A growing roster of startups view the manufacturing process, not the end product, as key to the future of optical components. Demand may have fallen after the boom, they reason, but expensive and manually intensive manufacturing techniques also helped shovel the dirt over many young firms last year (see Components Casualty Count Climbing). These failures, along with the move by big companies away from the business (see Components Overboard! and Agere's Exit From Opto: Sad but Sensible), are leaving the way open for a few good players to make money manufacturing optical parts for others.
Solutions fall into several categories: Some startups are selling processes or software that others can license for use in their own plants. Others specialize in packaging optical parts for use as subsystems by other manufacturers. Still others will take over the making of optical parts on an outsourced basis.
Here's a list of examples from this week's show:
Manufacturing Processes and Software
- LxSix Photonics Inc., a Montreal startup with US$5.4 million seed funding, offers a technology that automates multiple processes in the production of Fiber Bragg Gratings (FBGs) and other optical parts (see LxSix Photonics Debuts). LxSix hopes to sell its technology, called Write-On, for setup in the plants of companies making optical equipment or components. Prospects include the likes of Bookham Technology plc (Nasdaq: BKHM; London: BHM), the Lasertron division of Corning Inc. (NYSE: GLW), Furukawa Electric Co. Ltd., JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU), and TriQuint Semiconductor Inc. (Nasdaq: TQNT). According to VP of marketing Robert Caporuscio, LxSix is being considered by several of these "Tier 1" players, while actually producing parts for some lesser-known OEMs.
- QinetiQ Ltd. touts a technology based on hollow waveguides, which it hopes to sell to other companies developing optical subsystems (see QinetiQ Touts Hollow Waveguides). Interestingly, this startup emerged from a U.K. defense research outfit and has the backing of the august Carlyle Venture Partners.
- RSoft Design Group Inc. has introduced simulation software third-parties can license to help them make a range of photonic parts, including WDM multiplexers, waveguides, amplifiers, and dispersion compensators (see RSoft Launches Grating Design Software).
- The VPIphotonics division of VPIsystems Inc. released VPIplayer, a PC-based software package that simulates features of various optical components, such as waveguide amplifiers, for use by researchers.
- Xponent Photonics Inc. announced a process for streamlining the active alignment of optical modules, a complicated process involving positioning optical parts on semiconductor chips, using monitoring to track the process of placement (see Xponent Cuts Packaging Xpenses).
- Scottish Enterprise, which funds and oversees businesses in Scotland, announced plans to open a $6.75 million optoelectronics packaging facility in Livingston this summer (see Scots Open Opto Packaging Facility). The project's being developed by the Scottish Optoelectronics Association to boost component-making in the country.
- kSaria Corp. made headlines before the show (see KSaria Changes Faces) by revamping itself from a maker of its own components, based on automated manufacturing techniques, to a maker of pigtail attachments for a range of third-party customers. kSaria also offers packaging services.
The move reflects activity by others, such as 3M Company (NYSE: MMM), which appears to have defied the downturn in its own optics business (see 3M Opens Optoelectronics Lab and Corning Taps 3M for 850M). Like the startups, these larger firms see an opportunity in the industry consolidation.
But challenges remain, most notably reduced demand. There's still a market for optical parts, but how sizeable is it? "Automation is good... but you can't have efficient mass production without any volume," says Dan Yang, CEO and founder of Dowslake Microsystems, which makes optical subsystems. Like many optical companies, Dowslake has moved its manufacturing to China and eschews outsourcing as "just impossible" for its particular products, which are software-intensive.
The startups are undeterred. They insist the demand is growing for what they can offer. Perhaps by next year's OFC, they'll have the evidence to back this up.
— Mary Jander, Senior Editor, Light Reading