriculture, and healthcare.
The AI-RAN infrastructure enables high-performance software-defined RAN and AI workloads on a single platform, leveraging Nvidia’s Aerial RAN Computer 1 (ARC-1). The facility will also act as a distributed computing extension of Indosat’s sovereign AI Factory, a national AI platform powered by Nvidia, creating an “AI Grid” that connects datacentres and distributed 5G nodes to deliver intelligence closer to users.
Nezar Patria, vice minister of communication and digital affairs of the Republic of Indonesia said: “The inauguration of the AI-RAN Research Centre marks a concrete step in strengthening Indonesia’s digital sovereignty. The collaboration between the government, industry, and global partners such as Indosat, Nokia, and Nvidia demonstrates that Indonesia is not merely a user but also a creator of AI technology. This initiative supports the acceleration of the Indonesia Emas 2045 vision by building an inclusive, secure, and globally competitive AI ecosystem.”
Vikram Sinha, president director and CEO of Indosat Ooredoo Hutchison said: “As Indonesia accelerates its digital transformation, the AI-RAN Research Centre reflects Indosat’s larger purpose of empowering Indonesia. When connectivity meets compute, it creates intelligence, delivered at the edge, in a sovereign manner. This is how AI unlocks real impact, from personalised tutors for children in rural areas to precision farming powered by drones. Together with Nokia and Nvidia, we’re building the foundation for AI-driven growth that strengthens Indonesia’s digital future.”
From a network perspective, the project demonstrates how AI-RAN architectures can optimize wireless network performance, energy efficiency, and scalability through machine learning–based radio signal processing.
Ronnie Vasishta, senior vice president of telecom at Nvidia added: “The AI Grid is the biggest opportunity for telecom providers to make AI as ubiquitous as connectivity and distribute intelligence at scale by tapping into their nationwide wireless networks.”
Pallavi Mahajan, chief technology and AI officer at Nokia said: “This initiative represents a major milestone in our journey toward the future of AI-native networks by bringing AI-powered intelligence into the hands of every Indonesian.”
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Wireless Telcos are Skeptical about AI-RAN:
According to Light Reading, the AI RAN uptake is facing resistance from telcos. The problem is Nvidia’s AI GPUs are very costly and not GPUs power-efficient enough to reside in wireless base stations, central offices or even small telco data centers.
Nvidia references 300 watts for the power consumption of ARC-Pro, which is much higher than the peak of 40 watts that Qualcomm claimed more than two years ago for its own RAN silicon when supporting throughput of 24 Gbit/s. How ARC-Pro would measure up on a like-for-like basis in a commercial network is obviously unclear.
Nvidia also claims a Gbit/s-per-watt performance “on par with” today’s traditional custom silicon. Yet the huge energy consumption of GPU-filled telco data centers does not bear that out.
“Is there a case for a wide-area indiscriminate rollout? I am not sure,” said Verizon CTO Yago Tenorio, during the Brooklyn 6G Summit, another telecom event, last week. “It depends on the unit cost of the GPU, on the power efficiency of the GPU, and the main factor will always be just doing what’s best for the basestation. Don’t try to just overcomplicate the whole thing monetizing that platform, as there are easier ways to do it.”
“We have no way to justify a business case like that,” said Bernard Bureau, the vice president of wireless strategy for Canada’s Telus, at FYUZ. “Our COs [central offices] are not necessarily the best places to run a data center. It would mean huge investments in space and power upgrades for those locations, and we’ve got sunk investment that can be leveraged in our cell sites.”
Light Reading’s Iain Morris wrote, “Besides turning COs into data centers, operators would need to invest in fiber connections between those facilities and their masts.”
How much spectral efficiency can be gained by using Nvidia GPUs as RAN silicon?
“It’s debatable if it’s going to improve the spectral efficiency by 50% or even 100%. It depends on the case,” said Tenorio. Whatever the exact improvement, it would be “really good” and is something the industry needs, he told the audience.
In April, Nokia’s rival Ericsson said it had tested “AI-native” link adaptation, a RAN algorithm, in the network of Bell Canada without needing any GPU. “That’s an algorithm we have optimized for decades,” said Per Narvinger, the head of Ericsson’s mobile networks business group. “Despite that, through a large language model, but a really small one, we gained 10% of spectral efficiency.”
Before Nvidia invested in Nokia, the latter claimed to have sufficient AI and machine-learning capabilities in the custom silicon provided by Marvell Technology, its historical supplier of 5G base station chips.
Executives at Cohere Technology praises Nvidia’s investment in Nokia, seeing it as an important AI spur for telecom. Yet their own software does not run on Nvidia GPUs. It promises to boost spectral efficiency on today’s 5G networks, massively reducing what telcos would have to spend on new radios. It has won plaudits from Vodafone’s Pignatelli as well as Bell Canada and Telstra, both of which have invested in Cohere. The challenge is getting the kit vendors to accommodate a technology that could hurt their own sales. Regardless, Bell Canada’s recent field trials of Cohere have used a standard Dell server without GPUs.
Finally, if GPUs are so critical in AI for RAN, why has neither Ericsson or Samsung using Nvidia GPU’s in their RAN equipment?
Morris sums up:
“Currently, the AI-RAN strategy adopted by Nokia looks like a massive gamble on the future. “The world is developing on Nvidia,” Vasishta told Light Reading in the summer, before the company’s share price had gained another 35%. That vast and expanding ecosystem holds attractions for RAN developers bothered by the diminishing returns on investment in custom silicon.”
“Intel’s general-purpose chips and virtual RAN approach drew interest several years ago for all the same reasons. But Intel’s recent decline has made Nvidia shine even more brightly. Telcos might not have to worry. Nvidia is already paying a big 5G vendor (Nokia) to use its technology. For a company that is so outrageously wealthy, paying a big operator to deploy it would be the next logical step.
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References:
https://capacityglobal.com/news/indosat-nokia-and-nvidia-launch-ai-ran-research-centre-in-indonesia/
https://www.telecoms.com/ai/indosat-nokia-and-nvidia-open-ai-ran-research-centre-in-indonesia
https://www.lightreading.com/5g/nokia-and-nvidia-s-ai-ran-plan-hits-telco-resistance
https://resources.nvidia.com/en-us-aerial-ran-computer-pro
Nvidia pays $1 billion for a stake in Nokia to collaborate on AI networking solutions
Dell’Oro: AI RAN to account for 1/3 of RAN market by 2029; AI RAN Alliance membership increases but few telcos have joined
Nvidia AI-RAN survey results; AI inferencing as a reinvention of edge computing?
Dell’Oro: RAN revenue growth in 1Q2025; AI RAN is a conundrum
The case for and against AI-RAN technology using Nvidia or AMD GPUs
AI RAN Alliance selects Alex Choi as Chairman
IDC Report: Telecom Operators Turn to AI to Boost EBITDA Margins
Worldwide spending on telecommunication and pay TV services will reach $1,532 billion in 2025, representing an increase of +1.7% year-on-year, according to the International Data Corporation (IDC) Worldwide Semiannual Telecom Services Tracker. The latest forecast is slightly more optimistic compared to the forecast published earlier this year, as it assumes a 0.1 percentage point higher growth of the total market value.
