US chip giant Nvidia will acquire a 2.9 per cent stake in Finnish telecommunications equipment manufacturer Nokia for $1 billion, the company announced on Tuesday, sending Nokia’s share price soaring by almost 20 per cent.
The investment complements a new strategic partnership between the two firms to develop Nokia’s fifth and sixth-generation (5G and 6G) mobile networks using Nvidia’s advanced chips.
“Nokia and Nvidia have agreed to collaborate on AI networking solutions and to explore ways of integrating Nokia’s data centre switching and optical technologies into Nvidia’s future AI infrastructure,” Nokia said in a statement.
The company confirmed it would issue over 166 million new shares, priced at $6.01 each, to complete the transaction.
Under the partnership, Nokia aims to expand its presence in the artificial intelligence and cloud markets by providing data centre–aligned networking solutions.
Following the announcement, Nokia’s shares rose by more than 19 per cent to trade at €7.53.
Once relatively unknown outside the tech industry, Nvidia has in recent years become one of the world’s most valuable companies, driven by soaring demand for its graphics processing units (GPUs) — the processors that power AI systems such as ChatGPT and other generative technologies.