Corning Buys Pirelli's Photonics; $3.6 Billion Takes (Almost) All

CORNING, N.Y. -- Lithium niobate modulator technology and submarine 980-nm pump diodes join Corning Inc.'s family of photonics technologies after its September purchase of Pirelli S.p.A.'s optical technologies business.
For $3.6 billion plus a $180 million bonus if Pirelli meets some business milestones, Corning takes over 90 percent of the Milan, Italy, business. Cisco Systems Inc. of San Jose, Calif., owns the remaining 10 percent.
Corning executives said the Pirelli business has not yet turned a profit, but they expect to see one in 2001. The business is in the final stage of qualifying a submarine 908-nm pump diode and has started to qualify a pump diode module. While it waits for qualification, Corning will use the manufacturing capacity for terrestrial 980-nm pump diodes, said Gerald J. Fine, vice president and general manager for Corning Photonic Technologies.
Fine acknowledged that Pirelli's submarine pump diodes are "slightly below what the market requires" in terms of power, but he said that Corning's Lasertron Div. should be able to help bring the diodes up to the 100 to 150 mW that the market will require in the next year.
The lithium niobate modulator technology will hit its stride in a year or two, he said, and he expects to see some sales of 10-Gb/s modulators this year. The greater opportunities will come from 40-Gb/s devices, however. "We think the technology is 40-gig-compatible, but it will require some modifications," he said, adding that other Corning divisions have some expertise that can help in developing that technology.
Pirelli also brings Corning some Bragg grating capabilities, which Fine said will be very useful as 40-Gb/s transmission systems become more prevalent. "We have said before that a key product for us in the future is going to be tunable dispersion compensators," he said, adding that Bragg gratings could be a part of such a device.
Besides the new technologies, the acquisition offers Corning much-needed manufacturing capacity for specialty optical fiber. Pirelli employs about 310 people in Italy, where the business will remain and grow to about 440 employees by year end, when Corning expects to complete the sale.