Bloomberg reported December 11 that Cisco Systems (NASDAQ:CSCO) is in talks to acquire silicon photonics pioneer Luxtera. The purchase price is estimated to be in the hundreds of millions of dollars according to Bloomberg’s sources, whom the news site declined to identify.
Cisco will have outpaced other suitors, including Intel Corp. and Broadcom Inc., if it closes the deal, Bloomberg adds.
If consummated, the acquisition of Luxtera would put Cisco in better position to create its own optical transceiver modules or to add transceiver functions onboard its line cards, perhaps co-packaged with chips. Luxtera would be the second silicon photonics company Cisco has purchased, following the acquisition of Lightwire Inc. in 2012 (see “Cisco to acquire CMOS silicon photonics firm Lightwire”). Cisco used Lightwire’s technology to enable its CPAK optical transceivers (see “Cisco unveils CPAK 100G silicon photonics-based optical transceiver”), among other things.
Cisco also acquired coherent transmission technology with the purchase of CoreOptics in 2010 (see “Cisco wraps up CoreOptics acquisition”).
Luxtera unveiled its silicon photonics capabilities for the first time in 2005, with a modulator for 10-Gbps applications (see “Luxtera touts 10-Gbit CMOS capabilities”). It created the Blazar line of active optical cables in 2007 that leveraged transceiver arrays based on its expertise; the company sold the line to Molex in 2011 (see “Molex buys Luxtera’s active optical cable line”). Luxtera unveiled a QSFP28 100-Gbps transceiver and optical subassembly in 2015 and a 2x100G transceiver in 2017 (see “Luxtera offers PSM4 QSFP28 optical module, silicon photonics chipset” and “Luxtera ships 2x100-Gbps PSM4 silicon photonics embedded optical transceiver”). Meanwhile, it has been active in a variety of multi-source agreements.
Looking for an advantage
Responding to an email query, Cignal AI Founder and Directing Analyst, Optical Networking Andrew Schmitt wrote that Luxtera has been under pressure ever since Intel entered the silicon photonics field (see, for example, "Intel shipping silicon photonics optical transceivers"). However, as Intel already has silicon photonics expertise, he doesn't think the idea that Intel pursued Luxtera has much credence. He also is skeptical of Broadcom's involvement, as that company recently exited the module business (through Avago's sale of its module business to Foxconn) and therefore wouldn't have a product line that would benefit from silicon photonics.
"Cisco is a possibility because the company is seeking ways to vertically integrate hardware and software in situations it believes it will yield competitive advantage. Finding a way to deliver data center optics cheaper and denser via silicon photonics is one such way," he added. "Juniper acquired Aurrion two years ago with a similar goal – nothing has been shared publicly yet about how they will bring this technology to market. And Huawei and Nokia are also pursuing silicon photonics already.
"I don’t see Cisco acquiring Luxtera radically reshaping the industry; it is a continuation of trends already underway," Schmitt concluded.
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(This article was amended from the original to add the analyst commentary.)