Qusion Inc., a tiny startup in Princeton, N.J., is hoping to make a splash next week with an announcement of plans to develop the optical equivalent of integrated circuits.

The company is at an early stage of development; it's got fewer than 10 staff and has yet to finalize its first round of funding (see Qusion Technologies Inc.). But it's thinking big. It's joining a bunch of other startups and vendors chasing one of the Holy Grails in this field -- incorporating multiple active and passive devices on the same chip.

If Qusion succeeds (and that's quite a big "if"), it will be able to put complete subsystems -- like switches, add-drop multiplexers, and transmission modules -- on a single chip. And that would lead to dramatic improvements in the performance and price of telecom equipment.

Like a number of other vendors, Qusion is aiming to achieve this goal using indium phosphide to make its chips. And like other vendors, it's aiming to do things step by step. First, it plans to put a single device on a chip; a 40-Gbit/s optical modulator and a 1-by-2 switch are planned for early next year. Shortly afterwards, it'll put both devices on the same chip, Qusion says.

Mind you, it's one thing to make a few chips in a lab and it's another thing to come up with a manufacturing process that can pump out large volumes of them and maintain the necessary quality controls. At least one vendor -- Nanovation Technologies Inc. -- has run into problems trying to do this with indium phosphide, which is a difficult material to work with (see Nanovation Comes Down to Earth).

Still, plenty of other startups reckon they can solve the problems that Nanovation encountered, and some of them appear to be further ahead than Qusion. In particular, Agility Communications Inc. says it's been sampling chips with multiple integrated functions for months and plans to start volume production before year's end. In contrast, Qusion's not yet moved into its 33,000-square-foot manufacturing facility in East Brunswick, N.J.

Other vendors developing optical integrated circuits using indium phosphide include Intense Photonics, Kamelian Ltd. (see Kamelian Ltd.) and Lucent Technologies Inc. (NYSE: LU). New Focus Inc. (Nasdaq: NUFO) also is rumored to be working in this area.

Qusion, however, seems unfazed. "This isn't a market that will have just one or two vendors," says Igor Trofimov, executive VP. "There's room for us."

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