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Optical components

Infinera's Amp-less Ambition

Infinera Inc. remains cloaked in mystery after raising $53 million more this week, but pieces of the startup's strategy are coming to light.

The Series D funding, announced yesterday (see Infinera Scores $53M), brings Infinera's total haul to at least $143 million, based on the company's earlier statements that it had raised more than $90 million. With the extra funding, according to one source, Infinera is shifting strategy to build entire systems rather than chips and subsystems.

Infinera's valuation almost certainly fell with this round, to $150 million from possibly as high as $300 million, according to the source. But it's also likely that the company didn't suffer the massive dilution that's hit other Silicon Valley startups (see Washed Out in the Valley).

The funding jibes with earlier whispers that Infinera was trying to raise a large sum (see Infinera Shoots for the Moon), but concurrent rumors of a nine-figure backlog now seem exaggerated. In fact, it's uncertain whether the chip at the heart of Infinera's technology has made it to sample volumes yet. (To be fair, Infinera did laugh off those numbers. Infinera declined to comment for this story.)

Infinera has been a tantalizing puzzle, racking up large venture sums in 2001 and making the cover of Red Herring in 2002. But the company hasn't said much about its plans. Its founders include Lightera Networks founder Jagdeep Singh and SDL Inc. research manager David Welch; board members include prominent names such as Vinod Khosla of Kleiner Perkins Caufield & Byers (see Zepton Has an $86M War Chest and More on Infinera (née Zepton)).

It appears Infinera has been working on a way to build 10-Gbit/s long-haul links that don't require Dispersion compensation or Optical Amplification.

According to one source requesting anonymity, Infinera was founded to build an indium phosphide (InP) chip that regenerates 10 channels of 10-Gbit/s apiece. Complex enough to prod Infinera into building its own fab, the chip integrates 10 lasers, 10 receivers, and even a crossbar. It would receive an optical signal, convert it to electrical form, and pump it back out as optical -- the classic OEO regeneration.

The result is an add/drop multiplexer condensed into a chip, allowing adds, drops, and express-lane regenerations on ten lanes carrying 10 Gbit/s apiece. Using compact OEO systems based on this chip, a carrier could build a long-haul network without amplification or dispersion compensation. And because the chip is so highly integrated, it reduces the size -- and therefore the cost -- of those OEO conversions.

Reportedly, carriers one after another are falling in love with the technology, which is being demonstrated privately. Their only concern is with its manufacturability, because the chip at the heart of Infinera's machine would be quite complex.

But to sell the technology, Infinera might have to build its own systems.

Infinera originally wanted to sell just the chip, or possibly subsystems, according to the source. But optical networking OEMs increasingly are seeking out edge and even enterprise business rather than the long haul; moreover, much of the effort in long-haul networking is going into providing new line cards rather than new systems. Both trends mean less OEM attention for Infinera, possibly forcing the company to build its own systems and sell to carriers directly.

Who stands to lose if Infinera makes it? Obviously, makers of amplifiers and dispersion compensation modules would be hurt, but not immediately, as Infinera would most likely sell into greenfield networks. A tougher blow would be to vendors still pursuing all-optical networks, because Infinera may have found a way to keep the OEO alternative practical through its 10-Gbit/s generation.

— Craig Matsumoto, Senior Editor, Light Reading

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zettabit 12/4/2012 | 11:39:34 PM
re: Infinera's Amp-less Ambition Interesting that the news of Infinera raising $53M at a valuation of $150M (which is incredibly high for an optical start-up these days) comes on the same day of the news that Ceyba is closing its doors, after having raised more or less the same amount of money staring 4 years ago.

zettabit 12/4/2012 | 11:39:34 PM
re: Infinera's Amp-less Ambition Interesting that the news of Infinera raising $53M at a valuation of $150M (which is incredibly high for an optical start-up these days) comes on the same day of the news that Ceyba is closing its doors, after having raised more or less the same amount of money staring 4 years ago.

realoptics 12/4/2012 | 11:39:30 PM
re: Infinera's Amp-less Ambition Congratulation on the Infinera team, they are really good at convincing/cheating/BSing the VCs. They are real skillful guys in many senses.

On the product front, however, they would be too brave to claim that they are building a long- haul system without amplication, that is pure baloney! The law of physics is always true and valid, nobody is able to against that, no matter who you are and how smart you are, not even Chairman Mao.

May be Infinera did not claim that, and then it would be the editor's mistake to make a claim like that. By the way, Redherring was defunct long time ago, not too long after giving a cover story of Infinera. I feel funny that Infinera has been keeping the story at the front of their website, it is so pathetic!
sonet_user 12/4/2012 | 11:39:11 PM
re: Infinera's Amp-less Ambition Good luck on building a system !!! The VP of Hardware Engineering, Vu Nguyen, almost ran the Polaris ship aground. Perhaps, he will bring his friends and family to build Infinera an optical illusion.
smg 12/4/2012 | 11:39:11 PM
re: Infinera's Amp-less Ambition Actually, they are not violating the laws of physics, they are violating the laws of economics.

