The European Commission has approved a somewhat rare international transaction, that sees a European (well Finnish) company acquire an American business.
It was in June 2024 when Nokia had announced the $2.3 billion (£1.8bn) acquisition of US data centre equipment provider Infinera. The deal will make Nokia the world’s second-largest provider of optical networking equipment after China’s Huawei, with a 20 percent share.
The deal on paper makes sense, as it comes at a time when large tech companies are making huge investments into data centres to build and deploy artificial intelligence (AI) services.
European approval
Infinera makes optical semiconductors and networking equipment and has a leading position in intra-data centre communications (i.e. high-speed links between servers within a facility).
About 60 percent of the company’s business comes from the US, and it remains to be seen whether the acquisition of an American firm by a foreign entity will trigger the interest of the Donald Trump administration.
But on this side of the pond, the European competition regulator on Wednesday, as widely expected, finally announced that it “approved unconditionally, under the EU Merger Regulation, the proposed acquisition of Infinera Corporation (‘Infinera’) by Nokia Corporation (‘Nokia’). The Commission concluded that the transaction would raise no competition concerns in the European Economic Area (‘EEA’).”
Both organisations had said the deal allow the merged entity to attain the requisite scale in its optical networking business to accelerate its product roadmap and compete more vigorously with larger competitors in the market.
Data Centre expansion
Tech giants including the likes of Amazon, Apple, Google, Meta Platforms and Microsoft have already announced plans to invest tens of billions into AI data centres this year.
Meta said last month that it would increase its spending on AI infrastructure this year to around $60bn to $65bn in capital expenditures.
Meta’s announcement came days after US president Donald Trump announced that ChatGPT developer OpenAI, SoftBank, Oracle and Saudi Arabia sovereign wealth fund MGX were forming a venture called Stargate to invest $500bn into AI infrastructure across the US.
Microsoft meanwhile said last month it was planning to spend $80bn on data centres in fiscal 2025, while Amazon said its 2025 capital spending would be higher than an estimated $75bn last year.
And Apple this week said it plans to invest $500 billion (£395bn) in the US in the next four years, including hiring 20,000 new staff and producing AI servers in the country.