Optical components startup MetroPhotonics Inc. is slimming down its business by getting rid of its indium phosphide (InP) fabrication facility.

The Ottawa-based company is auctioning off the guts of its fab today. The online sale lasts until 4:00 p.m. Eastern time today and is being handled by DoveBid.

MetroPhotonics CEO John-Peter Bradford confirms that the company is going fabless but wouldn't fully explain why, although it's almost certainly a cost-cutting move. "Our business model makes more sense being fabless," is all Bradford would say.

Naturally, the change to fablessness involves layoffs, but again Bradford was stingy with details. "We're not going to have many fabrication people," he says.

MetroPhotonics does not have a foundry partner lined up yet but is in discussions with candidates.

Many optical components startups built their own fabrication facilities, as InP foundries weren't so easy to find circa 1999, and many of the startups required advanced manufacturing not available on the open market. MetroPhotonics arrived a bit later but still chose to build its own fab in mid-2002 (see MetroPhotonics Opens InP Fab and MetroPhotonics Demos Power Monitor).

Ironically, the wave of fab construction led to a small surge in InP foundry business, as companies including Covega Corp., Vitesse Semiconductor Corp. (Nasdaq: VTSS), and, until now, MetroPhotonics, offered their excess fab capacity to others (see Vitesse Teams on InP ICs). Some pure-play InP foundries have sprung up as well, such as Velocium, a subsidiary of defense contractor Northrop Grumman Corp.

The inevitable consolidation has begun, too. InP specialist ASIP Inc. has been collecting other integrated photonics startups, grabbing ThreeFive Photonics B.V. last year and merging with T-Networks Inc. this week to form Apogee Photonics Inc. (see Survival of the Smallest and ASIP, T-Networks Reach Apogee).

MetroPhotonics, which builds FTTx triplexers, is among the army of startups pursuing Photonic Integrated Circuits, trying to bring the benefits of semiconductor integration to the photonics world. The concept was popular a few years ago, but it's been a rough go for many players, the most famous being Lightwave Microsystems, which was eventually picked up by NeoPhotonics Corp. (see NeoPhotonics Buys Lightwave Micro).

MetroPhotonics' most recent funding was a $5.4 million round in May 2004. Back in 2000, the company raised $62.5 Canadian, or roughly US$51 million based on current conversion rates (see MetroPhotonics Gets $5.6M and MetroPhotonics Raises $62.5M CDN).

— Craig Matsumoto, Senior Editor, Light Reading