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Optical/IP

A Tale of Two Lightchips

When it first started out, Lightchip Inc. made a big deal out of the fact that its products integrated DWDM multiplexing and network management capabilities (see Why Cisco Loves Lightchip). But today it appears to be singing a different tune -- by selling its DWDM multiplexing and network management units to separate buyers.

Confluent Photonics Corp. snapped up the DWDM multiplexing group, while Digital Lightwave Inc. (Nasdaq: DIGL) bagged the network monitoring division (see Confluent Acquires Lightchip Biz and DIGL Acquires Lightchip Biz).

But Ian Turner, former CTO and senior VP of engineering at Lightchip, sees no inconsistency in the company's actions. Initially Lightchip promoted its optical performance monitors (OPMs) -- subsystems incorporating DWDM muxes and network management. Later, it also started touting DWDM muxes as an alternative to Arrayed Waveguide Gratings (AWGs) (see Lightchip Launches 'AWG Killer'). But although both products were based upon the same underlying technology of bulk diffraction gratings, says Turner, the markets they addressed were completely different.

"On the one hand, we had a engineering team concerned about how the OPM would fit into Cisco Systems Inc.'s (Nasdaq: CSCO) 15216 platform," he says, referring to Cisco's metro DWDM box. "On the other we had lab technicians and scientists worrying about performance and manufacturing in glass. It was obvious they were two separate divisions."

The designs of the bulk-diffraction gratings are different for the two product types, Turner adds, noting that Lightchip outsources the manufacturing of the bulk diffraction gratings to an offshore partner -- in other words there is no skills overlap in manufacturing.

When the board decided to look for a buyer, Turner took charge of the DWDM components side, while Lightchip's CEO Isadore Katz took the OPM side, and each set out to find the best suitor. Reading between the lines, the explanation seems to be that Lightchip simply could not sell both product lines to the same buyer.

The terms of the two deals weren't disclosed. Turner confusingly describes the deal with Confluent as "not as blunt as an asset purchase but not as complicated as an acquisition." But considering the fact that, according to Turner, Lightchip's investors ended up empty handed, it seems closer to the former than the latter.

In both cases, the deals involved the transfer of assets including intellectual property, inventory, manufacturing facilities, and employees. Before the sales, Lightchip numbered around 70 employees, it says, down from a peak of 180. Confluent took on 18 of those, including Turner, who becomes the new president and COO. Around 20 staff went to Digital Lightwave.

Is this the end of Lightchip? Well, yes and no. The group that went to Confluent will retain the Lightchip name, and it has taken over the Lightchip Website. A shell of the original startup was also left behind, consisting of bits and pieces that the company had developed but never sold. This will be wound up in an orderly fashion, according to David Hardwick, CEO of Confluent Photonics.

— Pauline Rigby, Senior Editor, Light Reading
www.lightreading.com
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FAFA 12/4/2012 | 9:32:37 PM
re: A Tale of Two Lightchips This was a fabulous place to work. I'm sorry to see that it did not survive in its former state. I'm sure the scaled-down version will be as successful with their product offerings as the parent company, as there is great talent there.

Question: What are they going to do with the 1200 lbs of Gradium glass left over?
realoptics 12/4/2012 | 9:32:35 PM
re: A Tale of Two Lightchips Although it is my opinion and strong belief that grating based mux/demux technology is taking over the market from the AWG(in the way Lightchip made a correct claim on the famous or infamous 'AWG killers'- congratuation at least they are sucessful on this one-we knew all the decent U.S. AWG companies are gone by now!), the devices, especially the OPMs Lightchip made are too bulky to be used in any real network easily.

There are many other much talent people on the market who are fully using the beaty of gratings, thriving even in today's environment.

Sorry for not using time to check spelling, but that has nothing to do with talent.
wavymode 12/4/2012 | 9:32:34 PM
re: A Tale of Two Lightchips wake up realoptics
try living up to your name
no gratings - bulk,fiber or eschelle perform as well as AWGs
and there ARE still good US AWG suppliers
pumping 12/4/2012 | 9:32:33 PM
re: A Tale of Two Lightchips Who can deserve as good US AWG suppliers?
Lightwave Microsystems? Scion? or Confluent?
Please advise.
KeyForce 12/4/2012 | 9:32:33 PM
re: A Tale of Two Lightchips It seems that Digital Lightwave bought Lightchip OWM biz for channel monitors based on bulk grating technology. However, Lightchip outsources gratings. What is Lightchip proprietary technology? Digital Lightwave bought Lightchip OWM for what? How can Lightchip team make a real channel monitor, not just a show box? It is either a stupid decision made by Digital Lightwave or hidden deal.
KeyForce 12/4/2012 | 9:32:28 PM
re: A Tale of Two Lightchips Yes, it was a fabulous place to burn money. No company can survive in such a state. The scaled-down version is the first step towards disappearance though "there is great talent there". Who cares. This is a good lesson to investors - who should be invested?
realoptics 12/4/2012 | 9:32:23 PM
re: A Tale of Two Lightchips Wavymode:

Probably you have not read any of the recent news, Lightwave Microsystem is gone, even the founder of the company is publically acknowledge that in 6-12 months time, there will be no cedible U.S. AWG vendors left, we knew JDSU bought and disbanded PIRI and Scion, we do not consider any others are decent. If you belive otherwise, and think the group you are in is good enough, why not wake up and share the name on your next post?
BobbyMax 12/4/2012 | 9:32:15 PM
re: A Tale of Two Lightchips Digital Lightwave got better part of the deal as the integration of DWDMs with Optical Performance Monitors has been thoght of for a long time.

The market for optical components is very competitive. This simply means that there are vendors than the demands today and in the forsseale future.
wavymode 12/4/2012 | 9:32:01 PM
re: A Tale of Two Lightchips "Probably you have not read any of the recent news, Lightwave Microsystem is gone, even the founder of the company is publically acknowledge that in 6-12 months time, there will be no cedible U.S. AWG vendors left, "

the founder and management team of LWM made gadzillion mistakes over the last decade--
think about it - didn't sell there company when billions were offered
and when times were bad, no layoffs or paycuts
fabs running 24/7
company pursuing the wrong direction for 10 of the 14 years of it's existence
---doesn't leave them much credibility

"we knew JDSU bought and disbanded PIRI and Scion"

JDSU disbanded SCION ???? are u sure ???

"share the name on your next post?"
someday .. realoptics someday..
telelight 12/4/2012 | 9:32:00 PM
re: A Tale of Two Lightchips How about LightCross?
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