External Publication

The optical imperative and Nokia’s vision to close the AI gap

Network World [Unofficial] March 26, 2026

While all eyes were on Nvidia GTC last week, there was another event happening with implications for the evolution of AI. The Optical Fiber Communications (OFC) conference took place in Los Angeles and addressed the desperate hunt for more capacity. For years, the networking industry has operated on a comfortable four-year innovation cycle. But as generative AI transitions from a boardroom initiative to physical infrastructure, that timeline has been accelerated.

During the OFC 2026 event, Nokia held a press and analyst event to announce a number of new products that brought some thought leadership to the optical networking industry. During his keynote, David Heard, president of network infrastructure at Nokia, explained the importance of optical: “Optical is a great place to ensure that we can keep up with the 60,000 times improvement in compute over the last 20 years, when networking has only improved by about 30 times.”

“We have some work to do, power is at a premium, and the volumes of data that traverse the WAN have grown by orders of magnitude,” Heard added.

That “work to do” is what Nokia’s recent suite of application-optimized optical solutions aims to solve—to enable networking to keep up with the massive growth in compute.

The Infinera factor

A year ago, the industry watched with cautious optimism as Nokia completed its acquisition of Infinera. At the time, skeptics wondered if the merger would succumb to the usual “mismatch of cultures” trap. Standing on stage at OFC 2026, Heard—the former CEO of Infinera—provided the answer.

The acquisition has transformed Nokia from a strong player with several best-of-breed products into a company that can now leverage vertically integrated solutions to deliver additional value. By combining Nokia’s massive R&D scale ($2 billion annually) with Infinera’s specialized DNA in photonic integrated circuits (PIC), the company can differentiate at a platform level.

Nokia operates one fab and has another in development (the newly expanded six-inch indium phosphide facility in San Jose), as well as an advanced packaging center in Pennsylvania. In an era where “sovereign AI” and supply chain resilience are paramount, being the only Western vendor with this level of vertical integration should act as a strategic moat.

Moving beyond the one-size-fits-all approach

For decades, the industry chased a single goal: maximum capacity per fiber. But the AI era has bifurcated the market. On one hand, we have the “scale-across” architecture of hyperscalers, where they are deploying upwards of 13,000 fibers between data centers. With that much fiber, it’s important to simplify what is typically a complex environment to deliver the lowest cost and power per bit. On the other hand, service providers dealing with fiber-constrained long-haul routes still need to squeeze every last drop of spectral efficiency out of a single strand.

Nokia’s response is a building-block approach that breaks the monolithic tradition of optical engines. Instead of one or two engines, they’ve introduced four distinct DSP engines—Ontario, Huron, Superior, and Pacific—which can be mixed and matched into 13 different applications.

Three innovations defining the new network

While the product list from OFC was extensive, three specific announcements stand out to me as thought leadership in action:

The double-sided pluggable : As switches move toward integrated optics (CPO/XPO), the industry struggles with how to convert that “gray” light to coherent light for transport. Nokia’s solution integrates gray and coherent optics into a single device. As Rob Shore, head of optical network marketing, noted, this can result in a 70% TCO saving by eliminating the need for separate thin transponders and extra cabling.
The full-band transponder : For hyperscalers lighting up ten fibers at once, the manual labor of connecting 1,000+ components is a recipe for human error. Nokia’s new appliance integrates the line-side, coherent, and client optics into one unit. It turns a chaotic rack of spaghetti cabling into a single fiber out.
The superior engine : By taking the restrictions off the power envelope of a standard pluggable, Nokia has created a 2.4 Terabit engine that delivers a 60% reduction in TCO compared to today’s embedded engines.

The Jevons paradox of bandwidth

There is a lingering fear in the industry that radical cost reductions will crater the market. Nokia is betting on the Jevons paradox: the idea that as a resource becomes more efficient and cheaper, its use actually increases overall consumption. In some ways, the Internet has been proof of this, as bandwidth and costs for consumers have fallen, usage has grown at unprecedented rates. There have been many parallels made between the Internet and AI, and this is another that’s likely to hold true.

By driving down the power and cost of 1.6T and 2.4T connections, Nokia isn’t just serving the existing market; it’s enabling agentic AI workloads that were previously cost-prohibitive to become a reality as the network costs won’t drive all the economic value from the ecosystem. This lets the AI builders change their question from “can we build it?” to “how fast can we scale it?”

Heard ended his session by stating, “customers are 100% buying on the roadmap. They are in our labs. They’ve been in our contract manufacturing locations, in our fabs, in our packaging facilities, going through the ability to scale,” which indicates the Infinera acquisition is having the “1+1=3” effect industry watchers of Nokia were hoping for.

The new clock speed

The most telling takeaway from OFC 2026 is the change in clock speed. The industry has moved from four-year development cycles to 18-month splits. Nokia’s integration of Infinera has given it the optical horsepower to keep pace with this brutal rhythm that AI has created.

Nokia’s diversified optical portfolio addresses a broad range of network environments, from localized data center clusters to long-haul subsea routes. This comprehensive approach suggests the company is moving beyond transactional hardware sales to become a fundamental enabler of AI infrastructure, specifically targeting the power efficiency and economic scaling required for generative AI workloads.

David Heard, president of network infrastructure at Nokia, speaks at the OFC 2026 conference.

Zeus Kerravala

The Infinera factor

Moving beyond the one-size-fits-all approach

Three innovations defining the new network

The Jevons paradox of bandwidth

The new clock speed

Discussion in the ATmosphere