Nokia Names Intel's Data Center and AI Head Justin Hotard as New CEO — 2nd Update

By Dominic Chopping

Nokia appointed Justin Hotard, a tech industry expert in data centers and AI, as its next chief executive officer, in a move that reinforces the company's ambition to expand into new growth areas.

The Finnish telecommunication company recently signaled its aim to diversify and search for new growth outside of its traditional telecom operator market. Last year, it signed a deal worth $2.3 billion to buy networking-solutions provider Infinera as it bets on new business for data centers.

The company said it expects data centers to be its number one growth driver in the coming years and has been boosting its spending to develop new products for the rapidly-expanding industry. It has already pledged to invest up to 100 million euros ($103.3 million) annually to broaden its market in data-center networking with a view to driving incremental net sales of 1 billion euros by 2028.

Justin Hotard, who currently leads Intel's data-center and artificial-intelligence operations, will start in his new role on April 1, taking over from Pekka Lundmark, who will continue as an adviser until the end of the year before leaving the company.

Prior to his role at Intel, Hotard held several leadership roles at large technology companies, including Hewlett Packard Enterprise and NCR Corp.

"He has a strong track record of accelerating growth in technology companies along with vast expertise in AI and data-center markets, which are critical areas for Nokia's future growth," said Sari Baldauf, chair of Nokia's board of directors.

Lundmark has led Nokia since 2020 and the company said he indicated he wanted to consider moving on from executive roles when the repositioning of the business was in a more advanced stage, and when the right successor had been identified.

"Now, both of those conditions have been met, and he has decided to step down," Baldauf added.

Baldauf said Hotard brings new capabilities to the team as well as experience from the technology industry in the U.S.--a key market for Nokia.

Nokia generates just more than a quarter of its overall revenue from North America and has recently seen momentum pick up sharply in the region, particularly in its network-infrastructure business that supplies data-center networking products following recent contract wins from Microsoft and Kyndryl.

The company's latest successes in the network-infrastructure business contrast with its traditional core mobile-networks business that is facing stiff competition and has seen choppy demand from telecom operators.

Inderes analyst Atte Riikola said the appointment of Hotard reflects what he sees as Nokia's strategic focus shifting increasingly to network infrastructure, where data centers and AI investments are creating new growth opportunities for the company.

"We see this as a justified direction, as Nokia's longer-term growth prospects for mobile networks clearly look more modest than for network infrastructure," he said.

Hotard said that with hundreds of billions of dollars being spent on data centers globally, Nokia is well positioned to take advantage of the market opportunity, while also noting potential in the mobile-networks business as AI continues to expand.

"My focus will be to accelerate the transformation journey and drive ever greater growth," he said.

Write to Dominic Chopping at dominic.chopping@wsj.com