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EM4 Acquires PowerNetix 604701

From the teensy-tiny merger files: Packaging specialist EM4 nabs PowerNetix in struggling pump laser market

July 28, 2004

3 Min Read
EM4 Acquires PowerNetix

So it's been a while since you've heard what's going on with the players in the pump laser market, hasn't it?

In the latest developments, manufacturing firm EM4 Inc. has acquired pump laser vendor PowerNetix Inc., a move that speaks more to PowerNetix's packaging expertise than to the strength of the pump laser market (see EM4 Acquires PowerNetix). Pump lasers are often used in optical amplifiers to relay telecom transmission signals, and the market has been slow ever since the collapse of construction in long-reach fiber networks.

While EM4 will pick up PowerNetix's 980nm lasers in the deal announced yesterday, the company mainly wanted PowerNetix's packaging technology. EM4 was founded in 2001 by veterans of the optical components industry, primarily to bring new packaging ideas to the sector.

"What PowerNetix offered was a high-power [pump laser] packaging technology that was Telcordia-qualified," says Basil Garabet, EM4's CEO and a former executive with tunable laser startup Altitun.

Financial terms of the deal were not disclosed. EM4 is still considering how many of PowerNetix's dozen remaining employees will be retained.

EM4 acts as a contract manufacturer for modules, sometimes adding its own components, such as lasers, to a job. The company works in volumes of around 10,000 units, making it an intermediate step for clients whose volume isn't quite high enough to justify using offshore manufacturing.

Like most optical companies, EM4 has had to search beyond telecom for revenues, delving into the cable, military, and industrial markets. "That's what's kept us going the last few years," Garabet says.

That PowerNetix bowed out is hardly surprising, as pump lasers haven't been a hot property of late, a reflection of the malaise in long-haul transport. Research firm ElectroniCast Corp. expects the pump laser market to grow dramatically as DWDM buildouts rekindle, but sales still won't be huge: $255 million in 2008, compared with $70 million in 2003 (see Pump Laser Diode Modules to Reach $255M).

Quite a few optical components companies have stayed in the pump laser market, however. The big three of JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU), Avanex Corp. (Nasdaq: AVNX), and Bookham Technology plc (Nasdaq: BKHM; London: BHM) still carry pump lasers, with Bookham wielding the famed Zurich manufacturing site that had previously changed hands from JDSU to Nortel Networks Ltd. (NYSE/Toronto: NT). (See Bookham Buys Nortel's Components Biz and Bookham Buys Onetta.)

Other competitors include Alfalight Inc., Archcom Technology Inc., Axcel Photonics Inc., Comlase AB, Eblana Photonics Ltd., Furukawa Electric Co. Ltd., Intense Photonics Ltd., Lumics GmbH, Princeton Lightwave Inc. (PLI), and Southampton Photonics Inc. Not all of them are still targeting telecom, however. A Southampton spokesman contacted last fall by Light Reading noted that his company gave up selling pump lasers to the telecom market and was concentrating on other applications.

Dropouts include Spectra-Physics Inc. (Nasdaq: SPLI), which halted 980nm pump laser development some time ago. No longer a telecom play, Spectra-Physics is being acquired by Newport Corp. (Nasdaq: NEWP). (See Newport Still Believes in Fiber.)

PowerNetix raised $10 million in two funding rounds, the last of which came in 2002 (see PowerNetix Nets New Funding).

— Craig Matsumoto, Senior Editor, Light Reading

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For further education, visit the archives of related Light Reading Webinars:

  • Optical Amplifiers: Putting the Power Into Metro Networks

  • Tunable Laser Developments

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