“The regional dynamics remain mixed, with inflationary effects, competition, and Average Revenue per User (ARPU) trends playing a central role in shaping market trajectories,” said Kresimir Alic, research director, Worldwide Telecom Services at IDC.
Global telecom operators are strategically adopting AI to drive significant business improvements across several key areas. The integration of AI technology is enhancing network operations, refining customer service interactions, and strengthening fraud prevention mechanisms which are reduce losses, reinforcing customer trust and regulatory compliance. With AI accelerating time-to-market for new services, telecoms can better monetize emerging technologies like 5G and edge computing.
“In the longer term, as AI continues to evolve, it will be increasingly recognized not as a mere technological enhancement, but as a strategic enabler poised to drive sustainable growth for telecommunications operators,” according to the report. This strategic adoption is accelerating time-to-market for new services, enabling better monetization of technologies like 5G and edge computing (which requires a 5G SA core network). It represents cautious optimism for a global connectivity services market that has been stagnant for many years.
- Network Planning and Operations: AI is heavily used to optimize network performance and manage the complexity of modern networks, including 5G and future 6G technologies. This involves:
- Predictive Maintenance: Anticipating hardware failures and network issues to ensure uninterrupted service and reduce downtime.
- Automation and Orchestration: Automating complex tasks and managing physical, virtual, and containerized network functions.
- Energy Efficiency: Making intelligent choices about radio access network (RAN) energy consumption and resource allocation to increase efficiency.
- Customer Experience (CX) and Service: Enhancing customer engagement and service is a top priority. This is achieved through:
- Personalized Services: Analyzing customer behavior and preferences to offer tailored products and marketing campaigns.
- Intelligent Virtual Assistants/Chatbots: Automating customer interactions and improving self-service capabilities.
- Churn Reduction: Using AI to predict customer churn and implement retention strategies.
- Business Efficiency and Productivity: Operators are focused on driving agility and productivity across the organization. This includes:
- Employee Productivity: Streamlining workflows and automating tasks using generative AI (GenAI) and agentic AI.
- Cost Reduction: Driving efficiency in operations to lower overall costs.
- Fraud Prevention: Deploying AI-enhanced systems to detect and mitigate fraud, protecting revenue streams and customer trust.
- New Revenue Opportunities: AI is seen as a cornerstone for developing new services, such as AI-as-a-Service, and monetizing existing network assets like 5G capabilities.
| Global Regional Services Revenue and Year-on-Year Growth (revenues in $B) | |||
| Global Region | 2024 Revenue | 2025 Revenue | 25/24
Growth |
| Americas | $568 | $574 | 1.0% |
| Asia/Pacific | $476 | $481 | 1.0% |
| EMEA | $462 | $477 | 3.2% |
| Grand Total | $1,507 | $1,532 | 1.7% |
| Source: IDC Worldwide Semiannual Services Tracker – 1H 2025 | |||
Mobile continues to dominate, driven by rising data consumption and the expansion of M2M applications, which are offsetting declines in traditional voice and messaging revenues.
Fixed data services are also expected to grow steadily, fueled by increasing demand for high-bandwidth connectivity.
In summary, IDC forecasts that the global connectivity services market is projected to grow at a compound annual rate of 1.5% over the next five years, maintaining a cautiously optimistic outlook. As highlighted by recent IMF forecasts, the overall market environment is expected to be less stimulating than in previous years, shaped by rising protectionism and persistent economic uncertainty in key regions. While declining inflation may ease cost pressures, it is also likely to reduce the inflation-driven boost to telecom service spending seen in recent cycles. Political instability in areas such as Eastern Europe and the Middle East adds further complexity to the growth landscape. Most notably, saturation in mature telecom markets continues to be the primary constraint on expansion, limiting upside potential in traditional service segments.
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About IDC Trackers:
IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC’s Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly excel deliverables and on-line query tools.
For more information about IDC’s Worldwide Semiannual Telecom Services Tracker, please contact Kathy Nagamine at 650-350-6423 or [email protected].
About IDC:
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,000 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 100 countries. IDC’s analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is the world’s leading media, data and marketing services company that activates and engages the most influential technology buyers. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn.
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References:
https://my.idc.com/getdoc.jsp?containerId=prUS53913925&
https://my.idc.com/getdoc.jsp?containerId=prEUR253369525
https://my.idc.com/getdoc.jsp?containerId=US53765725
Market research firms Omdia and Dell’Oro: impact of 6G and AI investments on telcos
Nokia and Rohde & Schwarz collaborate on AI-powered 6G receiver years before IMT 2030 RIT submissions to ITU-R WP5D
Nokia and the test and measurement firm Rohde & Schwarz have created and successfully tested a “6G” radio receiver that uses AI technologies to overcome one of the biggest anticipated challenges of 6G network rollouts, coverage limitations inherent in 6G’s higher-frequency spectrum.
–>This is truly astonishing as ITU-R WP5D doesn’t even plan to evaluate 6G RIT/SRITs till February 2027 when the first submissions are invited to be presented.
Nokia Bell Labs developed the receiver and validated it using 6G test equipment and methodologies from Rohde & Schwarz. The two companies will unveil a proof-of-concept receiver at the Brooklyn 6G Summit on November 6, 2025. Nokia says, “the machine learning capabilities in the receiver greatly boost uplink distance, enhancing coverage for future 6G networks. This will help operators roll out 6G over their existing 5G footprints, reducing deployment costs and accelerating time to market.”
Image Credit: Rohde & Schwarz
Nokia Bell Labs and Rohde & Schwarz have tested this new AI receiver under real world conditions, achieving uplink distance improvements over today’s receiver technologies ranging from 10% to 25%. The testbed comprises an R&S SMW200A vector signal generator, used for uplink signal generation and channel emulation. On the receive side, the newly launched FSWX signal and spectrum analyzer from Rohde & Schwarz is employed to perform the AI inference for Nokia’s AI receiver. In addition to enhancing coverage, the AI technology also demonstrates improved throughput and power efficiency, multiplying the benefits it will provide in the 6G era.
“One of the key issues facing future 6G deployments is the coverage limitations inherent in 6G’s higher-frequency spectrum. Typically, we would need to build denser networks with more cell sites to overcome this problem. By boosting the coverage of 6G receivers, however, AI technology will help us build 6G infrastructure over current 5G footprints,” said Peter Vetter, President, Core Research, Bell Labs, Nokia.
“Rohde & Schwarz is excited to collaborate with Nokia in pioneering AI-driven 6G receiver technology. Leveraging more than 90 years of experience in test and measurement, we’re uniquely positioned to support the development of next-generation wireless, allowing us to evaluate and refine AI algorithms at this crucial pre-standardization stage. This partnership builds on our long history of innovation and demonstrates our commitment to shaping the future of 6G,” said Michael Fischlein, VP, Spectrum & Network Analyzers, EMC and Antenna Test, Rohde & Schwarz.
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Last month, Nokia teamed up with rival kit vendor Ericsson to work on video coding standardization in preparation for 6G. The project, which also involved Berlin’s Fraunhofer Heinrich Hertz Institute (HHI), demonstrated a new video codec which they claim has higher compression efficiency than the current standards (H.264/AVC, H.265/HEVC, and H.266/VVC) without significantly increasing complexity, and its wider aim is to strengthen Europe’s role in next generation standardization, we were told at the time.
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About Nokia:
At Nokia, we create technology that helps the world act together.
