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Kotura Integrates With $11M

Kotura Inc. is emerging from the merger of Arroyo Optics and Lightcross Inc. as a new company aimed at integrating optics and electronics, following the path of many a failed bubble project.

The new direction comes to light as Kotura announces $11 million raised from prior investors ComVentures and Arch Venture Partners. The funding round won't be closed for 60 more days, so the final amount is likely to be higher, says Jean-Louis Malinge, the former Corning executive who was named Kotura's CEO in April (see Kotura Raises $11M, Kotura Names CEO, and Arroyo, Lightcross Join Forces).

"I have refocused everything on integrated optics and silicon," he says. Malinge isn't giving any details of the company's upcoming products, however.

Kotura is shipping a variable optical attenuator (VOA), but its real goal is to pursue integration of optics and electronics, building off Lightcross's work in silicon-based Arrayed Waveguide Gratings (AWGs). The company's material of choice is silicon-on-insulator, which allows it to use conventional complementary metal-oxide semiconductor (CMOS) processes. This kind of manufacturing dominates the semiconductor world and is widely available from foundries such as Taiwan Semiconductor Manufacturing Company (TSMC) (NYSE: TSM).

"The first reaction is 'Cool!' But that and $4.50 will get you a coffee at Starbucks," says Lawrence Gasman, analyst and wag with Communications Industry Researchers Inc. (CIR).

One catch is that CMOS-based optics have proven difficult to make. Previous attempts at this kind of monolithic integration have used polymers or indium phosphide (InP), materials better suited to photonics but not ideal for high-yield, high-volume production.

Another problem is that fab capacity costs money. The "fabless" business model tends to work only when a company is building a high-volume part such as field-programmable gate arrays (FPGAs). As a result, Kotura will have to seek out applications with high-volume potential, Malinge says.

Integration was a hot topic during the bubble, and even afterwards, as a host of companies worked to put active and passive optical components on the same device. Plans such as Kotura's, to integrate electronics, were less common but did crop up from companies including Agere Systems Inc. (NYSE: AGR.A) and Infineon Technologies AG (NYSE/Frankfurt: IFX), Gasman says.

The business case for such "optical chips" was predicated on the rise of all-optical networks, where AWGs would be found all over the network, making them a good platform for integration. But the devices were expensive, and the performance wasn't good enough to justify the price, Gasman says.

Integrated optics might have improved, given time, but startups' money ran out. The fallout has continued into this year: Avanex Corp. (Nasdaq: AVNX) shut down the former Kymata Inc. recently, and Intel Corp. (Nasdaq: INTC) refocused its AWG division to concentrate on enterprise and access markets (see End of the Road for Kymata? and Intel Backs Down on Photonics).

A few companies still carry the integration torch. Earlier this year, Infinera Inc. took the covers off its integrated chip, the heart of its long-haul WDM system (see Infinera Declares WDM War). Tunable-laser firm Agility Communications Inc. also intends to try its luck with integrated InP devices. And Intel is continuing its research into silicon-based lasers, which could provide the foundation for integrated devices.

Integration is "certainly a direction worth pursuing if there can be cost improvements without any degradation, " Gasman says.

Given the difficulty of developing integrated parts, some believe integration is better pursued, not by startups, but by larger companies that can afford to withstand a few R&D cycles without revenues. "It's not clear the first few generations will be taken up by the market," says one venture capitalist requesting anonymity.

So, what could Kotura be building? One obvious approach would be to mash Lightcross's AWG with some electronics, creating a one-chip multiplexer, Gasman says. But he thinks a more promising area would be 10-Gbit/s Ethernet. That's a market crying for price declines, which won't come through volume sales alone; some packaging innovations need to crop up as well, he says. (Gasman adds that he has no idea what Kotura is up to; he just thinks an Ethernet device, if it can be built, could be useful.)

And what about the Arroyo half of Kotura, which concentrated on liquid-crystal tunable filters? Those products have been discontinued. "We have to focus on one particular technology," Malinge says.

Some of the Arroyo employees are still with the company, but Malinge wouldn't say how many, nor would he give a headcount for the entire company.

— Craig Matsumoto, Senior Editor, Light Reading

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alcabash 12/5/2012 | 1:29:21 AM
re: Kotura Integrates With $11M Good thing that Barron and cronies are gone.
Good luck to Kotura, it's going to be a long, long way to success.
Vent 12/5/2012 | 1:29:20 AM
re: Kotura Integrates With $11M Seen this before. In fact Kotura's first product , the VOA ' is a exact copy from factor etc of the Bookham ASOC VOA which Bookham supplied to Nortel. Any integration (lightreading at least do your homework and read the whitepaper on kotura's website) will be with photodetectors attenuators and AWG
i.e. VMUX's and monitored VMUX's the small market that Hitachi cable, NEC and JDSU have between them (o I forgot gemfire now that they bought the ex Kymata) . JDSU just announced a product targeted for ROADM's

http://lw.pennnet.com/Articles...

