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JDSU to Close Picolight Fab

Craig Matsumoto
4/30/2009

JDSU (Nasdaq: JDSU; Toronto: JDU) is closing the former Picolight Vertical Cavity Surface Emitting Lasers (VCSELs) fab in Louisville, Colo., part of a manufacturing shuffle that includes additional outsourcing and some unspecified staff cuts.

The moves came to light during yesterday's earnings conference call. (See JDSU's Forecast Disappoints.) JDSU thinks the moves will eventually cut overhead by $35 million per year.

JDSU had already been making moves to save manufacturing costs, including selling its Shenzhen, China, facility to Sanmina Corp. (Nasdaq: SANM), as announced in February. Word at the time was that JDSU also wanted to sell the Picolight fab, acquired in 2007. (See JDSU Preps Fab Sales, JDSU Selling Shenzhen Facility, and Vendors Push Virtual Security.)

No sale has emerged, but because JDSU can build those same VCSEL chips at a plant in San Jose, Calif., it's shutting down the Picolight facility. "It makes sense for JDSU to consolidate this activity under one roof instead of having two separate gallium arsenide fabs in two different locations," a JDSU spokeswoman tells Light Reading via email.

For you old timers, the San Jose fab in question is at the former SDL headquarters on Rose Orchard Way. (See JDSU/SDL: A Component Powerhouse.)

The spokeswoman says JDSU is laying off some but not all of the Louisville, Colo., employees; some will remain in Colorado working from home. (JDSU isn't giving up specific numbers.) The Picolight closure should be completed by September 2010, CEO Thomas Waechter said on yesterday's call.

At the same time, JDSU is adding to the manufacturing it outsources to Fabrinet Co. Ltd. (NYSE:FN) by hiring the Thailand-based company to build some of the lasers JDSU has been building in San Jose. Some employees will be "affected," JDSU's spokeswoman ominously says, but there's no site closure to go along with this move.

Finally, JDSU is bringing yet another contract manufacturer into the mix: Benchmark Electronics, which will take over some of the manufacturing JDSU is doing in Indianapolis and in Germantown, Md. JDSU expects to complete these transfers by August 2009 and by May 2010, respectively.

The facilities, which JDSU acquired with test-and-measurement company Acterna, are not being sold or shut down; it's another case of outsourcing selected high-volume products. "A small number" of employees, mostly temporary workers, are being cut as a result of the Benchmark moves, the spokeswoman says. (See JDSU Buys Into Testy Market.)

— Craig Matsumoto, West Coast Editor, Light Reading

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