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Infineon Gets 10-Gig Boost

Light Reading
News Analysis
Light Reading
9/5/2000
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Infineon Technologies AG (NYSE: IFX) has scored a coup for a small transponder it's designed for telecom equipment in 10-Gbit/s data networks. But it looks like the semiconductor vendor will need to work hard to make its influence a market reality.

On Friday, Infineon announced the formation of a multisource agreement (MSA) with JDS Uniphase Inc. (Nasdaq: JDSU; TSE: JDU), Nortel Networks Corp. (NYSE/TSE: NT), and startup LightLogic Inc. The deal states that the vendors will use a common set of specs (ones based on Infineon's existing transponders) to build miniature, 200-pin plugs to link switches, routers, add/drop muxes, and digital cross-connects from electical to optical networks. The transponders will offer as many as 16 622-Mbit/s channels to move Sonet/SDH, gigabit Ethernet, and Fibre Channel traffic on and off 10-Gbit/s pipes at distances up to 10 kilometers, the vendors say. (A longer-range version is planned for a later date.)

According to Infineon, the deal is a milestone, because it will jumpstart the market for short-range 10-Gbit/s links by making it more economical to build high-speed connectivity into switches, routers, and other gear used in central offices.

"This transponder cuts implementation costs by at least 30 percent," claims Frank Becker, Infineon's manager of North American fiber optics. He says the plug's small size reduces the cost of the lasers and overall packaging required to put this kind of interface into network devices.

But Infineon faces a range of challenges in getting its transponder widely implemented, even with the participation of JDSU and Nortel. For one thing, it's the only vendor capable of supporting the agreement right now. Since this is a multisource agreement, participants are supposed to back each other up with extra parts in case supplies run short for one of them. But Infineon is currently the only vendor in the group with a transponder that fits the specs. LightLogic has an OC192 transponder, but not one as small. JDSU and Nortel say theirs are on the way, but give no dates. Without the goods to deliver the promised support, the MSA is of little value to prospective customers.

The deal also faces formidable competition. In July, Alcatel SA (NYSE: ALA), Hitachi Ltd. (NYSE: HIT; Paris: PHA), and Lucent Technologies Inc. (NYSE: LU) agreed to support a common interface of their own for 10-Gbit/s links. That interface is larger than Infineon's (300 pins instead of 200), but it extends further, to distances up to 40 kilometers, with an 80-km version planned.

Infineon tried to join the Alcatel/Hitachi/Lucent MSA and was spurned. "We were told it was closed," says Jens Fiedler, Infineon's product manager for 10-Gbit/s devices.

Another challenge: the seeming lack of enthusiasm of Infineon's big partners. When contacted Friday, both JDSU and Nortel seemed uninformed and uninterested in the agreement. "This really isn't a big announcement for us," said JDSU spokesperson Allison Reynders on Friday. "We've just agreed on how to make these interfaces if customers want them." And from Nortel spokesperson Robert Taylor: "I have no opinion as to the importance of this release. I leave that up to you." Neither JDSU nor Nortel had briefed analysts at press time.

Then there's the matter of emerging standards. While Infineon claims to support completed work by the Optical Internetworking Forum and the International Telecommunication Union (ITU), it can't claim the same for 10-Gbit/s Ethernet specs being worked on by The Institute of Electrical and Electronics Engineers Inc. (IEEE) That work won't be finished until 2002. Unfortunately, that's the work that looks like it's going to determine the real future for short-reach, 10-Gbit/s interfaces. In the meantime, Infineon has its work cut out.

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

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