IPG Sells Telecom Transmission Product Lines to Lumentum

Lumentum has acquired IPG Photonics’ telecom transmission product lines, enhancing its application-specific integrated circuit (ASIC) and technology capabilities. The companies announced the all-cash transaction in separate releases.

Financial terms of the transaction were not disclosed.

IPG’s telecom transmission product lines are composed of optical transceivers and coherent components, and the divestment includes the former Menara Networks and a subsidiary in Brazil.

IPG said the deal allows it to enhance focus on core products and markets. “While we have made good progress in developing fundamental technologies in our telecom transmission business, our ability to scale these product lines would require a step up in investment that we believe would be better spent on our core materials processing and adjacent markets,” said IPG Photonics CEO Eugene Scherbakov. “After an in-depth review, we have determined that participation in the broader telecom market is noncore to IPG’s strategy. Our strategy is to remain focused on revenue diversification and growth opportunities in markets where we can increase our value proposition to customers by delivering advanced laser processing and technology solutions.”

Scherbakov said that IPG is exploring new markets and applications where fiber lasers are replacing existing laser and nonlaser technologies.

According to Beck Mason, Lumentum’s senior vice president and general manager of telecom transmission, the company adds a team of developers for digital communications ASICs, including coherent digital signal processors, which complements its silicon and indium phosphide PIC capabilities. Mason said the acquisition further creates opportunities for increased vertical integration in future optical transmission modules.

“Increasingly, customers in the cable MSO and wireless network operator space are turning to wavelength tunable pluggable transceivers to help expand their network capacity, and this acquisition brings highly synergistic product lines addressing this rapidly growing opportunity,” Mason said.

The deal will not have an impact on Lumentum’s fiscal fourth quarter. IPG said the sale will have an immaterial effect on total revenue and earnings per share, though it is expected to reduce R&D spending and operating expenses going forward.

Lumentum completed its previously announced acquisition of NeoPhotonics earlier this month. It will announce its fourth quarter and fiscal year 2022 earnings Aug. 16.

IPG announced its second quarter earnings earlier this month.