Laser maker is hoping to automate its way into the market

September 27, 2000

3 Min Read
Laser Startup Bags $109 Million

A fully automated assembly and packaging plant is at the top of Novalux'sshopping list

Novalux Inc., a startup developing lasers for long haul,metro, and local area networks, scored a huge $109 million in a third roundof funding yesterday. Most of the cash is earmarked for a new productionplant that will provide the vendor with highly automated packaging andassembly facilities.

That's key. By automating the manufacturing process, Novalux should be ableto lower the cost of its products substantially, undercutting othercomponent players (see Novalux Promises Cheaper Lasers).

In addition to low cost, Novalux claims its devices will have another bigadvantage: power. The startup has demonstrated a laser with an opticaloutput power of 1 Watt -- twice that available using singlemode pump lasersfrom manufacturers like JDS Uniphase Inc. (Nasdaq: JDSU). More powerful lasersdrive signals farther on optical networks.

Novalux's products are based on a variation of existing vertical cavitysurface-emitting laser (VCSEL) technology. "[Conventional] VCSELs are verynice devices but they tend to stay in the low milliwatt range," says MalcolmThompson, CEO of Novalux. "We've designed a totally different laser cavity,and that brings two big benefits: high power and narrow linewidth."(Linewidth is a measure of the “spectral purity” of a wavelength; purerwavelengths distort less when transmitted down a fiber.)

Investors seem convinced by the marketing pitch. In fact, William Harding,managing director at Morgan Stanley Dean Witter, which ledthe investment round, was so convinced that he decided to come on board as a director. Other investors in this round were Cisco Systems Inc. (Nasdaq: CSCO), Credit Suisse First Boston, Intel Capital,Lamoreaux Partners, MSD Capital, NorthEast Ventures, Salomon Smith BarneySternhill Partners, Telesoft Partners, and U.S. Bancorp Piper Jaffray.Several previous investors also took part in this round, including CrownAdvisors, Crescendo Ventures, DynaFund, RWI, Tredegar Investments, andVanguard Venture Partners.

Automation has been a long time coming in the optical components industrybecause it requires such a big upfront investment. But with demand foroptical components currently outstripping supply in some areas, componentmakers have a tough choice: Make that investment or fall behind (see Components Shortage Delays Deliveries).

In this respect, Novalux is fortunate: Its technology lends itself toautomated manufacturing, according to Thompson. That's due to twoadvantages that are inherent to all VCSELs. First, it is possible to doon-chip testing before the wafer is broken up into individual devices. "Wecan predict whether the lasers will work early on in the process, whichgives us a real insight into how we can lower the manufacturing costs of thechip," he said. Second, the laser emits a wide circular beam from its topsurface, which makes it possible to use much looser alignment tolerances inthe optical package.

All this will put pressure on Novalux's competitors, which include VCSELmanufacturers like Honeywell Inc. and Mitel Corp. (NYSE/Toronto: MLT), as well as traditional laser manufacturers like JDSUniphase.

Novalux also claims to be developing a tunable VCSEL. This puts it on acollision course with several other startups such as Coretek, Nova Crystals Nova Crystals Inc., Cielo Communications Inc., and Bandwidth9 Inc. (see Nova Crystals Demos High-Power VCSEL and Cielo Shows Laser with Sandia Labs and Bandwidth9 Claims Laser Breakthrough).

Novalux's first product, a pump laser, should be available in the first halfof 2001.

-- Pauline Rigby, special to Light Reading http://www.lightreading.com

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