Intel Takes Equity Stake in Optoelectronics

Gaynell Terrell

Giant microprocessor manufacturer Intel Corp. has quietly been acquiring equity in optoelectronics companies -- both public and private -- and plans to own a portion of 30 companies by year-end.

Through its venture capital arm, Intel Capital, the company is seeking not only good investments, but also a means to stay ahead of the optical technology curve, said Tom Willis, director of Intel Capital's optical investments group.

"Intel has a history of strategic investments, but if they didn't make money, they weren't strategic. At the same time, we don't invest in something irrelevant to our business. If it's not related to computers or telecommunications, we're not investing," Willis said.

Intel has invested in, to date, such companies as New Focus Inc. of Santa Clara, Calif.; Molecular Optoelectronics Corp. of Watervliet, N.Y.; Bookham Technology of Abington, UK; Digital Optics Corp. of Charlotte, N.C.; Blaze Network Products Inc. of Dublin, Calif.; Templex Technology Inc. of Eugene, Ore.; and Yipes Communications Inc. of San Francisco.

All have strategic talents and services in the community of optical fiber, systems and component companies that can likely benefit one another.

"Optics is obviously making huge inroads in communications. It makes sense to invest in these companies and know what's going on," Willis said. "One of the great things about this market is that there are so many technological alternatives. If you bet on just one, odds are you'll be wrong."

Intel may not be an expert in photonics, but it does know automation, said Michael S. Lebby, optoelectronics business development director. An unnamed portfolio company invited an Intel manufacturing team to scrutinize and tweak its operations. Within a matter of months, the team had jump-started production from 300 to 3000 units a month.

That's proof enough to Intel that photonics component companies need more automated and integrated processes and fewer employees on the manufacturing side. Lebby cited a report by investment banker Warburg Dillon Read Inc. that up to 82 percent of JDS Uniphase Corp.'s employees, for example, are engaged in manufacturing; at SDL Inc. that number is 73 percent.

The Intel optoelectronics group is also exploring the concept of the photonics integrated circuit, an acknowledged misnomer since electronics has circuits and photonics has pathways. Willis declined to provide more information but noted the expertise of Digital Optics, which makes wafer-based micro-optics and integrated optical systems, and Bookham, a provider of optical components in silicon.

"We've gotten serious about optical communications. We're going to be doing a lot of deals here," he said.