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Optical components

UK Components Foundry for Sale

U.K. startup Optical Micro Devices Inc. (OMD), which offers a foundry service for planar lightwave circuits, announced this morning that it has gone into administration, an insolvency procedure similar to Chapter 11 bankruptcy protection in the United States (see OMD In Administration).

OMD appointed Richard Hill and Peter Rilett of KPMG on July 4 to oversee the sale of the business and assets, after a second round of funding fell through at the last minute.

The lead investor in the second round had pulled out just a couple of days earlier, citing "adverse market conditions" as its reason. That investor was to have stumped up 50 percent of the total funding, so without it, the company was no longer viable, says Neil Vinnicombe, a KPMG manager now handling OMD's day-to-day business.

OMD's chief executive, Kevin Ford, was ousted about six weeks ago because he wasn't liked by a prospective new investor, sources say.

Company executives are hoping to keep the business together, so no staff has been laid off. But the startup has only about six weeks to secure a buyer before it will have to close, permanently.

OMD might be a real catch for somebody. According to one of its founders, COO Bill McLeod, the startup had recently perfected its manufacturing processes for making integrated optical components such as Arrayed Waveguide Gratings (AWGs) and was preparing to ship first samples to customers on schedule in August. It is already making products for customers that want silicon microbench work, such as making V-grooves for aligning optical fibers. Finding both the waveguide expertise and the V-groove capability under the same roof is unusual, according to McLeod.

Possibly the biggest selling point is that OMD is one of a handful of optical fabs that use 200mm (8 inch) wafers, giving its customers lower costs and faster production times. "We can turn out several hundred wafers per month," says McLeod. "With just a little extra capex, we could increase that threefold, to 600 wafers per month."

The only other optical fabs that use 200mm wafers are Intel Corp. (Nasdaq: INTC) and Scion Photonics Inc., which was recently sold to JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU) (see JDSU Posts Loss, Buys Startup).

It's not known which dithering venture capitalist pulled the rug from under OMD. Possible candidates are Advent International or Storm Ventures, which both participated in OMD's earlier funding back in January 2000, although it could easily have been a new investor.

Previous investors in OMD also included U.K. fund manager Taube-Hodson-Stonex Partners (THS Partners), U.K. venture capitalist Quester, Wales Ventures, and E-Tek Dynamics, which was sold later that year to JDS Uniphase (see JDSU/E-Tek Merger Approved: No Surprises).

OMD's other founder and CFO, Neil Lethby, quit the company in mid 2001, having decided to rest on his laurels after making a mint from the flotation of Bookham Technology PLC (Nasdaq: BKHM; London: BHM).

— Pauline Rigby, Senior Editor, Light Reading
http://www.lightreading.com
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crapshooter 12/4/2012 | 10:07:40 PM
re: UK Components Foundry for Sale ...from a company named after an 80's pop band? Remember OMD (Orchestral Maneuvers in the Dark)? The band and the opto company had about the same longevity.
digerato 12/4/2012 | 10:07:33 PM
re: UK Components Foundry for Sale Actually, OMD (the band) was still in business after 10 years :-)

Dig
digerato 12/4/2012 | 10:07:32 PM
re: UK Components Foundry for Sale There is no equivalent of chapter 11 in UK company law. If a company goes into receivership, it ceases to trade. Everyone loses their jobs (because a non-trading company can't pay anyone) and the court-appointed receiver tries to sell the company and/or assets for as much as they can. This is not like chapter 11 where the company continues to operate while it tries to restructure its finances.
Peter Heywood 12/4/2012 | 10:07:29 PM
re: UK Components Foundry for Sale Don't think this is correct. In UK parlance, this is receivership, not liquidation. As Pauline says in the story, all the staff are still there and KPMG is continuing to run the business while it works out the best way of minimizing the losses of creditors.

Although this almost certainly will result in closure of OMD, there's a possibility that it might rise from the ashes in the way Yipes just has - someone buying the assets for a song and continuing operations.
vinney 12/4/2012 | 10:07:24 PM
re: UK Components Foundry for Sale Wavesplitter Technologies Inc, Fremont, CA also has an optical fab using 200mm wafers up and running.
Photonboat 12/4/2012 | 10:07:22 PM
re: UK Components Foundry for Sale Is there really a true economic advantage to using a 200 mm fab?

My impression of the telecom component market is that, given current volumes, it may be easier to use a 100 mm or even 50 mm fab. Since volumes are fairly low relative to the semiconductor industry, a 100 mm fab is adequate. It also gives the advantage of letting the firm buy proven, low-cost, "old-technology" semiconductor capital equipment as opposed to debugging 200 mm fab equipment. Plus, I would also guess that life with 100 mm wafers is much simpler than 200 mm wafers. 200 mm wafers are state-of-the art, and it took a long time (a decade or more?) for the industry to become successful (are they even today?) at keeping 200 mm wafers perfectly flat.

Think of the engineering challenge here--the tolerances get a lot worse going to the larger wafer. The "merits" of 200 mm fabs may be analogous to 40 Gb/s systems--in theory, there are cost advantages, but in the near term (next 5 years), 100mm and 10Gb/s will suffice and offer better economics.

Aren't most telecom components made from 100mm (or smaller) wafers?

Rook 12/4/2012 | 10:07:16 PM
re: UK Components Foundry for Sale 200mm is not state of the art for Silicon.

AWG's make VERY large die. Small diameter wafers are not economically viable.
vayeheeor 12/4/2012 | 10:07:11 PM
re: UK Components Foundry for Sale PLC's are not wafer cost limited. They are packaging cost limited. Wafer size is a red herring in this business. The economics of PLC's is driven by the backend. Furthermore, in today's market wafer size is only a limitation when a single device grows beyond the wafer diameter. Even "big" AWGs and integrated VMUXs, for example, will amply fit on a 100mm substrate. Wafer size becomes an issue when the component market expands again and puts pressure on yield and constrains capacity. Being 8" is macho bravado but obscures the real story.
Rook 12/4/2012 | 10:07:10 PM
re: UK Components Foundry for Sale One device per wafer does not make for a scaleable business model. If your packaging costs are significantly higher than your die cost at one die/wafer (and some realistic yield) then your packaging solution must suck.
digerato 12/4/2012 | 10:07:03 PM
re: UK Components Foundry for Sale I was born and brought up in the UK and have, unfortunately, intimate acquaintance with receivership as well as US chapter 11. There is no chapter 11 equivalent in UK law.

Thank you,

Digerato
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