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Optical components

Intel Backs Down on Photonics

Intel Corp. (Nasdaq: INTC) is making substantial changes at its passive components plant in San Jose, canceling the long-haul projects originally slated for that facility in favor of enterprise and access parts.

Sources suggested that the 70,000-square-foot manufacturing facility is being shut down, but an Intel spokesman insists that's not the case. He acknowledges that previous projects related to long-haul networking have been stopped, but says the facility is still running. "There is some work going on in that facility," he states.

The spokesman confirmed that some of the 100 employees had been reassigned but didn't have a figure for how many remain.

At the same time, Intel Capital has bundled some of its photonics investments together for sale, according to one source. The spokesman wouldn't comment other than to say that occasional divestitures are part of Intel Capital's normal portfolio management. He notes that Intel has added to its optical portfolio recently, with investments in the likes of ASIP Inc. (see ASIP Gets $16M Boost).

Not all of Intel's optical projects are in jeopardy. The LightLogic facility in Newark, Calif., is still going strong, according to sources inside the company (see Intel's 10-Gig Shopping Spree). And Intel's research labs are continuing work on a silicon-based laser, details of which might be revealed at the Intel Developer Forum in September.

Intel has spent the last few years pushing hard to become a player in optical networking. Acquisitions along those lines have included LightLogic, GIGA A/S (a maker of forward-error-correction chips), and the tunable-laser business of New Focus Inc. (Nasdaq: NUFO) (see Intel To Acquire Optical Chipmaker and Intel Scoops Up New Focus Laser Unit).

The San Jose facility, home to Intel's Photonics Technology Operation, was announced in May 2002. Its initial staff of 100 included roughly 10 employees picked up from the acquisition of Tempex (see Intel Intros Photonics Unit and Intel Snaps Up Templex ).

The PTO group was created to develop passive components such as Arrayed Waveguide Gratings (AWGs), and its business focus was on customized parts and contract manufacturing. It was not part of Intel's Optical Networking Group, which houses nearly all of the company's optical networking efforts.

Intel's fascination with optical networking stems from its position of strength in manufacturing. Photonics is frequently compared to the early semiconductor industry, where much of the work was custom and very little of the manufacturing automated. Arguably, Intel's success in semiconductors comes down to manufacturing, and that's the advantage the company has been hoping to wield in optical components.

— Craig Matsumoto, Senior Editor, Light Reading

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vayeheeor 12/4/2012 | 11:40:54 PM
re: Intel Backs Down on Photonics The market for passives based on PLCs is down to 1 or 2 suppliers, namely NEL and - if they have the stamina - JDSU (Scion). Hitachi cable is, for all intents and purposes, out of the game. Neophotonics (a.k.a. Lightwave Microsystems) is gasping for air and probably won't make it to Xmas. All the other estwhile players are long gone. The shake-out is effectively complete.

Intel's purported effort in waveguide-based products for enterprise, access or FTTx markets won't amount to a hill of beans. Nor, I dare say, will its other efforts in the active photonics space; a la Lightlogic. Intel's bet is on wireless not optical. This is where Intel can win. The smart money is long on wireless and short on optical...
lorent 12/4/2012 | 11:40:49 PM
re: Intel Backs Down on Photonics Well said!!

So where is photonics going to be in 20 years? Is JDSU going to be the Intel or are they going to be passed by companies in China and Taiwan that nobody has heard of? Maybe...except that it's such an expensive business to get into. I mean I love AMD but there's no way that they're going to catch Intel (is there??).

