Opnext ready to bounce back from flood disaster

08 Feb 2012

CEO says that production capacity will be back to pre-flood levels by the end of March.

Laser diode and optical telecoms module maker Opnext looks set to bounce back from the major disruption caused by last year’s catastrophic flooding of contract manufacturer Fabrinet over the next couple of months.

Announcing results for the company’s third fiscal quarter, Opnext CEO Harry Bosco said: “We plan to restart manufacturing in Thailand at Fabrinet’s Pinehurst campus this month, with a return to pre-flood production capacity expected by March 31, 2012.”

Since the flooding of Fabrinet’s Chokchai campus, where a large proportion of Opnext’s products were assembled and tested, last October, the company has been working on contingency plans, including a switch of manufacturing to its own sites in California and Japan. Opnext was among the worst-hit optics and photonics companies, with Emcore, Oclaro and II-VI among others to face significant disruption.

While limited assembly and testing of modules at Opnext's own sites did begin in late 2011, revenues were inevitably hit hard in the closing quarter of the calendar year. At $53.1 million, total sales were down 38% sequentially and 45% on the same quarter in 2010 – with sales of 10 Gb/s modules hit hardest.

Not surprisingly, that translated to an operating loss of $46.2 million – though the company’s cash balance has been much less affected by the crisis, falling by only around $5 million in the latest quarter, to $85.2 million.

Opnext was also hit by a slowdown in orders and sales relating to next-generation systems using 40 Gb/s and 100 Gb/s modules, while its revenues from non-telecoms deployments such as red and blue lasers declined more than 25% sequentially to $6.7 million.

Despite the difficulties, Bosco said he was very pleased with the recovery efforts, and with demand for the 40 Gb/s and faster products now appearing to bounce back somewhat, he is predicting that revenues will be strongly up in the current quarter, which ends in March.

“Based on our 10G production recovery plan and the improvement to date in orders for 40G and above products, we expect total revenue for the March 2012 quarter will be between $70.0 million and $75.0 million,” he concluded.