Bookham struggled to compete and get a market for this Silicon technology (admittedly they did hav a fab, be interesting as well to see if Bookham held on to it's Si patents!
This is just more money down the drain
Well done Kotura for convincing the investors

Aligner 12/5/2012 | 1:29:19 AM
re: Kotura Integrates With $11M It's just so sad that investors have such short memories/poor research groups. As a former Bookham employee (1997-2000) - still working in integrated optics - this is so obviously doomed to failure. I had a read of Kotura's technology white paper and it seems like someone sent them a copy of Bookhams original business plan, which they dusted off, changed the names, and hey presto a new technology is born.

I could understand if Bookham had only flirted with the technology, which is what they would probably want you to believe, the reality was that silicon on insulator was what they did until a couple of years ago (when they went out and bought a real business). Lets face it Andrew Rickman was pretty much the self proclaimed Messiah of silicon optics. It's also not as if they didn't push much money at it, $30M+ pre-ipo, plus a substantial amount of the $300M+ cash pile raised at the ipo and secondary offering.

The problems are legion - waveguide coupling losses, repeatability of processing and the fact that the market is still miniscule. Add to that the fact that it is NOT standard CMOS processing - find me a CMOS process that requires you to spin resist over topography of the depth required to form waveguides. In CMOS planarization means 0.5um features not 5um and bigger (especially if you use V-grooves).

My experience would suggest that without a fab it's even harder - process iterations are harder to control, take longer and process variations (particularly with AWGs and more complex products) can make a mess of device performance and yield.

Fundamentally, all power to their elbow for getting in the $$, but am I interested in investing in the remaining 60 days, or in working for them - I don't think so!
[email protected] 12/5/2012 | 1:29:17 AM
re: Kotura Integrates With $11M Hi Aligner

If you take it the mantra of Photonics is a deep desire to get to "Semiconductor like volumes, yields and integration" then it becomes a question not of if but when.

There has been enough money thrown at this problem to provide a foundation for future success.

So while you maybe right with this post, sometime in teh not too distant future you will probably be wrong.

Best wishes

Dave
Balet 12/5/2012 | 1:29:14 AM
re: Kotura Integrates With $11M alcabash said: "Good thing that Barron and cronies are gone. Good luck to Kotura, it's going to be a long, long way to success."

Running Kotura was just very boring for Barron lately.

Not all the cronies are gone yet.

What kind of success do you see for them? Could you define it please?
Balet 12/5/2012 | 1:29:14 AM
re: Kotura Integrates With $11M Unfortunately I fully agree with Vent.
More money down the drain.

To be honest noone really cares what Kotura will be building in the near future or if they will ever be able to create an integrated product (inspite of a very strong technical team).

From VC's point of view, venture capital investment is a lotery.
SOI sounds like a "cool" technology with a lot of potential. It is next to impossible package it right but who cares? Some "big guy" might pick the company up for its potential.


alcabash 12/5/2012 | 1:29:13 AM
re: Kotura Integrates With $11M I thought the cronies would all be gone by now. Who is left from the business savvy entourage of Mr. Barron?

Success for Kotura means surviving another 2 year. If they can do just that and build integrated components for defense, bio and telecom in the meantime, they have a shot a getting their investors some of their money back.

By the way, how much of the $11M is already gone to reimburse the bridge loan? I have heard half of it, can anyone confirm ?


Dr. Darklight 12/5/2012 | 1:29:11 AM
re: Kotura Integrates With $11M I heard $6 million is already gone to the bridge loan.

Let's see Bookham spent $200 million on SOI and failed. Kotura has another $150 million or so to go. Hope they are benevolent VC's

I heard that their VOA products are a mess. Anyone know?


Dr. D
Balet 12/5/2012 | 1:29:09 AM
re: Kotura Integrates With $11M Dr.Darklight wrote: "I heard $6 million is already gone to the bridge loan.
Let's see Bookham spent $200 million on SOI and failed. Kotura has another $150 million or so to go. Hope they are benevolent VC's
I heard that their VOA products are a mess. Anyone know?"


A good friend of mine is a very early employee of Lightcross.
As far I know, Kotura has already spent half of the newest round.

Their VOA works fine; however, it is too expensive to make (just like Bookham's one was). The integration idea might be also too expensive to be able to compete with other technologies available.
The last thing I've heard is that they have no roadmap and marketing and sales people.
Dr,Q 12/5/2012 | 1:28:46 AM
re: Kotura Integrates With $11M I must agree wholeheartedly with Aligner (post #3). I worked next to the Bell Labs/Lucent silicon waveguide folks for well over a decade. The whole mythos of the silicon integrated waveguide device has allowed a lot of people over the years to make flashy Powerpoint presentations and well-attended OFC talks, but these were largely based on onesey/twosey devices made in the research lab.
The *fundamental* issues that have not been solved (and which are generally left off the Powerpoint presentations because they aren't sexy) are
1) Process reproducibility & control -- which translates into the ability to make the waveguide devices at high yield, which sometimes means yield that is non-zero;
2) Optical losses in the waveguide devices;
3) Optical coupling loss onto and off of the waveguide device;
4) The physical size of the silicon chip, which is often several centimeters.

Bottom line, it is not now and never will be a field-deployable technology.


- Dr.Q

(P.S. to Aligner -- I'm currently job searching, since my last startup tanked a while ago. Anybody you know dumb enough to hire me to work on integrated optics for them?)
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