Nortel Nixes Passive Components

The plans of Nortel Networks Corp. (NYSE/Toronto: NT) to become a big player in the passive components business appear to have come to naught, to judge from some detective work undertaken by the crew here at Light Reading.

The spadework –- analyzing manufacturing equipment being auctioned off by Nortel and identifying products withdrawn from its Website –- suggests that the company has dumped a program that might have given it an edge in manufacturing high-performance components.

In particular, Nortel no longer appears to be making Arrayed Waveguide Gratings (AWGs).

The fact that Nortel was making AWGs at one stage might surprise some industry observers, because Nortel hadn’t made any announcements on this score -- not saying whether it’s started or stopped making them. All that a company spokesperson was prepared to say is that Nortel isn’t selling them now and doesn’t have any plans to do so.

However, Nortel hasn’t been able to obliterate all evidence of its past activities. A simple search on Google for Nortel AWGs turns up pages on Nortel’s Website that have been withdrawn.

Nortel also has been selling off huge amounts of equipment that was probably bought for AWG manufacture, in auctions run by Henry Butcher International Ltd. More than 20,000 items from components plants in the U.K., Canada, and Switzerland have been put up for sale, the first auction being held in December 2001 (see Nortel Fire Sale). Another 2,000 lots of equipment, some of it unused and some costing more than $1 million when new, were sold this past Jan. 22.

In the January sale, Nortel’s Harlow, U.K., site offloaded a range of four-inch silicon wafer processing gear such as photolithography, deposition, and etching kit. Since the site made optical rather than electronic components, it's almost certain that this gear was used to make AWGs and more advanced planar waveguide circuits. (Active components are made at Nortel's Ottawa location.)

A former employee says Nortel was doing more than making run-of-the-mill AWGs; it had succeeded in developing particularly low-loss ones. This promised to make AWGs an even more attractive starting point for integrated optics developments (see Photonic Integrated Circuits).

All of this is a far cry from May 2000, when Nortel announced the setting up of its “High Performance Optical Components Solutions” business unit. At the time, it said it would invest billions of dollars in it and create thousands of new jobs (see Nortel Creates Optical Components Unit,Nortel Remolds Its Component Business, and Nortel to Double Production Capacity).

According to reports filed with the SEC, Nortel's components business generated $674 million in revenues and $285 million in gross profit for the quarter ended September 30, 2000, the first full quarter after the components business was launched as a separate unit. A year later, revenues had nose-dived by 94 percent, resulting in an $87 million loss for the corresponding quarter in 2001.

Nortel is planning a further auction of component manufacturing and test gear, this time from its Paignton, U.K., facility on April 10 and 11. Paignton is the home of Nortel's optical module business… for the time being.

— Pauline Rigby, Senior Editor, Light Reading
http://www.lightreading.com