As a B2B technology innovation leader, we are pioneering networks that sense, think and act by leveraging our work across mobile, fixed and cloud networks. In addition, we create value with intellectual property and long-term research, led by the award-winning Nokia Bell Labs, which is celebrating 100 years of innovation.
With truly open architectures that seamlessly integrate into any ecosystem, our high-performance networks create new opportunities for monetization and scale. Service providers, enterprises and partners worldwide trust Nokia to deliver secure, reliable and sustainable networks today – and work with us to create the digital services and applications of the future
About Rohde & Schwarz:
Rohde & Schwarz is striving for a safer and connected world with its Test & Measurement, Technology Systems and Networks & Cybersecurity Divisions. For over 90 years, the global technology group has pushed technical boundaries with developments in cutting-edge technologies. The company’s leading-edge products and solutions empower industrial, regulatory and government customers to attain technological and digital sovereignty. The privately owned, Munich-based company can act independently, long-term and sustainably. Rohde & Schwarz generated a net revenue of EUR 3.16 billion in the 2024/2025 fiscal year (July to June). On June 30, 2025, Rohde & Schwarz had more than 15,000 employees worldwide.
References:
ITU-R WP5D IMT 2030 Submission & Evaluation Guidelines vs 6G specs in 3GPP Release 20 & 21
ITU-R WP 5D reports on: IMT-2030 (“6G”) Minimum Technology Performance Requirements; Evaluation Criteria & Methodology
Market research firms Omdia and Dell’Oro: impact of 6G and AI investments on telcos
Nvidia pays $1 billion for a stake in Nokia to collaborate on AI networking solutions
Highlights of Nokia’s Smart Factory in Oulu, Finland for 5G and 6G innovation
Verizon’s 6G Innovation Forum joins a crowded list of 6G efforts that may conflict with 3GPP and ITU-R IMT-2030 work
Qualcomm CEO: expect “pre-commercial” 6G devices by 2028
NGMN: 6G Key Messages from a network operator point of view
Market research firms Omdia and Dell’Oro: impact of 6G and AI investments on telcos
Market research firm Omdia (owned by Informa) this week forecast that 6G and AI investments are set to drive industry growth in the global communications market. As a result, global communications providers’ revenue is expected to reach $5.6 trillion by 2030, growing at a 6.2% CAGR from 2025. Investment momentum is also expected to shift toward mobile networks from 2028 onward, as tier 1 markets prepare for 6G deployments. Telecoms capex is forecast to reach $395 billion by 2030, with a 3.6% CAGR, while technology capex will surge to $545 billion, reflecting a 9.3% CAGR.
Fixed telecom capex will gradually decline due to market saturation. Meanwhile, AI infrastructure, cloud services, and digital sovereignty policies are driving telecom operators to expand data centers and invest in specialized hardware.
Key market trends:
- CP capex per person will increase from $74 in 2024 to $116 in 2030, with CP capex reaching 2.5% of global GDP investment.
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Capital intensity in telecom will decline until 2027, then rise due to mobile network upgrades.
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Regional leaders in revenue and capex include North America, Oceania & Eastern Asia, and Western Europe, with Central & Southern Asia showing the highest growth potential.
Dario Talmesio, research director at Omdia said, “telecom operators are entering a new phase of strategic investment. With 6G on the horizon and AI infrastructure demands accelerating, the connectivity business is shifting from volume-based pricing to value-driven connectivity.”
Omdia’s forecast is based on a comprehensive model incorporating historical data from 67 countries, local market dynamics, regulatory trends, and technology migration patterns.
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Separately, Dell’Oro Group sees 6G capex ramping around 2030, although it warns that the RAN market remains flat, “raising key questions for the industry’s future.” Cumulative 6G RAN investments over the 2029-2034 period are projected to account for 55% to 60% of the total RAN capex over the same forecast period.
“Our long-term position and characterization of this market have not changed,” said Stefan Pongratz, Vice President of RAN and Telecom Capex research at Dell’Oro Group. “The RAN network plays a pivotal role in the broader telecom market. There are opportunities to expand the RAN beyond the traditional MBB (mobile broadband) use cases. At the same time, there are serious near-term risks tilted to the downside, particularly when considering the slowdown in data traffic,” continued Pongratz.
Additional highlights from Dell’Oro’s October 2025 6G Advanced Research Report:
- The baseline scenario is for the broader RAN market to stay flat over the next 10 years. This is built on the assumption that the mobile network will run into utilization challenges by the end of the decade, spurring a 6G capex ramp dominated by Massive MIMO systems in the Sub-7GHz/cm Wave spectrum, utilizing the existing macro grid as much as possible.
- The report also outlines more optimistic and pessimistic growth scenarios, depending largely on the mobile data traffic growth trajectory and the impact beyond MBB, including private wireless and FWA (fixed wireless access).
- Cumulative 6G RAN investments over the 2029-2034 period are projected to account for 55 to 60 percent of the total RAN capex over the same forecast period.
Dell’Oro Group’s 6G Advanced Research Report offers an overview of the RAN market by technology, with tables covering manufacturers’ revenue for total RAN over the next 10 years. 6G RAN is analyzed by spectrum (Sub-7 GHz, cmWave, mmWave), by Massive MIMO, and by region (North America, Europe, Middle East and Africa, China, Asia Pacific Excl. China, and CALA). To purchase this report, please contact by email at [email protected].
References:
https://www.lightreading.com/6g/6g-momentum-is-building
6G Capex Ramp to Start Around 2030, According to Dell’Oro Group
https://www.lightreading.com/6g/6g-course-correction-vendors-hear-mno-pleas
https://www.lightreading.com/6g/what-at-t-really-wants-from-6g
Nvidia pays $1 billion for a stake in Nokia to collaborate on AI networking solutions
This is not only astonishing but unheard of: the world’s largest and most popular fabless semiconductor company –Nvidia– taking a $1 billion stake in a telco/reinvented data center connectivity company-Nokia.
Indeed, GPU king Nvidia will pay $1 billion for a stake of 2.9% in Nokia as part of a deal focused on AI and data centers, the Finnish telecom equipment maker said on Tuesday as its shares hit their highest level in nearly a decade on hope for AI to lift their business revenue and profits. The nonexclusive partnership and the investment will make Nvidia the second-largest shareholder in Nokia. Nokia said it will issue 166,389,351 new shares for Nvidia, which the U.S. company will subscribe to at $6.01 per share.
Nokia said the companies will collaborate on artificial intelligence networking solutions and explore opportunities to include its data center communications products in Nvidia’s future AI infrastructure plans. Nokia and its Swedish rival Ericsson both make networking equipment for connectivity inside (intra-) data centers and between (inter-) data centers and have been benefiting from increased AI use.
Summary:
- NVIDIA and Nokia to establish a strategic partnership to enable accelerated development and deployment of next generation AI native mobile networks and AI networking infrastructure.
- NVIDIA introduces NVIDIA Arc Aerial RAN Computer, a 6G-ready telecommunications computing platform.
- Nokia to expand its global access portfolio with new AI-RAN product based on NVIDIA platform.
- T-Mobile U.S. is working with Nokia and NVIDIA to integrate AI-RAN technologies into its 6G development process.
- Collaboration enables new AI services and improved consumer experiences to support explosive growth in mobile AI traffic.
