Doubling down on optics: How Nokia’s Infinera acquisition fuels AI driven network scale

“Really, the driving force behind all of this is this substantially growing need for optical connectivity solutions. And it's growing not only in volume, so the size, quantity, total capacity in the network growth, but also the number of applications is diversifying as well,” he explains.

Since signing the $2.3 billion agreement to fold Infinera into its Network Infrastructure division, Nokia has been clear: the combined entity will turbocharge product development across every segment of networking, from subsea long‑haul to intra‑data‑centre links.

Shore underscores that the traditional stronghold of high‑speed optics—long‑distance routes and metro backbones—has given way to a panorama of ever‑more demanding use cases.

“That includes everything from short‑reach data centre interconnect, campus‑style data centre interconnect, and even inside the data centre for short‑reach optics,” he says.

Key to meeting this explosion in demand, Shore argues, is scale. “With the Nokia and Infinera integration, one of the…reasons why this fits so nicely is, of course, it virtually doubles the scale of the business, but it also improves our presence in a variety of different application spaces.”

Where Nokia historically shone with traditional service providers in Europe, Infinera brought deep relationships with webscale data centres and submarine network operators.

The combination accelerates innovation at every technology generation, Shore adds, allowing the joint company to “develop solutions across the market space” more rapidly than either could alone.

For Manish Gulyani, senior vice president and chief marketing officer of Nokia Network Infrastructure, the tie‑up is perfectly timed to capitalise on the AI‑driven surge in data centre networking.

“Everybody talks about AI, but they don't talk a lot about networking,” he observes. “When we said strategically that we want to grow our business around data centre networking, it's all driven by the demand by AI. And so that covers both our IP and our optical businesses that we believe complement perfectly.”

Gulyani paints a holistic picture: from fixed‑access at the network edge, through IP routing and optical backbones, all the way to intra‑data‑centre switching fabrics.

He points to Nokia’s recent contract to supply the first sovereign AI cloud in Australia as proof of concept: “The idea is reduce power, increase efficiency. Our data centre IP solutions are in there, for example. So people are looking to put AI, take a different approach with a solid remedy. With this power, whether it's space—you need many things—and we want to be the one solution for all things network.”

Shore drills deeper into how the acquisition will serve the insatiable bandwidth appetite of tomorrow’s data centres.

Worldwide, there are roughly 11,000 data centres today, and that figure is forecast to double within five years. “Every time you build a new data centre, that data centre requires connectivity,” he says. “AI‑related bandwidth is about doubling every year.”

He identifies three distinct optical applications driving product development:

1. Regional data centre interconnect

   Here, operators often deploy multiple fibres between sites rather than maximise capacity on a single strand. “Cost per bit isn't number one for data centre operators; power is,” Shore emphasises. New pluggable coherent modules, optimised for low power per bit and low cost, light up bundles of fibre to minimise transmission losses and free up power for compute.

2. Campus‑style interconnect

   As single logical data centres spread across multiple buildings up to 20 km apart, ultra‑low latency and power efficiency become critical. “They need very low latency between buildings so that it can still operate like a single data centre,” Shore explains. New optical engines are being designed specifically to meet these tight reach and latency requirements.

3. Intra‑data‑centre links

   Within densely packed server halls, distances are measured in hundreds of metres, and every milliwatt saved translates directly into more computing power. “Inside the data centre, of course, you're talking about hundreds of metres, not even a kilometre, and that's, again, 100% power driven,” Shore says. He highlights the advantage of owning the full manufacturing stack—from optical engines to silicon fabrication—which allows Infinera (and soon Nokia) to innovate with unprecedented agility.

With technology alignment established, the focus turns to market execution. Gulyani explains that Nokia’s vast global footprint will multiply the reach of combined optical solutions. “We operate in over 100 countries. We have people who can deliver projects—we're in 100 countries. That’s where the scale kicks in.” He notes that Infinera’s optical revenues were heavily skewed towards North America, while Nokia’s strength lay elsewhere, making the merger “very, very complementary.”

Shore adds that scale is not only about geography but also about volume commitments. Hyperscale operators such as Google, Meta and Amazon demand suppliers who can fulfil orders of tens of thousands of units at a moment’s notice.

“If you want to do business with the hyperscalers, their first question is, ‘Are you going to be able to deliver the 50,000 units I need next week?’” he says. By nearly doubling combined capacity and vertical integration, Nokia can now challenge for larger slices of the hyperscale market—where 80% of industry spending is concentrated, Shore estimates.

When asked about the fate of the Infinera brand, Gulyani is unequivocal: “On day one, the moment we issued a press release it became Nokia.” Shore confesses there were a few expos where Infinera logos lingered—“we sadly had a few events that had booths already manufactured that had the Infinera logo on them”—but they have since been retired. The companies now present a “single, unified company with a single, unified set of solutions, portfolios and development strategy,” he confirms.

Both executives stress that integration has proceeded at breakneck speed. Gulyani notes they closed the deal in late February and were co‑presenting at Mobile World Congress by early March, underscoring that “speed matters. There’s not going to be a slow process.” Shore adds that minimal product and customer overlap made the merger smoother than is often the case in large acquisitions.

While capacity, cost and power efficiency remain the headline drivers, security and automation are emerging as equally critical pillars for networks serving AI‑centric workloads. Gulyani highlights Nokia’s leadership in quantum‑safe networking solutions across both IP and optical layers, a strategic advantage as adversaries begin to explore “Harvest Now, Decrypt Later” attacks. “Security is going to be a big concern,” he says.

Shore concurs that new problems breed fresh opportunities. “We love new problems because they allow us to innovate completely new solutions,” he says.

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