Nokia plans to acquire Elenion, a privately-owned technology company whose proprietary silicon photonics design platform can lower the ‘per bit’ cost for network operators.

Through its acquisition of Alcatel-Lucent in 2016, Nokia has become one of the biggest suppliers of optical transport solutions. In the latest quarterly and full-year results, the IP routing and optical businesses registered healthy growth. This newly announced transaction looks to be an attempt to acquire unique technology know-how. The parties claim that Elenion’s silicon photonics design platform can, with its design toolset, improve the efficiency of the optical supply chain, and in turn, bring down the cost of data transmission on per bit basis for the operators.

The technology know-how can be highly relevant to Nokia’s core mobile business as well. The terse announcement stresses that Elenion’s silicon photonics technologies are highly integrated, low-cost, and ideal for short-reach and high-performance optical interfaces. This indicates that the technologies can be broadly applied in the dense radio networks expected for 5G, as well as the enterprise market where Nokia has made strong gains recently.

“As a world-class provider of silicon photonics solutions, advanced packaging and custom design services, Elenion provides a strong strategic fit for Nokia. Its solutions can be readily integrated into Nokia’s product offerings and address multiple high growth segments including 5G, cloud and data center networking,” said Sam Bucci, Head of Optical Networking at Nokia. “When combined with Nokia, Elenion technologies will accelerate the growth and scale of Nokia’s optical networking business, while enabling us to cost-effectively address new markets.”

“Nokia is an industry leader in networking systems, including advanced coherent optical interfaces and hyperscale datacenter solutions. Elenion benefits by having its technology incorporated into an industry-leading portfolio and with a company offering solutions across a wide array of networking applications,” added Larry Schwerin, CEO of Elenion Technologies. “Nokia’s strong optical industry leadership, size, scale, global reach, and ongoing commitment to investment in key technologies vastly accelerates the adoption of Elenion silicon photonics technology.”

The value of the transaction is not disclosed, and the companies expect the deal to close in Q1 2020 after regulatory clearance.