What Infinera is proposing is replacing EDFAs and DCMs with OEO regenerators. So, instead of an amplifier and dispersion compensator, you have a bunch of their chips with CDRs performing 3R regeneration. How cheap are these 10x 10Gbps transmitters and receivers? For a 40 channel system you would need 4 of the TX modules, 4 of the RX modules, and 40 multirate CDRs for 10Gbps....and since you are in the electrical domian you may have to add in performance monitoring (SONET B1/J0 monitor chips). How is this cheaper? How about reliability of all these electronic parts vs. an EDFA?
Optodude 12/4/2012 | 11:39:08 PM
re: Infinera's Amp-less Ambition I really feel sorry for Infinera's investors and employees.... Their management will be rightfully ridiculed out of silicon valley after they get corrected in a couple of years. The saddest thing of all is that all these Sand Hill road idiots didn't learn anything during the bubble.

I'm taking wagers on how long people thing Infinera will go before they flame out ... I say 2-yrs after they burn through their $53 million... by which point, Infinera will be sampling a yet-another optical chip that is far simpler than what they're pitching today, and customers will be stringing them along for months on end, and the investors will be pushing to cut costs which mgmt will resist ... at which point a new "wiser" CEO will be brought in.... at which point the final-final lay-off will begin .... at which point a new $5m pre-money round will ensue ... just 1-yr before the company will be sold for $1 million in stock ....

You would think the over-hyped over-priced arrogant and dense Vinod had learned something through the Optical bubble which he materially contributed to .... what a #%@$#^.
mpl 12/4/2012 | 11:39:02 PM
re: Infinera's Amp-less Ambition According to one source requesting anonymity, Infinera was founded to build an indium phosphide (InP) chip that regenerates 10 channels of 10-Gbit/s apiece. Complex enough to prod Infinera into building its own fab, the chip integrates 10 lasers, 10 receivers, and even a crossbar. It would receive an optical signal, convert it to electrical form, and pump it back out as optical -- the classic OEO regeneration.
_______________________________

Hardware equals semiconductors and Indium Phosphide is significantly more esoteric than CMOS.

Is this company planning on building a fab to do InP chips? Will its chips find their way into new hardware designs? or will they have to vertically integrate and make the hardware themselves? They will need much more funding than $53M to make this work. Where does their chip fabrication know-how come from? Chip design know-how? Will their process scale over time? Is the chip trying to do too much?

Bottom line: this sounds like a dream to me.

Carriers will always attempt to motivate VCs to fund ventures such as Infinera so that they might one day benefit from a piece of technology without having to fund R&D themselves. Why put up the money yourself when VCs are doing a great job finding and funneling money into basic R&D?
dave77777 12/4/2012 | 11:38:57 PM
re: Infinera's Amp-less Ambition Maybe ten or twenty times that much, for an InP fab and system development. Chipmaking is not a simple thing, and what they're talking about seems a little farfetched to begin with.


But then again, every few years someone gets six- or seven-figure funding for a technology that's supposed to deliver 100:1 data compression, which can be shown mathematically to be impossible.
meaty_urologist 12/4/2012 | 11:38:57 PM
re: Infinera's Amp-less Ambition How can they put electronics and optics on the same device?
This is impossible.
Yields can never be good enough; even Intel is getting out of photonics. Even they knows that photons cannot be controlled in an electronic device. All I can say is they better build their fab soon.
That is a very bad thing that all the Sand Hill idiots didn't learn anything.
All startups should be banned since technology is already finished. It is so bad if they got funding. Chairman Mao wouldn't fund them either.
TheAce 12/4/2012 | 11:38:57 PM
re: Infinera's Amp-less Ambition It is amazing how smart VCs can be foold, but don't let the VCs themselves fool you. Infinera/Zepton first raised $86M from a list of respected VCs. Last year the VCs found out that they are in trouble because the company is sucking money at an amazing rate. However, even VCs like KPCB can not easily write off ~ $90M investment, so what do you do, bring on more fools to the ship.
As for the technology, in priniciple you can integrate light and electronics using InP but it is very difficult and I doubt if Infinera have found the way. For example, integrating lasres and detectors has contradicting requirements in terms of wafer's layers structure and device specifications. In addition,as mentioned by others, the economics of InP (2 inch wafers!) is problematic. I always doubted the founding team capabilities and expertise regarding InP technology (I've been there and done that). Just to mention interesting issues, the losses of InP waveguides are horrible and you need 0.25um lithography or better to start with. Setting up your own FAB will definitely hamper the R&D effort. They don't know that, none of them have ever worked in a FAB and there are really no CMOS-like FABs for InP, just labs (even those who claim to be FABs are not really FABs).
Lastly, At first Infinera/Zepton did not claim for a "SYSTEM", they claimed for optical integration of components. The fact that they go now after a "SYSTEM" signals that, whatver they do, the performance of their optical components is lousy. The startegy of aiming to a "SYSTEM" stems from the thought that they will be able to compensate for the components performance at the system level. This reminds me of one GaAs Israeli start-up called Chiaro Networks (raised ~$220M) that followed such a startegy. What do you think came out of it? ~ $220M down the drain, let's see if Infinera will have the upper hand here :-)
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