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UPDATE 1-Nokia targets web giants with fastest routers on market

* New 2.6 terabit chipset for fastest routers on market

* New routers aimed at "core" and "edge" network customers

* Routers serve telecom customers and new internet giants

* Nokia now credible player in core router market -analyst (Adds Nokia CEO and BT customer comments)

SAN FRANCISCO, June 14 (Reuters) - Nokia launched the world's fastest network chips on Wednesday, marking a breakthrough into the core router market dominated by rivals Juniper and Cisco, while giving a boost to its existing network business.

The new traffic routers can handle the greater demands of virtual reality programming, cloud-based internet services and next-generation mobile communications, the Finnish company said.

Nokia's new products should help it win business with so-called "web-scale" customers such as Facebook, Google and Amazon for whom transmission speed is everything and who are still increasing spending on network gear, unlike its traditional base of telecoms customers.

They grew out of Nokia's 15.6 billion-euro ($17.5 billion) 2016 acquisition of Alcatel and its IP network gear business.

"We need networks with little or no delay... that are able to respond 10 times faster than they do today" Nokia Chief Executive Rajeev Suri told a news conference.

They will also serve Nokia's existing customers who want speed but must still contend with legacy gear needed to run existing services, as they are compatible with older products.

"Nokia will have the highest-performance system capacity in the market, and a lot of those web-scalers, they just want speed," Ray Mota, principal analyst at ACG Research, told Reuters.

Nokia is introducing its latest FP4 silicon chipset capable of processing data at 2.4 terabits per second.

These will be built into routers to operate both ultra high-speed "core" networks at the heart of the biggest internet services and also "edge" networks that link datacenters to front-line customer services on mobile or fixed-line networks.

The new chipsets are set to ship in the fourth quarter, with routers using FP4 chips ready in first quarter of next year.

The former Alcatel IP networks business is already the world's No. 2 player in edge routers behind Cisco, having displaced Juniper Networks, which is now No. 3.

The Nokia business also competes with China's Huawei in router markets outside the United States, where Huawei is barred for national security reasons.

Nokia faces flat capital spending among its telecom customer base, leading it to pursue more business from web-scale players, which have doubled their spending on network equipment over the past four years, Mota said.

PETABITS

Nokia is introducing the 7950 petabit-class router aimed at the core routing market to help it win business from customers such as Facebook and Twitter. A petabit can transmit 5,000 two-hour-long high-definition videos every second.

For edge network customers, Nokia is introducing its 7750 router, offering the highest traffic capacity on the market.

Mota said the Nokia 7750 can deliver speeds of up to 4.8 terabits per slot, compared with Juniper's 3 terabit edge router speeds, which had been the industry's fastest. A terabit can transfer a high-definition Netflix TV episode in one second.

Beyond sheer speed, there is enough processing power head-room in its new chipset to offer built-in security features to fend off the growing threat of distributed denial of service (DDoS) attacks.

BT managing director and chief network architect Neil McRae said the British telecoms operator, an early customer of Nokia's new products, is already running thousands of 7750 edge routers and hundreds of 7950 systems in its core network.

"If you look at London, one of the busiest parts of our network, we need this platform today," McRae said. ($1 = 0.8916 euros) (Additional reporting by Jussi Rosendahl in Helsinki; Editing by Ken Ferris and Alexander Smith)