Nokia phone maker HMD Global to move part of its manufacturing to Europe

HMD Global, the Finnish phone maker and heir to the Nokia mobile phone brand, has revealed plans to shift some of its manufacturing to Europe.

The company said the move was designed to meet an “increase in customer demand” for locally produced devices, in part due to safety and durability concerns from businesses and consumers.

The announcement, which was due to coincide with the Mobile World Congress (MWC) 2023 industry event in Barcelona, ​​comes four years after HMD Global revealed it was moving its data centers to Europe to meet data center regulations. the European Union (EU) on data such as the GDPR. Moving manufacturing there, it seems, is a natural next step.

“We already have our data centers in Europe – more specifically, we have our data centers in Finland, to keep our devices secure,” said Lars Silberbauer, chief marketing officer of HMD Global, during a press briefing. earlier this week. “As we begin this journey to bring manufacturing to Europe, we want to ensure that the critical part of device development takes place in Europe and within European legislation, which is quite important to many of our customers.”

So in many ways the company is adopting a manufacturing philosophy similar to that of the cloud computing industry for data with region-specific infrastructure – sovereignty is really the name of the game, bringing “product” closer together. of the customer, thereby facilitating compliance with local laws and regulations by all concerned.

Manufacturer’s mark

HMD Global emerged from the ashes of Microsoft’s ill-fated acquisition of Nokia devices in 2013, a move that ultimately led to a $7 billion writedown after Satya Nadella stepped into the CEO seat and refocused the efforts of the company. Microsoft eventually unloaded the Nokia business entirely, with Nokia signing a brand license agreement with the new entity HMD Global in 2016.

For the most part, HMD Global has focused on feature phones and budget smartphones, but that hasn’t stopped the Helsinki-based company from raising $330 million in venture capital (VC) funding, the share of the lion arriving in 2020 from major donors. including Google, Qualcomm and Nokia itself.

Like most mobile phone companies, HMD Global has so far relied on Asia for manufacturing, particularly China and India. And it is clear that this does not change. But as part of its burgeoning ambitions in the enterprise space in particular, which includes a suite of complementary subscription services for businesses, the company wants to further differentiate itself in a space that includes deep-pocketed incumbents such as Samsung, Google and – of course – Apple.

Indeed, today’s news does not signal the start of a major “lift and shift” effort to bring existing Nokia phone manufacturing to Europe. Silberbauer pointed out that the company sees it as a way to attract new customers with very specific location requests in the region.

“We won’t take production out of anywhere,” he said. “We see this as a growth opportunity for the European market.”

Silberbauer told TechCrunch that its European manufacturing efforts will begin with a 5G smartphone aimed at “security-conscious industries” and will be offered as a B2B product only. It expects manufacturing and shipping to begin as early as Q3 2023, with plans to add at least one consumer-focused device in the future.

“It’s step by step that we’re taking this journey to manufacturing in Europe,” Silberbauer said.

HMD Enable Pro: an enterprise mobility management (EMM) service for centralized management of Nokia devices Image credits: Global HMD

Address unknown

The big elephant in the room here, of course, is where – exactly – does HMD Global manufacture its devices in Europe? Finland, perhaps, could be a good bet given that is where the company is headquartered. But despite repeated attempts to get details of its manufacturing plans on the continent, Silberbauer cited security concerns as one of the reasons they could not disclose the precise location of its factories.

“Unfortunately, since our customers are from various security conscious industries, we are not allowed to tell anyone in which countries we produce these devices, just to keep it as safe as possible,” he said. -he declares.

However, Silberbauer explained what the manufacturing flow might look like at first, confirming that HMD Global will always work closely with its existing partners in Asia.

“We can’t just flip a switch and then have a fully operational factory in Europe,” he said. “You have to take it step by step. So the first steps are basically for our current partner in China to collect the materials and do the initial security, before they ship them to our manufacturing partners in the EU. And from there, the partner in Europe will complete the assembly, calibrate and test the devices, test the hardware, and specifically test the software for security.

HMD Global is also using this new distributed manufacturing model to tout its sustainability credentials, Silberbauer noting it’s one of the reasons it doesn’t make sense to move its existing manufacturing from its current location in Asia, where he already has a solid client. base.

“Manufacturing in Europe means we will reduce the carbon footprint of these devices,” Silberbauer said. “It wouldn’t make sense to manufacture all of our phones in Europe, because not all of our markets and consumers are in Europe. It is best, from a sustainability perspective, to keep production in areas where consumers are. »