Nokia Completes Acquisition of Infinera

Nokia’s ambitious plan to transition from telecommunications to data centers may soon be realized, as it has completed the $2.3 billion acquisition of optical network provider Infinera.
This Finnish company first announced its intention to acquire Infinera in June last year, stating that the acquisition would expand its optical network business by 75%. In fact, Nokia faces some strong competitors in the global optical communication market, such as Ciena, Cisco, and Fujitsu in the West, as well as Huawei and ZTE in other regions.

Dell’Oro analyst Jimmy Yu stated in a LinkedIn post last Friday that considering Infinera’s market coverage, Nokia will occupy the second highest market share in multiple regions (including North America, Europe, the Middle East and Africa, the Caribbean and Latin America, and the Asia Pacific region (excluding China)) by 2024.
Yu said, “Completing the acquisition is the easy part, but the difficult part lies in the next step – integrating Infinera and Nokia’s optical communication business.” Assuming everything goes according to plan and “minimizing customer overlap,” he stated that Nokia will have a “stronger market position” in the optical transmission field.

Nokia enters the data center field

Why does Nokia want to further penetrate the optical communication market? The company has formulated a strategy to develop its data center business amidst the sluggish mobile network business (although Nokia has assured investors that the market is finally “stabilizing”). Data centers not only require GPUs, but also optical networks to support AI workloads.
In order to further strengthen the AI field, Nokia will replace CEO Pekka Lundmark with Justin Hotard, who currently serves as the head of Intel’s data center and AI departments. With Hotard taking office in April, AvidThink Chief Analyst Roy Chua stated that we can expect Nokia to “make further progress” in the data center market.
In addition to acquiring Infinera, Nokia has also taken some measures in the past year to expand its data center strategy. The company reached an agreement with massive cloud service provider CoreWeave in September, and CoreWeave chose Nokia to deploy its IP routing and optical transmission equipment as part of its backbone network construction.
Nokia has also done similar things for Nscale, while extending its agreement with Microsoft Azure to supply data center switches and routers to this massive cloud service provider.

Chua stated, “Infinera has added strength to Nokia’s optical data center interconnect product portfolio and made its data center solutions from scale out to scale out more comprehensive. As the demand for AI pre training, post training, and inference time expansion drives greater collective computing power and increases traffic between data centers, having a powerful Scale out product will give it a more advantageous position in the market
Yu also mentioned that Infinera has been developing component businesses including ZR optical devices, which are “very popular among ultra large scale cloud service providers that require extensive interconnection between metropolitan and campus data centers.