Cisco Systems Inc, the biggest maker of networking equipment, is in talks to purchase optical chip technology company Luxtera Inc, people familiar with the plans said.
A final price for the closely held company has not been determined, but a deal would likely value Luxtera in the hundreds of millions of dollars, said the people, who asked not to be identified because the negotiations are private.
Cisco beat out rival bids from other companies including Intel Corp and Broadcom Inc, one of the people said.
The transaction has not been completed and an agreement might not be reached, the people said.
Representatives for Luxtera, based in Carlsbad, California, and Cisco declined to comment.
Intel and Broadcom did not have an immediate comment.
Luxtera develops silicon photonics technology, a way of converting information encoded into photons and carried over fiber optic cables directly into semiconductors, that greatly speeds up the transfer of data. Other equipment is usually needed to turn light from fiber optic cables into the electronic signals needed to run computers.
Luxtera says it can make a high volume of chips that can do that job, something that has eluded other companies in the industry for years.
The technology would give Cisco more capabilities in the components it uses to build networking machinery. The company has struggled to rekindle growth amid an industry-wide migration to cheaper machinery that uses open-source software.
Luxtera could give it a more fundamental technology to differentiate its products.
Under chief executive pfficer Chuck Robbins, Cisco has also expanded into software and networking services to lessen its dependence on proprietary hardware and software combinations.
Luxtera’s products are used in data centers to transfer information between server computers, as well as in mobile phone network base stations.
Luxtera chief executive officer Greg Young was previously at Intel and Broadcom.
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