Cisco Acquires its Optics Supplier Acacia for $2.6 billion

Cisco and Acacia Communications announced that they have entered into a definitive agreement whereby Cisco will acquire Acacia for $2.6 billion. Acacia is Cisco's existing supplier of optical interconnect technologies.

Cisco intends to continue supporting Acacia’s existing customers and any new customers, the company said. However, the acquisition fits in the company’s strategy of “reinventing every domain of the network” with its intent-based architectures and enrich the company’s optical systems offerings. Acacia, for its part, thinks it can “accelerate the trend toward coherent technology and pluggable solutions while accommodating a larger footprint of customers worldwide.”

David Goeckeler, executive vice president of Cisco’s networking and security business further notes: “With the explosion of bandwidth in the multi-cloud era, optical interconnect technologies are becoming increasingly strategic. The acquisition of Acacia will allow us to build on the strength of our switching, routing, and optical networking portfolio to address our customers’ most demanding requirements.”

EETimes notes that Cisco views coherent optical networks as a multi-billion dollar market in its early stage. Coherent optical networks use modulation of the amplitude and phase of light, with transmission across two polarization and DSP used at both transmitter and receiver. About a quarter of Acacia’s sales are DSPs and photonic integrated circuits, with the rest being photonic modules. Acacia also sells 600G transceivers.

The deal is subject to customary closing conditions and regulatory approvals. Cisco expects to close the acquisition in the first half of 2020.