News

posted on 10 April 2008 13:08

Intel is selling its Optical Platform Division's enterprise and storage assets to EMCORE corporation in an all-share deal. The company will keep its silicon photonics and USB 3.0 R&D though.

If you didn't know that Intel had an Optical Platform Division (OPD) don't worry; most people didn't know either. It's getting rid of most of it in an all-share deal with EMCORE, which makes semi-conductor components and subsystems for the broadband, fiber optic, satellite and terrestrial solar power markets.

EMCORE isn't paying any cash for the assets which include intellectual property, inventory, fixed assets and assorted technology. It will be used to enhance EMCORE's 10 gigabit Ethernet and storage area network (SAN) transceivers product lines. The deal should close in the second half of this year.

EMCORE has aleady acquired the telecom part of Intel's OPD, as EMCORE executive chairman, Reuben F. Richards, said: “Following the successful acquisition of the telecom-related assets of Intel’s Optical Platform Division, this second acquisition from Intel enables EMCORE’s Fiber Optics to be a significant supplier for both telecom and datacom products."

"This acquisition will provide additional manufacturing efficiencies through economies of scale and vertical integration, benefiting our enterprise, storage, telecom, cable and high-performance computing customers. EMCORE projects this asset will add $45 million in revenue for the next 12 months, increase gross margin from 23 to 29 percent and be accretive to earnings."

"The Intel Connects Cables business provides an innovative solution for high-performance computing cluster interconnect applications, using embedded parallel optical transceivers with a multi-mode fiber ribbon. EMCORE expects this business to have gross margins exceeding 50% and to be the fastest growing segment of the acquired assets.”

Not a distress sale then. Why is Intel getting rid of what looks like a profitable business for no cash at all?

It doesn't see them as part of its core business and will focus its investments on core communications and embedded market segments in line with its platform strategies. However, Intel will continue its efforts on the USB 3.0 specification, which is slated to support optical, and silicon photonics research and development.

^{[Paul Roberts, news editor.]}