Cisco Systems will acquire optical chip maker Luxtera for US$660 million (A$919 million) with plans to integrate the company's technology across its entire intent-based networking portfolio and expand 100-GbE and 400-GbE capabilities.
David Goeckeler, executive vice president and general manager of Cisco's networking and security business, said the networking giant was acquiring the US-based semiconductor vendor to meet the growing demand for internet bandwidth due to the rise of technologies such as the internet of things and mobility applications.
"Optics is a fundamental technology to enable this future. Coupled with our silicon and optics innovation, Luxtera will allow our customers to build the biggest, fastest and most efficient networks in the world," Goeckeler said in a statement.
Founded in 2001, Luxtera develops silicon photonics, which integrates fibre optics with silicon electronics, to build optics capabilities for webscale and enterprise data centres as well as service providers. The "fibre to the chip" technology is said to greatly speed data connectivity. Luxtera's technology significantly improves chip scale and performance while also lowering costs, according to the company.
Cisco said the acquisition would combine the two companies’ capabilities in 100-GbE/400-GbE optics, silicon and process technology to build future-proof networks optimized for performance, reliability and cost. Cisco said as system port capacity increases from 100 GbE to 400 GbE, optics will play an increasingly important role in addressing network infrastructure constraints, particularly density and power requirements.
Cisco under chairman and chief executive Chuck Robbins has made significant efforts to transition to a business model that emphasises software and subscription-based revenue. The acquisition of Luxtera will potentially give the company a hardware performance advantage as customers move toward low-cost gear and away from expensive, proprietary equipment.
The deal is expected to close in Cisco's fiscal third-quarter 2019. Cisco will pay US$660 million in cash and assumed equity awards for the company. Luxtera's team will join Cisco's Optics business under Goeckeler.