ANAHEIM, Calif. -- OFC2001 -- The venture-capital arm of Lucent Technologies Inc. (NYSE: LU) has spun off an optical component startup -- one that will use Bell Labs' patents to create laser modules for terabit routers and switches (see Lucent Launches Startup).

AraLight Inc. was founded by Lucent's New Ventures Group, which built the startup's arsenal of intellectual property by seeing that it got full rights to 75 patents from Bell Labs. The VC also helped raise $10 million in seed funding from Signal Lake Ventures, Solar Venture Partners, and Ridgewood Capital.

Lucent also owns an interest in the new company, but AraLight CEO Michael Camp (who formerly headed up Tech-Sym and Tangram Systems), says Lucent wants to keep the size of its position undisclosed. "It's not a controlling interest," he asserts.

AraLight plans to offer modules that cram hundreds of lasers onto gallium arsenide chips that can then be added to silicon integrated circuits. Part of the process involves so-called "microbump flip-chip bonding," in which tiny bumps are used to position lasers on a chip -- two bumps per laser.

The result, AraLight says, is a lightning-fast element for use in creating terabit-speed gear. "We'll be offering high-performance, high-bandwidth modules basic to optical switching and interconnection," says Ashok Krishnamoorthy, CTO, formerly with Bell Labs.

In some respects, AraLight figures to be competition for other startups such as TeraConnect and Xanoptix Inc. (see Xanoptix's Strange Story). Like those newly formed companies, Aralight will focus on low-cost, high-performance links. Initially, AraLight plans short-reach modules, such as 850-nanometer VCSELs for deployment inside a terabit router or switch.

Lucent's launching of a new component startup in the optical space raises the question of how it will stack up against the company's recent component spinoff, Agere Systems. According to AraLight, there's no conflict of interest here.

"Agere is focused on long-haul and telecom, and on integrated circuits," says Krishnamoorthy. "We'll compliment those chips."

Located in Monroe Township, N.J., AraLight has 28 employees and plans to grow to about 50. Most of its manufacturing will be outsourced, sources say.

-- Mary Jander, senior editor, Light Reading http://www.lightreading.com