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AWG Startup Makes Waves

Light Reading
News Analysis
Light Reading
3/30/2004

Many prominent vendors of Arrayed Waveguide Gratings (AWGs) have disappeared in the past few years, but one small Austrian startup appears to be thriving.

Photeon Technologies GmbH, based in Bregenz, near Lake Constance, has made a business designing AWGs. But unlike the fabless component suppliers, which provide a range of standard components at a price per unit, Photeon only works with custom designs, which are manufactured at the customer premises or at whatever foundry they choose, for a one-off design fee and royalties.

It's a pretty normal business model. But what makes it interesting is that Photeon's customers appear to include big name components suppliers, the kind of guys who might be expected to be doing their own design work. Current customers include Infineon Technologies AG (NYSE/Frankfurt: IFX) and NTT Communications Corp., according to a source near the company.

It's unclear whether Infineon started buying AWG designs from Photeon before it spun out its own AWG group, which was sold to OpTun Inc. (see Infineon Spins Off AWG Business). Infineon's press office did not return calls, possibly because it was still preoccupied with the aftermath of the sudden departure of its CEO last week (see Infineon CEO Schumacher Quits).

Photeon says it can't comment on its customers because it has signed NDAs with them. But VP of sales and marketing Peter Nachbaur does say that it designed some components for WaveSplitter Technologies Inc. -- a market that WaveSplitter has since quit (see WaveSplutter?). Photeon was founded in 1999, back when WaveSplitter was puffing itself up for an IPO, which never materialized (see IPO Window Shuts Tighter).

"Our AWGs have quite good performance, especially cross-talk and uniformity," says Nachbaur, explaining why customers with a design capability choose to buy rather than do the work themselves.

Another reason may be the portfolio that Photeon's managed to build up. The startup's Website shows a complete library of designs for AWGs with up to 80 channels, as well as a range of other planar waveguide-based components, including switches, splitters, variable optical attenuators (VOAs), and even photonic crystals.

Some components vendors prefer to keep design closer to home, however. Pam Sufi, of JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU) corporate marketing, says JDSU does not use external design houses for its AWG components. "The best performance is achieved with designers who are also experts in the optical characteristics of the wafer fab process, and by very close interaction between the designers and fabrication engineers. We believe this is best done in-house."

With just 17 employees, Photeon was founded by a husband and wife team, Heinz and Dana Seyringer, together with Hans-Peter Metzler, who is president and CEO of NewLogic Technologies AG, a company active in wireless chips. Heinz and Dana run Photeon, as general manager and R&D manager, respectively. Metzler was the man with the vision to create the company. He and his family have invested an undisclosed amount in the startup, which started actively marketing its AWG design services last March.

— Pauline Rigby, Senior Editor, Light Reading

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particle_man
particle_man
12/5/2012 | 2:09:00 AM
re: AWG Startup Makes Waves
Pauline,

This sounds like a pretty unique business model. It is highly leveraged, it builds on custom products delivered to spec, and gets royalties in return. They turn their design talents into on-going royalties. It sounds like a great idea and one with little risk (read: capital) other than salaries.

Most companies build a standard product and try and sell it to people, making money on the margin. This new model is far more interesting.

It is also entertaining in that the VCs are cut out of the deal completely. This company appears to be designed to make money as opposed to reach a "liquidity event".

PM
Pauline Rigby
Pauline Rigby
12/5/2012 | 2:08:56 AM
re: AWG Startup Makes Waves
When I said it was a normal business model, I was thinking of the electronic chip design houses. Isn't that how they work, or am missing something here?

Also, I believe that some optical foundries offer design services, they don't seem to make enough money from just the fab.

[email protected]
stephenpcooke
stephenpcooke
12/5/2012 | 2:08:54 AM
re: AWG Startup Makes Waves
In terms of the chip business this is not a standard practice (ie: having the chip fabricated at any foundry). What you describe sounds more like a design consultancy with royalties.
alcabash
alcabash
12/5/2012 | 2:08:47 AM
re: AWG Startup Makes Waves
How do they compare to JDSU and NEL?
Markos
Markos
12/5/2012 | 2:08:36 AM
re: AWG Startup Makes Waves
The non-uniformity of our AWG designs are not dependant on channel spacing, which some companies have problems with. The non-uniformity, crosstalk and overall chip size is comparable to JDSU and NEL.
For more information please contact Peter Nachbaur (VP Sales & Marketing): [email protected]
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