- Dell Technologies provides PowerEdge servers to power new AI-RAN solution.
- Partnership marks turning point for the industry, paving the way to AI-native 6G by taking AI-RAN to innovation and commercialization at a global scale.
In some respects, this new partnership competes with Nvidia’s own data center connectivity solutions from its Mellanox Technologies division, which it acquired for $6.9 billion in 2019. Meanwhile, Nokia now claims to have worked on a redesign to ensure its RAN software is compatible with Nvidia’s compute unified device architecture (CUDA) platform, meaning it can run on Nvidia’s GPUs. Nvidia has also modified its hardware offer, creating capacity cards that will slot directly into Nokia’s existing AirScale baseband units at mobile sites.
Having dethroned Intel several years ago, Nvidia now has a near-monopoly in supplying GPU chips for data centers and has partnered with companies ranging from OpenAI to Microsoft. AMD is a distant second but is gaining ground in the data center GPU space as is ARM Ltd with its RISC CPU cores. Capital expenditure on data center infrastructure is expected to exceed $1.7 trillion by 2030, consulting firm McKinsey, largely because of the expansion of AI.
Nvidia CEO Jensen Huang said the deal would help make the U.S. the center of the next revolution in 6G. “Thank you for helping the United States bring telecommunication technology back to America,” Huang said in a speech in Washington, addressing Nokia CEO Justin Hotard (x-Intel). “The key thing here is it’s American technology delivering the base capability, which is the accelerated computing stack from Nvidia, now purpose-built for mobile,” Hotard told Reuters in an interview. “Jensen and I have been talking for a little bit and I love the pace at which Nvidia moves,” Hotard said. “It’s a pace that I aspire for us to move at Nokia.” He expects the new equipment to start contributing to revenue from 2027 as it goes into commercial deployment, first with 5G, followed by 6G after 2030.
Nvidia has been on a spending spree in recent weeks. The company in September pledged to invest $5 billion in beleaguered chip maker Intel. The investment pairs the world’s most valuable company, which has been a darling of the AI boom, with a chip maker that has almost completely fallen out of the AI conversation.
Later that month, Nvidia said it planned to invest up to $100 billion in OpenAI over an unspecified period that will likely span at least a few years. The partnership includes plans for an enormous data-center build-out and will allow OpenAI to build and deploy at least 10 gigawatts of Nvidia systems.
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Tech Details:
Nokia uses Marvell Physical Layer (1) baseband chips for many of its products. Among other things, this ensured Nokia had a single software stack for all its virtual and purpose-built RAN products. Pallavi Mahajan, Nokia’s recently joined chief technology and AI officer recently told Light Reading that their software could easily adapt to run on Nvidia’s GPUs: “We built a hardware abstraction layer so that whether you are on Marvell, whether you are on any of the x86 servers or whether you are on GPUs, the abstraction takes away from that complexity, and the software is still the same.”
Fully independent software has been something of a Holy Grail for the entire industry. It would have ramifications for the whole market and its economics. Yet Nokia has conceivably been able to minimize the effort required to put its Layer 1 and specific higher-layer functions on a GPU. “There are going to be pieces of the software that are going to leverage on the accelerated compute,” said Mahajan. “That’s where we will bring in the CUDA integration pieces. But it’s not the entire software,” she added. The appeal of Nvidia as an alternative was largely to be found in “the programmability pieces that you don’t have on any other general merchant silicon,” said Mahajan. “There’s also this entire ecosystem, the CUDA ecosystem, that comes in.” One of Nvidia’s most eye-catching recent moves is the decision to “open source” Aerial, its own CUDA-based RAN software framework, so that other developers can tinker, she says. “What it now enables is the entire ecosystem to go out and contribute.”
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Quotes:
“Telecommunications is a critical national infrastructure — the digital nervous system of our economy and security,” said Jensen Huang, founder and CEO of NVIDIA. “Built on NVIDIA CUDA and AI, AI-RAN will revolutionize telecommunications — a generational platform shift that empowers the United States to regain global leadership in this vital infrastructure technology. Together with Nokia and America’s telecom ecosystem, we’re igniting this revolution, equipping operators to build intelligent, adaptive networks that will define the next generation of global connectivity.”
“The next leap in telecom isn’t just from 5G to 6G — it’s a fundamental redesign of the network to deliver AI-powered connectivity, capable of processing intelligence from the data center all the way to the edge. Our partnership with NVIDIA, and their investment in Nokia, will accelerate AI-RAN innovation to put an AI data center into everyone’s pocket,” said Justin Hotard, President and CEO of Nokia. “We’re proud to drive this industry transformation with NVIDIA, Dell Technologies, and T-Mobile U.S., our first AI-RAN deployments in T-Mobile’s network will ensure America leads in the advanced connectivity that AI needs.”
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Editor’s Notes:
1. In more advanced 5G networks, Physical Layer functions have demanded the support of custom silicon, or “accelerators.” A technique known as “lookaside,” favored by Ericsson and Samsung, uses an accelerator for only a single problematic Layer 1 task – forward error correction – and keeps everything else on the CPU. Nokia prefers the “inline” approach, which puts the whole of Layer 1 on the accelerator.
2. The huge AI-RAN push that Nvidia started with the formation of the AI-RAN Alliance in early 2024 has not met with an enthusiastic telco response so far. Results from Nokia as well as Ericsson show wireless network operators are spending less on 5G rollouts than they were in the early 2020s. Telco numbers indicate the appetite for smartphone and other mobile data services has not produced any sales growth. As companies prioritize efficiency above all else, baseband units that include Marvell and Nvidia cards may seem too expensive.
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Other Opinions and Quotes:
Nvidia chips are likely to be more expensive, said Mads Rosendal, analyst at Danske Bank Credit Research, but the proposed partnership would be mutually beneficial, given Nvidia’s large share in the U.S. data center market.
“This is a strong endorsement of Nokia’s capabilities,” said PP Foresight analyst Paolo Pescatore. “Next-generation networks, such as 6G, will play a significant role in enabling new AI-powered experiences,” he added.
Iain Morris, International Editor, Light Reading: “Layer 1 control software runs on ARM RISC CPU cores in both Marvell and Nvidia technologies. The bigger differences tend to be in the hardware acceleration “kernels,” or central components, which have some unique demands. Yet Nokia has been working to put as much as it possibly can into a bucket of common software. Regardless, if Nvidia is effectively paying for all this with its $1 billion investment, the risks for Nokia may be small………….Nokia’s customers will in future have an AI-RAN choice that limits or even shrinks the floorspace for Marvell. The development also points to more subtle changes in Nokia’s thinking. The message earlier this year was that Nokia did not require a GPU to implement AI for RAN, whereby machine-generated algorithms help to improve network performance and efficiency. Marvell had that covered because it had incorporated AI and machine-learning technologies into the baseband chips used by Nokia.”
“If you start doing inline, you typically get much more locked into the hardware,” said Per Narvinger, the president of Ericsson’s mobile networks business group, on a recent analyst call. During its own trials with Nvidia, Ericsson said it was effectively able to redeploy virtual RAN software written for Intel’s x86 CPUs on the Grace CPU with minimal changes, leaving the GPU only as a possible option for the FEC accelerator. Putting the entire Layer 1 on a GPU would mean “you probably also get more tightly into that specific implementation,” said Narvinger. “Where does it really benefit from having that kind of parallel compute system?”
