Nokia set to acquire Infinera
Nokia is set to acquire Infinera, a global supplier of innovative open optical networking solutions and advanced optical semiconductors. The move values Infinera at US$ 2.3 billion.
According to their joint statement: “Nokia and Infinera see a significant opportunity in merging to improve scale and profitability, enabling the combined business to accelerate the development of new products and solutions to benefit customers.”
The release goes on to note that “the two companies have limited customer overlap, putting the combined business in a strong position in all regions.” Nokia estimates this will increase its Optical Networks business by 75%. It also means Nokia will increase US based manufacturing and advanced testing & packaging capabilities. This is a noteworthy addition to the release given the current US administration’s moves to secure critical communication infrastructure supply chains, most notably with Open RAN.
Indeed, this is a good reminder that while Open RAN may be the most scrutinised of the open and disaggregated infrastructure technologies, connectivity involves a lot more than just the radio access network. Infinera is a pioneer of open optical and disaggregated transport products. It took part in the first commercial deployment of a DCSG (Disaggregated Cell Site Gateway) and has several Telecom Infra Project badges awarded for its products. The acquisition will increase Nokia’s presence in the open and disaggregated space and should compliment its growing Open RAN portfolio.
The move will also help Nokia position itself to meet the growing demand placed on networks by AI workloads. A recent Infinera blog post notes that GPU clusters for generative AI are currently scaling by a factor of 10 every three years, with the present state-of-the-art being 32,000 GPUs in a cluster. These clusters require massive numbers of optical interconnects, with low power and low latency both being critical. Infinera’s expertise across silicon photonics and indium phosphide-based semiconductor material sciences, as well as its existing portfolio of products and customers are expected to help Nokia diversify its customer base, especially in the enterprise segment.
As telecom analyst Dean Bubley noted in his initial thoughts on the acquisition, the 5G infrastructure spending slump makes it all the more important for vendors to invest in growth markets. These include Optical Transport and Datacenter Networks. With internet content providers making up 30% of Infinera’s sales, Nokia is increasingly well positioned to grow its footprint in these segments.
