Network gear maker Cisco Systems Inc. said it
would buy optical component maker Acacia Communications Inc. for $2.84 Billion
in cash, as it seeks to garner a bigger chunk of 5G spending by telecom
companies.
Globally, mobile networks would need
higher-capacity optical interfaces to handle a surge of data when high-speed the fifth-generation network comes online in the next few years. The acquisition
will bolster Cisco's technology for service providers upgrading to 5G and put
its optical portfolio ahead of the shift toward using plug and play devices
across various communication segments.
According to Cisco's Visual Networking Index,
global internet traffic is projected to more than triple to 13.2 exabytes per
day in 2022 from 4.1 exabytes per day in 2017. "Cisco's optical portfolio
was mainly for short-range data center connections, and now gains Acacia's
skill set in areas such as metro, long-haul, and undersea.
Revenue in Cisco's infrastructure platform
business, which includes switches and routers, rose 5% to $7.55 billion in its
third quarter. That business is expected to get a boost from 5G communication
networks. The deal is Cisco's biggest since its $3.7 billion purchase of
business performance monitoring software company AppDynamics in 2017.
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