JDSU: Selling Out?
That hasn't been a major question for the company, but there's apparently a rumor going 'round in China about JDSU eventually outsourcing its optical manufacturing to Fabrinet Co. Ltd. (NYSE:FN)
That's the latest word, according to editor Jacques Liu, who's assisted Light Reading in the past and posted the rumor earlier this week.
The theory, which JDSU isn't commenting on, is that the Shenzen fab could sell to Fabrinet for $2 million (which seems really, really light). JDSU would then use Fabrinet for its manufacturing, much as competitor Avanex Corp. (Nasdaq: AVNX) already does.
Would it make sense for JDSU to outsource? Fabrinet is certainly established enough to take on the job. (And even might have gone public in a better market: See IPO Alert: Fabrinet and IPOs Clanked in 2007.)
It's not like the companies are strangers, either. JDSU lists Fabrinet as a supplier and a customer, and it's sold pieces of facilities to Fabrinet before. (See JDSU Sells Manufacturing Operations, JDSU Cuts Continue, and Trimming Continues at JDSU.)
Then again, not every company is embracing the "fabless" optical model. Bookham Inc. (Nasdaq: BKHM; London: BHM) stuffed a lot of money, time, effort, and heartache into moving its manufacturing to Shenzhen, claiming that it could only achieve cutting-edge results through ownership of its own fab. (See Bookham Shows Signs of Recovery and Georgio Anania, Ex-CEO, Bookham.)
Finisar Corp. (Nasdaq: FNSR) owns its own fab, but chairman Jerry Rawls says that's partly because the company got a great deal on a Malaysian facility back in 2001, when prices crashed.
I don't know how seriously to take this one. It's plausible, considering JDSU's optical innovation seems to focus on integration-fed design rather than from advantages in manufacturing processes. (See OFC: JDSU & Superblade!)
Separately, it's unclear whether "outsourcing" would include JDSU's non-Shenzhen optical facilities. The company still has fabs in the San Jose area and at Picolight's digs in Colorado, if I recall correctly.
— Craig Matsumoto, West Coast Editor, Light Reading