OCP Shutters VCSEL Works

Optical Communication Products Inc. (OCP) (Nasdaq: OCPI) has closed its Broomfield, Colo., facility, backing off from the market for long-wavelength Vertical Cavity Surface Emitting Lasers (VCSELs).

OCP presaged the move in its 10-K report filed with the SEC in December. "We expect to cease the operation of our Colorado facility as of January 31, 2006, because the cost of Fabry-Perot lasers has been decreasing, making 1300nm VCSEL technology less attractive as a cost-effective replacement, and because of the delay in development of the next generation of optical modules," the report reads.

The company got a headstart on the closure by trimming down the site earlier this month. "Right now, it's just a skeleton operation that's shutting down that Colorado facility," says Kirk Bovill, OCP vice president of marketing. OCP is retaining the Cielo intellectual property "for future development," according to the 10-K.

The Colorado closing isn't necessarily a bad sign for the rest of OCP. The company has reported two consecutive quarters of profits and holds a whopping $148 million in cash. For its fourth quarter, which ended Sept. 30, OCP reported profits of $1.6 million, or 1 cent per share, on revenues of $14.8 million.

Considered a cheap, efficient alternative to lasers commonly used in telecom, VCSELs were a hot item in the bubble years around 2000. Making them tunable, making them run at 10-Gbit/s, making them operate at longer wavelengths -- all were startup plans that earned VC money for the likes of Bandwidth9, Cielo Communications, Nova Crystals, and Siros Technology (all defunct).

The VCSEL market also attracted big companies including Alcatel (NYSE: ALA; Paris: CGEP:PA), Honeywell International Inc. (NYSE: HON), and Infineon Technologies AG (NYSE/Frankfurt: IFX).

OCP got into long-wavelength VCSELs with the acquisition of Cielo's assets in October 2002 for $5 million. At the time, several companies had produced 850nm VCSELs for short-range uses, but the output power on VCSELs in the 1310nm range still wasn't strong enough, creating a perceived opportunity for startups. Moreover, Cielo packaged its VCSELs into an array that reportedly sold well for OCP at first. (See OCPI Acquires Cielo, Cielo Pushes the Limits on Lasers, and OCP Achieves VCSEL Milestones.)

Today, several companies offer 1310nm VCSELs, but they haven't found the success that the 850nm generation enjoys.

"I think people make the assumption that what happened at 850nm will happen again," says Tom Hausken, an analyst with Strategies Unlimited . "It doesn't necessarily happen. The opportunity has gone past us."

OCP, which continues to hold an 850nm VCSEL line acquired from Gore in 2003, isn't the only company to step away from long-wavelength VCSELs. Last year, Infineon sold its 1310nm VCSEL line to Alight Technologies A/S . (See OCP Buys Gore's VCSEL Biz and Alight Buys Infineon VCSEL Platform.)

The VCSEL's luster hasn't completely faded, as the parts can still hold a price advantage against distributed feedback (DFB) lasers. Picolight Corp. recently introduced a 4-Gbit/s, 1310nm VCSEL aimed at storage networks. (See Picolight Ships VCSEL.)

In 2004, Finisar Corp. (Nasdaq: FNSR) bought up a Honeywell division that was building long-wavelength VCSELs, and JDSU (Nasdaq: JDSU; Toronto: JDU) got into the game with the 2004 purchase of startup E2O, a transceiver vendor that made its own VCSELs. (See Finisar Takes On Agilent and JDSU Buys E2O.)

Even the array idea is still alive, with VertiLas GmbH announcing plans last year for a 1550nm VCSEL array. (See VertiLas Demos 1550nm VCSEL Array.)

— Craig Matsumoto, Senior Editor, Light Reading

DarkWriting 12/5/2012 | 4:08:29 AM
re: OCP Shutters VCSEL Works I heard that Picolight just laid off a bunch of people. Now, I have to wonder if they were just making room for the rest of the Cielo people they didn't hire when OCP first bought Cielo? It sure is curious timing anyway. I also wonder if Picolight will pick up the facility for a song?

LW VCSELs will still have a market as soon as a manufacturer can show significant reliability data to the big boys like Sun, Cisco and Juniper.

Pete Baldwin 12/5/2012 | 4:08:26 AM
re: OCP Shutters VCSEL Works Regarding DarkWriting's point... we're told OCP is moving all its equipment out of the Colo. facility, so Picolight wouldn't be picking that up. (Of course, if someone has info to the contrary, we're all ears...)

OCP is one of those companies that doesn't do a lot of press releases or media events. They stay under the radar -- but they seem to have gotten themselves into a good position, with profitability and a nice horde of cash.

We always talk about Bookham and Avanex duking it out for survival in the market -- where does OCP fit in?
marcks 12/5/2012 | 4:08:14 AM
re: OCP Shutters VCSEL Works Dear DarkWriting,

I thought the big boys were mostly into short distance links where 850 nm VCSELs are doing fine. Do you (or anyone else) have more information about why they would need LW VCSELs?


paolo.franzoi 12/5/2012 | 4:08:13 AM
re: OCP Shutters VCSEL Works
I sat on the Technical Advisory Board for Cielo and argued that a 1310nm VCSEL (which is what they were developing) with enough power (and they did not have it at the time could be the key to lowering PON deployment costs.

My theory (not proven yet) would be to integrate the VCSEL with waveguides to lower the fundamental cost of ONT optics. They decided going after startup backplanes was a better path.

I still firmly believe that ONT optics could use a shakeup. The technology used to make the modules is primitive in comparison to what is going on in other sectors. The best part is not a single Tier 1 optical supplier is bothering to enter the PON optics busines.

So, the systems suppliers are sitting there with dollar bills in their hands waiting for somebody willing to invest to build them a better part. *crickets* has ensued.

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