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Separately, Nokia and Nvidia will partner with T-Mobile U.S. to develop and test AI RAN technologies for developing 6G, Nokia said in its press release. Trials are expected to begin in 2026, focused on field validation of performance and efficiency gains for customers.
References:
https://nvidianews.nvidia.com/news/nvidia-nokia-ai-telecommunications
https://www.reuters.com/world/europe/nvidia-make-1-billion-investment-finlands-nokia-2025-10-28/
https://www.lightreading.com/5g/nvidia-takes-1b-stake-in-nokia-which-promises-5g-and-6g-overhaul
https://www.wsj.com/business/telecom/nvidia-takes-1-billion-stake-in-nokia-69f75bb6
Analysis: Cisco, HPE/Juniper, and Nvidia network equipment for AI data centers
Nvidia’s networking solutions give it an edge over competitive AI chip makers
Telecom sessions at Nvidia’s 2025 AI developers GTC: March 17–21 in San Jose, CA
Nvidia AI-RAN survey results; AI inferencing as a reinvention of edge computing?
FT: Nvidia invested $1bn in AI start-ups in 2024
The case for and against AI-RAN technology using Nvidia or AMD GPUs
Highlights of Nokia’s Smart Factory in Oulu, Finland for 5G and 6G innovation
Nokia & Deutsche Bahn deploy world’s first 1900 MHz 5G radio network meeting FRMCS requirements
Will the wave of AI generated user-to/from-network traffic increase spectacularly as Cisco and Nokia predict?
Indosat Ooredoo Hutchison and Nokia use AI to reduce energy demand and emissions
Verizon partners with Nokia to deploy large private 5G network in the UK
Omdia: How telcos will evolve in the AI era
Dario Talmesio, research director, service provider, strategy and regulation at market research firm Omdia (owned by Informa) sees positive signs for network operators.
“After many years of plumbing, now telecom operators are starting to see some of the benefits of their network and beyond network strategies. Furthermore, the investor community is now appreciating telecom investments, after many years of poor valuation, he said during his analyst keynote presentation at Network X, a conference organized by Light Reading and Informa in Paris, France last week.
“What has changed in the telecoms industry over the past few years is the fact that we are no longer in a market that is in contraction,” he said. Although telcos are generally not seeing double-digit percentage increases in revenue or profit, “it’s a reliable business … a business that is able to provide cash to investors.”
Omdia forecasts that global telecoms revenue will have a CAGR of 2.8% in the 2025-2030 timeframe. In addition, the industry has delivered two consecutive years of record free cash flow, above 17% of sales.
However, Omdia found that telcos have reduced capex, which is trending towards 15% of revenues. Opex fell by -0.2% in 2024 and is broadly flatlining. There was a 2.2% decline in global labor opex following the challenging trend in 2023, when labor opex increased by 4% despite notable layoffs.
“Overall, the positive momentum is continuing, but of course there is more work to be done on the efficiency side,” Talmesio said. He added that it is also still too early to say what impact AI investments will have over the longer term. “All the work that has been done so far is still largely preparatory, with visible results expected to materialize in the near(ish) future,” he added. His Network X keynote presentation addressed the following questions:
- How will telcos evolve their operating structures and shift their business focuses in the next 5 years?
- AI, cloud and more to supercharge efficiencies and operating models?
- How will big tech co-opetition evolve and impact traditional telcos?
Customer care was seen as the area first impacted by AI, building on existing GenAI implementations. In contrast, network operations are expected to ultimately see the most significant impact of agentic AI.
Talmesio said many of the building blocks are in place for telecoms services and future revenue generation, with several markets reaching 60% to 70% fiber coverage, and some even approaching 100%.
Network operators are now moving beyond monetizing pure data access and are able to charge more for different gigabit speeds, home gaming, more intelligent home routers and additional WiFi access points, smart home services such as energy, security and multi-room video, and more.
While noting that connectivity remains the most important revenue driver, when contributions from various telecoms-adjacent services are added up “it becomes a significant number,” Talmesio said.
Mobile networks are another important building block. While acknowledging that 5G has been something of a disappointment in the first five years of the deployment cycle, “this is really changing” as more operators deploy 5G standalone (5G SA core) networks, Omdia observed.
Talmesio said: “At the end of June, there were only 66 telecom operators launching or commercially using 5G SA. But those 66 operators are those operators that carry the majority of the world’s 5G subscribers. And with 5G SA, we have improved latency and more devices among other factors. Monetization is still in its infancy, perhaps, but then you can see some really positive progress in 5G Advanced, where as of June, we had 13 commercial networks available with some good monetization examples, including uplink.”
“Telecom is moving beyond telecoms,” with a number of new AI strategies in place. For example, telcos are increasingly providing AI infrastructure in their data centers, offering GPU as-a-service, AI-related colocation, AI-RAN and edge AI functionality.
Dario Talmesio, Omdia
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AI is also being used for network management, with AI productivity tools and AI digital assistants, as well as AI software services including GenAI products and services for consumer, enterprises and vertical markets.
“There is an additional boost for telecom operators to move beyond connectivity, which is the sovereignty agenda,” Talmesio noted. While sovereignty in the past was largely applied to data residency, “in reality, there are more and more aspects of sovereignty that are in many ways facilitating telecom operators in retaining or entering business areas that probably ten years ago were unthinkable for them.” These include cloud and data center infrastructure, sovereign AI, cyberdefense and quantum safety, satellite communication, data protection and critical communications.
“The telecom business is definitely improving,” Talmesio concluded, noting that the market is now also being viewed more favorably by investors. “In many ways, the glass is maybe still half full, but there’s more water being poured into the telecom industry.”
References:
https://networkxevent.com/speakers/dario-talmesio/
https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/pushing-telcos-ai-envelope-on-capital-decisions
Omdia on resurgence of Huawei: #1 RAN vendor in 3 out of 5 regions; RAN market has bottomed
Omdia: Huawei increases global RAN market share due to China hegemony
Dell’Oro & Omdia: Global RAN market declined in 2023 and again in 2024
Omdia: Cable network operators deploy PONs
SK Telecom forms AI CIC in-house company to pursue internal AI innovation
SK Telecom (SKT) is establishing an in-house independent company (CIC) that consolidates its artificial intelligence (AI) capabilities. Through AI CIC, SK Telecom plans to invest approximately 5 trillion won (US$3.5 billion) in AI over the next five years and achieve annual sales of over 5 trillion won ($3.5 billion) by 2030.
On September 25th, SK Telecom CEO Ryu Young-sang held a town hall meeting for all employees at the SKT Tower Supex Hall in Jung-gu, Seoul, announcing the launch of AI CIC to pursue rapid AI innovation. Ryu will concurrently serve as the CEO of SK CIC. SK Telecom plans to unveil detailed organizational restructuring plans for AI CIC at the end of October this year.
“We are launching AI CIC, a streamlined organizational structure, and will simultaneously pursue internal AI innovation, including internal systems, organizational culture, and enhancing employees’ AI capabilities. We will grow AI CIC to be the main driver of SK’s AI business and, furthermore, the core that leads the AI business for the entire SK Group. The AI CIC will establish itself as South Korea’s leading AI business operator in all fields of AI, including services, platforms, AI data centers and proprietary foundation models,” Ryu said.
