Nokia announced on Tuesday that Nvidia is acquiring a $1 billion stake in the networking firm, marking another strategic move for the AI chipmaker.

Following the announcement, Nokia’s shares jumped 22 per cent.

Nokia plans to issue over 166 million new shares, with the proceeds earmarked for AI initiatives and general corporate purposes.

The companies also formed a strategic partnership to develop next-generation 6G cellular technology.

Nokia will adapt its 5G and 6G software to run on Nvidia’s chips and collaborate on AI-focused networking solutions.

Nokia noted that Nvidia may integrate its technology into the chipmaker’s future AI infrastructure projects.

Nokia, a Finnish company once famed for its early mobile phones, has in recent years focused mainly on supplying 5G cellular equipment to telecom operators.

Nvidia has recently acquired several equity stakes in strategic partners as it positions itself at the heart of the AI industry.

In September, the company announced a $5 billion investment in former rival Intel and a $100 billion commitment to OpenAI.

It also invested $500 million in self-driving car startup Wayve and $667 million in United Kingdom’s cloud provider Nscale.