Sumitomo Electric acquires Emcore's optical tranceiver, data center networking products

Deal includes Emcore’s parallel transceivers, active optical cables and other VCSEL-based components.

Mar 29th, 2012

Sumitomo Electric Device Innovations USA, Inc. (SEDU) announced that it will acquire the vertical-cavity surface-emitting laser (VCSEL)-based component and fiber-optic transceiver product lines from the enterprise business of Emcore Corp. (NASDAQ: EMKR).

The transaction is valued at approximately $17 million. In fiscal year 2011, the acquired product lines represented approximately 5% of Emcore's overall revenue. The deal includes Emcore’s parallel transceivers, active optical cables (AOCs) and other VCSEL component product lines, for use in data centers and local network applications (LANs, SANS, etc.). Metro and long haul optical communications products, including tunable lasers and CATV optical components, will remain with Emcore.

As the preferred light source for data transmission in short-distance links, the VCSEL-based module products enable the next generation data interconnect capabilities that service providers and OEMs demand, notes Sumitomo. Applications include rack-to-rack, ganged serial links, logic-logic data links, board-to-board and shelf-to-shelf configurations. In addition, the portfolio offers solutions for 10GbE, 40GbE, 100GbE parallel optic modules and active optical cables. Future developments will target consumer and automotive markets as well, said the company.

SEDU plans to continue VCSEL fab operations in Albuquerque, NM and to consolidate the enterprise engineering team currently residing in Newark, CA to its nearby operations in San Jose, CA. On or prior to the deal's closing, SEDU will enter into several ancillary agreements with Emcore, including service agreements to ensure a smooth business transition. The deal is subject to certain closing conditions including US Government approval.

Brad Smith, vice president and chief analyst at LightCounting, which recently analyzed and discussed the AOC market, said, "The EMCORE products will enable Sumitomo to participate in the 0-10km data center market for optical modules inside system chassis to interconnecting services, switches and routers across large data centers. The merged product lines will span both the client and line side for all the lasers, detectors and components as well as transceivers from less than 1 meter to approximately 1,000 kilometers.

"The acquisition will enable Sumitomo to enter the InfiniBand HPC [high-performance computing] interconnect space and high-end data center servers with active optical cables and soon likely embedded optical modules."

Smith added that the acquisition "will give Sumitomo a much more competitive presence in data center interconnects where it has almost no presence. The $17 million invested is likely to return far more for Sumitimo in only a few years."

You may also be interested in this recent coverage of LightCounting analysis:AOC market doesn't ebb and flow, it spasms

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