The newly established AI CIC will be responsible for all the company’s AI-related functions and businesses. It is expected that SK Telecom’s business will be divided into mobile network operations (MNO) and AI, with AI CIC consolidating related businesses to enhance operational efficiency. Furthermore, AI CIC will actively participate in government-led AI projects, contributing to the establishment of a government-driven AI ecosystem. SKT said that reorganizing its services under one umbrella will “drive AI innovation that enhance business productivity and efficiency.”
“Through this (AI CIC), we will play a central role in building a domestic AI-related ecosystem and become a company that contributes to the success of the national AI strategy,” Ryu said.
By integrating and consolidating dispersed AI technology assets, SKT plans to strengthen the role of the “AI platform” that supports AI technology/operations across the entire SK Group, including SKT, and also pursue a strategy to secure a flexible “AI model” to respond to the diverse AI needs of the government, industry, and private sectors.
In addition, SKT will accelerate the development of future growth areas (R&D) such as digital twins and robots, and the expansion of domestic and international partnerships based on AI full-stack capabilities.
Ryu Young-sang, CEO of SK Telecom, unveils the plans for the AI CIC
CEO Ryu said, “SK Telecom has secured various achievements such as securing 10 million Adot (AI enabled) subscribers, selecting an independent AI foundation model, launching the Ulsan AI DC, and establishing global partnerships through its transformation into an AI company over the past three years, and has laid the foundation for future leaps forward. We will achieve another AI innovation centered around the AI CIC to restore the trust of customers and the market and advance into a global AI company.”
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References:
https://www.businesskorea.co.kr/news/articleView.html?idxno=253124
SKT-Samsung Electronics to Optimize 5G Base Station Performance using AI
SK Telecom unveils plans for AI Infrastructure at SK AI Summit 2024
SK Telecom (SKT) and Nokia to work on AI assisted “fiber sensing”
SK Telecom and Singtel partner to develop next-generation telco technologies using AI
SK Telecom, DOCOMO, NTT and Nokia develop 6G AI-native air interface
South Korea has 30 million 5G users, but did not meet expectations; KT and SKT AI initiatives
Lumen: “We’re Building the Backbone for the AI Economy” – NaaS platform to be available to more customers
“Lumen is determined to lead the transformation of our industry to meet the demands of the AI economy,” said Lumen Technologies CEO Kate Johnson. “With ubiquitous reach and a digital-first platform, we are positioned to deliver next-gen connectivity, power enterprise innovation, and secure our own growth. This is how we build the trusted network for AI and deliver exceptional value to our customers and shareholders.”
Highlights included keynote remarks from Johnson, who outlined the three pillars of the company’s strategy:
- Building the backbone for the AI economy with a physical network designed for scale, speed, and security – delivering connectivity anywhere and for everything customers want to do.
- Cloudifying and agentifying telecom to reduce complexity and simplify the network for customers as an intelligent, on-demand, consumption-based digital platform.
- Creating a connected ecosystem with partnerships that extend Lumen’s reach, accelerate customer-first, AI-driven innovation, and unlock new opportunities across industries.
Johnson noted how Lumen’s growth is powered by a set of unique enablers that turn the company’s network into a true digital platform. With near-term product launches like self-service digital portal Lumen Connect, a universal Fabric Port, and new innovations in development that extend intelligence into the network edge, Lumen is making connectivity programmable and effortless. Combined with the company’s Network-as-a-Service business model and a connected ecosystem of data centers, hyper-scalers and technology partners, these enablers give customers the speed, security, and simplicity they need to thrive in the AI economy.
Lumen Technologies CEO Kate Johnson spotlights the company’s bold strategy, financial progress, and early look at product roadmap to reimagine digital networking for the AI economy at a gathering of industry analysts.
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Chief Financial Officer Chris Stansbury said 2026 is expected to mark an inflection point as new digital revenues, growth in IP and Wavelengths, and long-term hyper-scaler contracts begin to outpace legacy declines – setting up what he called a “trampoline moment” for expansion. Lumen projects business segment revenue growth in 2028 and a return to overall top-line growth in 2029, establishing a clear path from stabilization to value creation.
With a strengthened balance sheet and greater financial freedom, executives highlighted the bold investment in the company’s three strategic pillars, each designed to accelerate innovation and position Lumen for long-term industry leadership.
Lumen’s strategy begins with the physical network, which carries a significant portion of the world’s internet traffic. With construction underway coast-to-coast, the company is executing a multi-billion-dollar program to expand its intercity and metro fiber backbone:
- Adding 34 million new fiber miles by the end of 2028 for a total of 47 million intercity and metro miles.
- Connecting data centers, clouds, edge, and enterprise locations in any combination.
- Delivering 400G today and plans to scale to 1.6 terabits in the future.
Lumen’s substantial investments to expand high-speed connectivity ensures customers have the network scale, speed, and reliability to confidently innovate and grow without constraints.
The rise of AI is driving unprecedented demands for a new, Cloud 2.0 architecture with distributed, low-latency, high-bandwidth networks that can move and process massive amounts of data across multi-cloud, edge, and enterprise locations. Lumen is meeting this challenge by cloudifying and agentifying telecom, turning its expansive fiber footprint into a programmable digital platform that strips away the complexity of legacy networking.
Lumen plans to make its network-as-a-service (NaaS) platform [1.] available to more customers, regardless of their existing internet connection. At the company’s Analyst Forum, The NaaS platform includes new innovations like Lumen Fabric Port (Q4 2025), Lumen Multi-Cloud Gateway (Q4 2025), and Lumen Connect (Q1 2026). Together, these technologies digitize the entire service lifecycle, so customers can provision, manage, and scale thousands of services across thousands of locations, within minutes.
Note 1. Network as a Service (NaaS) is a cloud-based model that allows businesses to rent networking services from a provider on a subscription or pay-per-use basis, instead of building and maintaining their own network infrastructure. NaaS provides scalable and flexible network capabilities, shifting the cost from a capital expense (CapEx) to an operational expense (OpEx). NaaS functions by using a virtualized, software-defined network, meaning the network capabilities are abstracted from the physical hardware. Businesses access and manage their network resources through a web-based interface or portal, and the NaaS provider manages the underlying infrastructure, including hardware, software, updates, and troubleshooting.
Lumen CTO Dave Ward unveiled “Project Berkeley,” a network interface device that essentially expands the company’s NaaS services, like on-demand internet, Ethernet and IP VPN, to off-net sites using any access type. Those access types can be 5G, fiber, copper, fixed wireless access, satellite and more. Project Berkeley leverages digital twin technology, which lets Lumen have “a full replicate understanding of exactly what’s going on in this device running out of our cloud.”
Ward said on the company’s website:
“Lumen is taking the network out of its hardware box and transforming it into a true digital platform. Technology and Product Officer Dave Ward. “By cloudifying our fiber assets into software and disrupting cloud economics, we’re giving customers the ability to turn up services within minutes, scale as their AI workloads demand, and innovate at cloud speed. This is what the future of digital networking should deliver.”
Lumen has been growing its NaaS platform for some time. It launched its first offering in 2023 and now counts over 1,000 enterprise NaaS customers. The company now plans to bring its connectivity products to over 10 million off-net buildings, said Ward. The device will also allow hyper-scalers to integrate and sell these products in their respective marketplaces.
