Gigaom

Cisco (s csco) said Friday it is buying Lightwire, a company that makes optics chips using traditional chip manufacturing techniques in a deal valued at $271 million. This is a significant acquisition for Cisco because it stays true to its core networking business and advances it with some pretty deep technology, which is just the thing to keep Cisco ahead of the growing pack of lower-cost competition on the switching side and the looming threat of open, software-defined networks.

Lightwire, which was formed in 2002, makes an optical transceiver using traditional CMOS manufacturing technologies. Competitors include Luxtera, Intel (s intc) and IBM (s ibm). Such transceivers are becoming more important for two reasons. One, thanks to the ability to use the CMOS manufacturing process ,the chips are priced for mass use in the data center, unlike traditional optical chips. Two, the use of optics means the chip can deliver…

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