28 March 2012

Emcore sells VCSEL-based product lines to Sumitomo Electric for $17m

Emcore Corp of Albuquerque, NM, USA, which makes components and subsystems for the fiber-optic and solar power markets, has entered into a definitive agreement to sell certain assets and to transfer certain obligations of its vertical-cavity surface-emitting laser (VCSEL)-based product lines in exchange for $17m in cash (subject to closing adjustments) to optical and wireless communications product maker Sumitomo Electric Device Innovations USA Inc of San Jose, CA (SEDU, a subsidiary of Japan’s Sumitomo Electric Inc).

The assets to be sold include fixed assets, inventory and intellectual property for the VCSEL-based product lines of Emcore’s fiber-optics business unit, including VCSEL and photodiode components, parallel-optical transceiver modules, and active optical cables (AOCs).

Emcore will retain its telecom and broadband fiber-optics products, which include its tunable lasers, tunable XFPs, cable TV modules and transmitters, FTTx transceivers, indium phosphide (InP)-based lasers, photodiodes, and modulators, video transport and specialty photonics products.

Emcore says that selling the VCSEL product line allows it to focus its fiber-optics product portfolio in areas of strong product differentiation. In fiscal 2011, the VCSEL-based product lines contributed about 5% of Emcore’s overall revenue.

The sale is also expected to simplify Emcore’s operating structure, reduce fixed costs, and improve market focus. The firm says that its core competencies in compound semiconductor-based products and performance capabilities remain the cornerstones of its Fiber Optics business, addressing high-speed fiber-optic transmission for telecom, broadband and military & defense applications.  

“The decision to sell the VCSEL-based product lines is strategic and market driven,” says Emcore’s CEO Dr Hong Hou. “Our product and technology portfolio is strongly aligned to support current and future requirements in tunable, coherent high-speed transmission systems and next-generation broadband architectures,” he adds.  

“The proceeds from the transaction significantly improve our balance sheet and the sale is expected to reduce the time to reaching profitability,” Hou notes. “Along with the improved operating model, the transaction will benefit our customers as we focus our investment in telecom, broadband and specialty photonics products to remain industry leaders in those respective product lines in our fiber-optic business segment,” he concludes.

SEDU says that the VCSEL is the preferred light source for data transmission in short-distance links, interconnects for the data center and local networks (LANs, SANS, etc). The VCSEL-based module products are designed to enable next-generation data interconnect capabilities that service the demands of providers and OEMs. Applications include rack-to-rack, ganged serial links, logic-logic data links, board-to-board and shelf-to-shelf configurations. The portfolio will also offer solutions for 10GbE, 40GbE, 100GbE parallel-optic modules and AOCs. Future developments will target consumer and automotive markets as well.

“SEDU is committed to developing the products necessary to meet the requirements of high-bandwidth, high-speed optical networks,” comments SEDU’s president & CEO John Wyatt. “By acquiring Emcore’s next-generation VCSELs and parallel-optics products and technology, we will continue to advance high-performance computing applications.”

SEDU plans to continue the VCSEL fab operations in Albuquerque and consolidate Emcore’s Enterprise engineering team currently in Newark, CA to SEDU’s nearby operations in San Jose. On or prior to the closing, SEDU will enter into several ancillary agreements with Emcore, including service agreements to ensure a smooth business transition.

The deal is expected to close shortly after securing regulatory approval by the Committee on Foreign Investment in the United States (CFIUS).

Tags: Emcore VCSEL Sumitomo Electric

Visit: www.emcore.com

Visit: www.sei-device.com