In closing the Analyst session, CEO Johnson underscored that Lumen’s strategies are the foundation of the company’s momentum today – transforming the industry with innovation to fuel growth, strengthening financial performance, and positioning the company as a critical enabler in the digital economy.
“We’re thrilled by the energy and engagement we’ve seen from the analyst community. The discussions around how Lumen is delivering an expansive network, digital platform, connected ecosystem and winning culture to meet the exponential enterprise demands of AI demonstrate the urgent need for innovation in our industry, and we’re proud to be at the forefront of that conversation.”
About Lumen Technologies:
Lumen is unleashing the world’s digital potential. We ignite business growth by connecting people, data, and applications – quickly, securely, and effortlessly. As the trusted network for AI, Lumen uses the scale of our network to help companies realize AI’s full potential. From metro connectivity to long-haul data transport to our edge cloud, security, managed service, and digital platform capabilities, we meet our customers’ needs today and as they build for tomorrow.
For news and insights visit news.lumen.com, LinkedIn: /lumentechnologies, X: lumentechco, Facebook: /lumentechnologies, Instagram: @lumentechnologies and YouTube: /lumentechnologies. Lumen and Lumen Technologies are registered trademarks of Lumen Technologies LLC in the United States. Lumen Technologies LLC is a wholly owned affiliate of Lumen Technologies, Inc.
References:
For a replay of the webcast, visit Lumen’s investor website
https://www.fierce-network.com/broadband/lumen-says-its-taking-its-naas-new-level
Lumen deploys 400G on a routed optical network to meet AI & cloud bandwidth demands
Dell’Oro: Bright Future for Campus Network As A Service (NaaS) and Public Cloud Managed LAN
NaaS emerges as challenger to legacy network models; likely to grow rapidly along with SD WAN market
Verizon and WiPro in Network-as-a-Service (NaaS) partnership
ABI Research: Network-as-a-Service market to be over $150 billion by 2030
Cisco Plus: Network as a Service includes computing and storage too
Gartner: changes in WAN requirements, SD-WAN/SASE assumptions and magic quadrant for network services
Ciena to acquire Nubis Communications for high performance optical and electrical interconnects to support AI workloads
New Ciena Acquisition:
Today, Ciena announced it will acquire electronics startup Nubis Communications, a privately-held company headquartered in New Providence, New Jersey for $270 million. Nubis specializes in high-performance, ultra-compact, low-power optical and electrical interconnects tailored to support AI workloads. The Nubis acquisition will give Ciena access to technology that supports a wider range of data center use cases. It is is expected to close during Ciena’s fiscal 4th quarter.
Nubis’ solutions complement Ciena’s existing high-speed interconnects portfolio and will enable new capabilities to support growing AI workloads by significantly increasing scale up and scale out capacity and density inside the data center. The Nubis portfolio includes two key technologies:
- Co-Packaged Optics (CPO) / Near Packaged Optics (NPO): Nubis’ compact, high-density optical modules deliver ultra-fast data transfer using light instead of traditional electrical signals. Supporting up to 6.4 Tb/s full-duplex bandwidth, these modules are optimized for low-latency, low-power operation – making them ideal for scaling AI systems. Combined with Ciena’s high-speed SerDes, Nubis’ optical engines enable differentiated CPO solutions to address high-performance connectivity needs inside and between racks.
- Electrical ACC: Nubis’ advanced analog electronics enable Active Copper Cables (ACC) to support high-speed data transmission, allowing data to travel up to 4 meters at speeds of 200 Gb/s per lane. This low-power, low-latency solution helps customers connect more AI accelerators across racks without the limitations of traditional copper or DSP-based solutions
Nubis has developed two products to increase bandwidth and reduce latency within and between data center racks:
- XT Optical Engines is a series of optical modules that support up to 6.4 Tbps of full-duplex bandwidth while using light instead of traditional electrical signals.
- Nitro Linear Redriver aims to improve the performance of all the copper cables that are wired into the data center. Bloomberg has predicted copper usage in North American data centers could increase by 1.1-2.4 million tons by 2030 as “AI demands mount.”
“The acquisition of Nubis represents a significant step forward in Ciena’s strategy to address the rapidly growing demand for scalable, high-performance connectivity inside the data center, driven by the explosive growth of AI-related traffic,” said David Rothenstein, Chief Strategy Officer at Ciena. “With ownership of these key technologies for a wider range of use cases inside the data center, we are expanding our competitive advantage by advancing development of differentiated solutions, reducing development costs, and driving long-term efficiency and profitability. Nitro also supports up to 4m of reach for 200G per lane active copper cables, far beyond the limits of passive copper and legacy analog solutions. This is a game-changer for AI infrastructure, where short-reach, high-bandwidth copper is preferred for cost and latency reasons,” Rothenstein added.
“The Nubis team is thrilled to join Ciena and enhance its industry-leading portfolio with our breakthrough interconnect technologies,” said Dan Harding, CEO of Nubis. “Together, we will advance Ciena’s data center strategy by delivering reliable, high-quality, and high-performance interconnect solutions to support the next generation of AI workloads.”
Dell’Oro VP Jimmy Yu said Nubis is probably “one of [Ciena’s] most forward-looking” acquisitions, since the company is assembling the pieces it thinks are necessary to support future data center networking. “This acquisition aligns well with Ciena’s overall strategy to expand into the data center market, and it likely played a role in their decision to exit future investments in broadband PON,” Yu said.
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Ciena Cutting Back on Residential Broadband Access investments to focus on AI and Coherent Optics:
The Nubis takeover comes shortly after Ciena announced it will reduce investment in residential broadband access (e.g. 25G PON) to focus more on AI applications and its coherent optics business. Ciena CEO Gary Smith said on the company’s Q3 2025 earnings call:
“Folks are more concentrated on 10-gig and driving that out, and there’s a good market for that. As we looked at our overall portfolio and our investments in [25-gig], we see so much opportunity in these different AI workloads that we want to continue to really make sure we’re heavily invested in that….To be clear, we will continue to sell and support our existing broadband access products. However, we will be limiting our forward investments only to strategic areas such as DCOM [1.].”
Note 1. DCOM refers to Ciena’s data center out-of-band management solution, which involves replacing bulky legacy hardware like copper cabling and console servers with passive optical network (PON) technology.
Dell’Oro Group’s Jimmy Yu thinks Ciena’s move to re-allocate R&D dollars makes sense so that the company is not spread too thin and [misses] out the biggest opportunity sitting in front of them. “My guess is that to address the future of AI workloads and AI data center interconnect, Ciena will need to not only maintain their cadence on launching new high performance coherent optics like the WaveLogic 6e for long distance 1.6 Tbps connections, but also optical devices for shorter distances like 800 ZR/ZR+ plugs and even shorter distances that take them inside the data center,” Yu explained.
Ciena considers the WaveLogic series its bread-and-butter for coherent optics. The company in Q3 gained 11 new customers for its WaveLogic 6 Extreme product, bringing its total customer tally to 60. Companies deploying WaveLogic 6 include operators such as Arelion, Lumen and Telstra, which are upgrading their networks to support demand from cloud customers.