I wonder if it isn't time to start nibbling away by purchasing shares in the guys that are left standing? I mean most companies that are left are going to survive and with reduced competition prices/revenues/profits should tend to rise. But then again -- I've sure been wrong before...
mess 12/4/2012 | 11:40:48 PM
re: Intel Backs Down on Photonics Inetl will get out of photonics, that's a sure thing. It's only a matter of time until they realize that. The players to watch out for in the photonics arena are more than JDSU and NEL, take Bookham, Avanex, and Finisar for example. Photonics will never be like electronics for variety of reasons that our beyond the scope of this note. Analysts and fools led many people, including well respected professionals and companies (e.g. Intel), to think so.
Indeed, Intel will do well in wireless where the synergy with their core expertise is high. Fianlly, most of their optical investments, directly or through their investments are, will go rock bottom and write off.
BobbyMax 12/4/2012 | 11:40:47 PM
re: Intel Backs Down on Photonics Intel made at least two acuisitions so that they can manufacture oc-12, Oc-48 and oc-192 chips. None of these efforts were suceesful. It also attempted its luck in laser opticals, but this was failure too.

Intel does have any internal expertise on making or knowing much about optical components. I do not know why Intel should be interested in this kind of thing if it does not have the capability to so.

Intel also has opened a branch in India in the hope of making wireless components, but this effort even after spending a lot of money has not brought about any positive results.

With wasting of resources, it is not cleat as to how Intel is going to make its shareholders whole.
jamesoid 12/4/2012 | 11:40:43 PM
re: Intel Backs Down on Photonics If Intel is to continue as a growing concern it must look to expand areas within its scope of expertise. Few enterprises understand the commodity silicon space better. The expansion from computing to communication is obvious. The reach into materials which transform photons into information is not unrealistic. Electrons and Photons are compatable. If Intel can leverage its silicon expertise into the photonic domain and apply that to transforming III-V materials into commodity components to drive the Information Evolution then I think more will join the party.
ureka 12/4/2012 | 11:40:39 PM
re: Intel Backs Down on Photonics Isn't Intels motivation in both the photonics and wireless space to enable higher speed processors talk to the outside world. If not, Moore's law will break down at the interface. On that basis, they must have interest in both as wireless won't cut it forever.
Sofa-kingdom 12/4/2012 | 11:40:37 PM
re: Intel Backs Down on Photonics Since Intel acquired several whole photonics companies, it's hard to understand the comments that they have no expertise. By that measure they probably have more expertise than most companies you could name, BobbyMax. If many of those people have since left Intel, that's another story.

The problem isn't lack of expertise, it is Intel's gorilla size, and the lack of photonics markets that presently even approach 1% significance for Intel's size. Their size may be a burden in other ways too, since their overhead costs are surely very high, and those get reflected into the prices they would have to charge.

Maybe they would be better off to spin off their photonics into a wholly-owned subsidiary that reports financials separately. That way its relevance isn't judged in comparison to $30 Billion in revenue. 1% of that is 300 million. Bookham+Finisar+Avanex together don't even add up to that, and they have been at this for years and have established product lines.
dwdm2 12/4/2012 | 11:40:30 PM
re: Intel Backs Down on Photonics "Photonics will never be like electronics for variety of reasons that our beyond the scope of this note."

Pretty interesting observation... care to enumerate/discuss a few compelling ones? On the outset I agree that unless the industry is able to solve few basic problems, it is not going to be as vibrant as many expected. Many companies had a goal of taking a short-cut route towards a 'big' revenue which did not quite play out. So in the short run perhaps you have a point.

The other thing is many perceives the whole thing as "photonics" versus "electronics," but it does not have to be that way...



dwdm2 12/4/2012 | 11:40:22 PM
re: Intel Backs Down on Photonics "Intel's fascination with optical networking stems from its position of strength in manufacturing."

Is this another way of saying that Intel made a business decision to gain rapid access to lucrative revenue potential of the optical segment? "We are Intel, therefore it in our forte to do it..." is not holding water?

And based on this kind of outcome, many are trying to shift the blame on photonics itself. But isn't a technology as good as one can make it? There are problems to be solved. Those problems need attention and nurturing before you can profit from them, IMHO.
beachboy 12/4/2012 | 11:40:09 PM
re: Intel Backs Down on Photonics Pretty interesting observation... care to enumerate/discuss a few compelling ones?



Fundamentally it is easy to interface one IC to another IC via some copper tracks at extremely low cost and not face too many problems in loss of signal or data. It's the same to visual display units, keyboards or any other man-machine interface.
Photonics interfaces by comparison !!


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