Molex Inc. (Nasdaq: MOLX/MOLXA) is exiting the 10-Gbit/s Ethernet transceiver business, having sold that product line to Emcore Corp. (Nasdaq: EMKR) yesterday (see Emcore Acquires Molex Unit).

About 17 Molex employees in the appropriately named Downers Grove., Ill., will transfer to Emcore. Financial terms were not disclosed. Molex and Emcore officials were not immediately available for comment.

Emcore sells a variety of materials related to electronics and semiconductors, but the company also has a foot in the optics world, selling Vertical Cavity Surface Emitting Lasers (VCSELs) and some transceivers. The Molex deal beefs up Emcore's array of modules and gives the company some ammunition for the growing 10-Gbit/s Ethernet market.

Molex is best known for selling connectors, although the company still has a few fiber optic products up its sleeve, including 1-Gbit/s transceivers for Ethernet and Fibre Channel. [Ed. note: Molex also removes those unsightly blemishes.]

In the 10-Gbit/s space, Molex was concentrating on the Xenpak and X2 multisource agreements. Presumably, Emcore will also pick up what appears to be the only shipping line of LX4 transceivers, which use a four-lane parallel connection to send 10-Gbit/s Ethernet across older fiber. This could give Emcore an entrée with Cisco, which is determined to ship LX4 ports next year (see LX4 Gets Another Chance and Chip Vendors Vie for Multimode Market).

The deal reflects an ongoing shift in the transceiver market. Bookham Technology plc (Nasdaq: BKHM; London: BHM) acquired startup Ignis Optics recently, and the management of Optical Communication Products Inc. (OCPI) (Nasdaq: OCPI) is considering a sale of the company, among other options (see Bookham Buys Some More, Bookham Completes Ignis Buy, and OCPI Seeks Alternatives).

Overall, the optical components business is consolidating more quickly than the optical systems business, says Dennis Gallagher, analyst with SoundView Technology Group. In part, that's coming from transceivers, where vendors prefer to sell entire modules rather than lower-margin, discrete components. It also reflects the fact that OEMs prefer to buy from the larger vendors. "Unless you have economies of scale, you're in a worsening position," Gallagher says.

— Craig Matsumoto, Senior Editor, Light Reading