Supplemental Materials:
In conjunction with this announcement, Ciena has posted to the Events and Presentations page of the Investor Relations section of its website a recorded transaction overview presentation and accompanying transcript.
About Ciena:
Ciena is the global leader in high-speed connectivity. We build the world’s most adaptive networks to support exponential growth in bandwidth demand. By harnessing the power of our networking systems, components, automation software, and services, Ciena revolutionizes data transmission and network management. With unparalleled expertise and innovation, we empower our customers, partners, and communities to thrive in the AI era. For updates on Ciena, follow us on LinkedIn and X, or visit the Ciena Insights webpage and Ciena website.
About Nubis Communications:
Nubis says they innovate across photonics, electronics, packaging and manufacturing to create optics significantly more dense, scalable and lower power than existing solutions, breaking the I/O wall in data centers and enabling more advanced compute, AI and machine learning. The startup has raised over $50 million in funding with the help of investors such as Ericsson and Marvell Technology co-founders Weili Dai and Sehat Sutardja.
Nubis has just over 50 employees including a seasoned executive team. Founder Peter Winzer previously led fiber optic transmission research at Nokia’s Bell Labs, while CEO Dan Harding spent over 15 years at Broadcom.
References:
https://www.nubis-inc.com/about-us/
https://www.nubis-inc.com/products/
https://www.fierce-network.com/broadband/ciena-ramps-data-center-focus-new-270m-deal
https://www.fierce-network.com/broadband/ciena-pulls-back-broadband-focus-more-ai
AI infrastructure investments drive demand for Ciena’s products including 800G coherent optics
Lumen and Ciena Transmit 1.2 Tbps Wavelength Service Across 3,050 Kilometers
Ciena CEO sees huge increase in AI generated network traffic growth while others expect a slowdown
Summit Broadband deploys 400G using Ciena’s WaveLogic 5 Extreme
DriveNets and Ciena Complete Joint Testing of 400G ZR/ZR+ optics for Network Cloud Platform
Ciena acquires 2 privately held companies: Tibit Communications and Benu Networks
AI Data Center Boom Carries Huge Default and Demand Risks
“How does the digital economy exist?” asked John Medina, a senior vice president at Moody’s, who specializes in assessing infrastructure investments. “It exists on data centers.”
New investments in data centers to power Artificial Intelligence (AI) are projected to reach $3 trillion to $4 trillion by 2030, according to Nvidia. Other estimates suggest the investment needed to keep pace with AI demand could be as high as $7 trillion by 2030, according to McKinsey. This massive spending is already having a significant economic impact, with some analysis indicating that AI data center expenditure has surpassed the total impact from US consumer spending on GDP growth in 2025.
U.S. data center demand, driven largely by A.I., could triple by 2030, according to McKinsey. That would require data centers to make nearly $7 trillion in investment to keep up. OpenAI, SoftBank and Oracle recently announced a pact to invest $500 billion in A.I. infrastructure through 2029. Meta and Alphabet are also investing billions. Merely saying “please” and “thank you” to a chatbot eats up tens of millions of dollars in processing power, according to OpenAI’s chief executive, Sam Altman.
- OpenAI, SoftBank, and Oracle pledging to invest $500 billion in AI infrastructure through 2029.
- Nvidia and Intel collaborating to develop AI infrastructure, with Nvidia investing $5 billion in Intel stock.
- Microsoft spending $4 billion on a second data center in Wisconsin.
- Amazon planning to invest $20 billion in Pennsylvania for AI infrastructure.
Compute and Storage Servers within an AI Data Center. Photo credit: iStock quantic69
The spending frenzy comes with a big default risk. According to Moody’s, structured finance has become a popular way to pay for new data center projects, with more than $9 billion of issuance in the commercial mortgage-backed security and asset-backed security markets during the first four months of 2025. Meta, for example, tapped the bond manager Pimco to issue $26 billion in bonds to finance its data center expansion plans.
As more debt enters these data center build-out transactions, analysts and lenders are putting more emphasis on lease terms for third-party developers. “Does the debt get paid off in that lease term, or does the tenant’s lease need to be renewed?” Medina of Moody’s said. “What we’re seeing often is there is lease renewal risk, because who knows what the markets or what the world will even be like from a technology perspective at that time.”
Even if A.I. proliferates, demand for processing power may not. Chinese technology company DeepSeek has demonstrated that A.I. models can produce reliable outputs with less computing power. As A.I. companies make their models more efficient, data center demand could drop, making it much harder to turn investments in A.I. infrastructure into profit. After Microsoft backed out of a $1 billion data center investment in March, UBS wrote that the company, which has lease obligations of roughly $175 billion, most likely overcommitted.
Some worry costs will always be too high for profits. In a blog post on his company’s website, Harris Kupperman, a self-described boomer investor and the founder of the hedge fund Praetorian Capital, laid out his bearish case on A.I. infrastructure. Because the building needs upkeep and the chips and other technology will continually evolve, he argued that data centers will depreciate faster than they can generate revenue.
“Even worse, since losing the A.I. race is potentially existential, all future cash flow, for years into the future, may also have to be funneled into data centers with fabulously negative returns on capital,” he added. “However, lighting hundreds of billions on fire may seem preferable than losing out to a competitor, despite not even knowing what the prize ultimately is.”
It’s not just Silicon Valley with skin in the game. State budgets are being upended by tax incentives given to developers of A.I. data centers. According to Good Jobs First, a nonprofit that promotes corporate and government accountability in economic development, at least 10 states so far have lost more than $100 million per year in tax revenue to data centers. But the true monetary impact may never be truly known: Over one-third of states that offer tax incentives for data centers do not disclose aggregate revenue loss.
Local governments are also heralding the expansion of energy infrastructure to support the surge of data centers. Phoenix, for example, is expected to grow its data center power capacity by over 500 percent in the coming years — enough power to support over 4.3 million households. Virginia, which has more than 50 new data centers in the works, has contracted the state’s largest utility company, Dominion, to build 40 gigawatts of additional capacity to meet demand — triple the size of the current grid.
The stakes extend beyond finance. The big bump in data center activity has been linked to distorted residential power readings across the country. And according to the International Energy Agency, a 100-megawatt data center, which uses water to cool servers, consumes roughly two million liters of water per day, equivalent to 6,500 households. This puts strain on water supply for nearby residential communities, a majority of which, according to Bloomberg News, are already facing high levels of water stress.
“I think we’re in that era right now with A.I. models where it’s just who can make the bigger and better one,” said Vijay Gadepally, a senior scientist at the Lincoln Laboratory Supercomputing Center at the Massachusetts Institute of Technology. “But we haven’t actually stopped to think about, Well, OK, is this actually worth it?”
References:
What Wall Street Sees in the Data Center Boom – The New York Times
Will billions of dollars big tech is spending on Gen AI data centers produce a decent ROI?
Gartner: AI spending >$2 trillion in 2026 driven by hyperscalers data center investments
Analysis: Cisco, HPE/Juniper, and Nvidia network equipment for AI data centers
Cisco CEO sees great potential in AI data center connectivity, silicon, optics, and optical systems
Networking chips and modules for AI data centers: Infiniband, Ultra Ethernet, Optical Connections
Superclusters of Nvidia GPU/AI chips combined with end-to-end network platforms to create next generation data centers
Lumen Technologies to connect Prometheus Hyperscale’s energy efficient AI data centers
