Survival of the Smallest
ASIP is calling the combination a "merger," though the complete financial terms of the deal were not disclosed. The company says that ThreeFive will remain in the Netherlands as a wholly-owned subsidiary of Somerset, N.J.-based ASIP.
Related to the acquisition, ThreeFive investors Atlas Venture and Gilde IT Fund have pumped a combined $7.5 million into ASIP, bringing the company's funding total to $31 million across three rounds. Both deals were completed yesterday (see ThreeFive, ASIP Complete Merger).
ASIP's CEO Mike Decelle did say that this latest funding was a "down round" (one at a lower valuation than previous rounds), but addded that the company was "highly satisfied" to attract investment at all, given the current mood in the investment market.
The deal taps a key trend in optical components, namely that companies are broadening their product ranges to compete with the industry's new giants: Avanex Corp. (Nasdaq: AVNX), Bookham Technology plc (Nasdaq: BKHM; London: BHM), JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU), and, to some degree, TriQuint Semiconductor Inc. (Nasdaq: TQNT).
By picking up ThreeFive, ASIP -- which sells electroabsorption modulated lasers (EMLs), and receivers -- inherits components including Arrayed Waveguide Gratings (AWGs) and Semiconductor Optical Amplifiers (SOAs).
"ThreeFive brings us the best AWG technology in indium phosphide," boasts Decelle (see Dutch Startup Seeks Passage to Indium).
The pair have already forged a combined product roadmap, which leverages ASIP's expertise in active components, with ThreeFives skills in passives. Future products include multiwavelength transmitters, and reconfigurable optical add-drop multiplexers -- "products that we would not have been in a position to pursue before, " says Decelle.
But the market for Photonic Integrated Circuits, which pack multiple optical functions onto a chip to save space and power, is pretty uncertain. "There's similar research that had gone on in Bell Labs, but it's still pretty early for [ThreeFive's] technology," says Glen Riley, vice president in charge of TriQuint's optoelectronics division.
The deal rescues ThreeFive from impending closure. Earlier this year, the startup filed a "suspension of payments" request in Dutch court, the equivalent of a Chapter 11 filing in U.S. bankruptcy court (see ThreeFive Files for Protection and Wanted: Multi-Wavelength Believers).
By the way, ThreeFive is not related to Three-Five Systems Inc., a U.S. contract manufacturer and display vendor.
— Craig Matsumoto, Senior Editor, Light Reading