Cisco Systems on Friday said it plans to acquire Nemo Systems in a deal that will add network memory technology to its portfolio and enhance its core switching platforms and service modules.

The San Jose, Calif., networking vendor plans to pay up to $12.5 million in cash to acquire the privately held company in a transaction expected to close in October.

Nemo, based in Los Altos, Calif., has developed network memory technology, which Cisco said it plans to incorporate into its products to allow customers to scale network systems and line card bandwidth.

Once the acquisition deal closes, Nemo will become part of Cisco’s Data Center, Switching and Security Technology Group under Tom Edsall, vice president and general manager.

Nemo was founded in 2003 to build semiconductors for network systems. Co-founder and CEO Nick McKeown is an associate professor of electrical engineering and computer science at Stanford University.

The acquisition represents another move by Cisco’s to expand its data center portfolio. This week, Cisco unveiled a new data-center architecture, including a new line of server fabric switches and virtualization software based on technology picked up via its acquisition of Topspin Communications earlier this year. Its new Server Fabric Switch and VFrame 3.0 lineup should ease utility computing deployments, solution providers said.

Shares of Cisco traded down 20 cents at $17.66 Friday afternoon following the announcement.