Emcore buys more Intel assets and prepares for restructuring

17 Apr 2008

Following further acquisitions from Intel's optical platform and optical cables businesses, Emcore intends to separate its fibre and photovoltaic units.

Recent announcements from Emcore indicate the company's continuing ambitions in the optical components and photovoltaic segments. It has acquired the enterprise and storage assets of Intel's Optical Platform division, having earlier purchased the division's telecom-related assets.

Emcore has also bought the Intel Connects Cables business, which supplies high-performance 20 Gbit/s optical cables. The total value of the deals was estimated by analysts to be just under $28 million.

The acquisitions are claimed to further enhance Emcore's presence in the optical communications market, especially in the areas of 10 Gbit Ethernet and storage area network transceivers.

"Emcore expects the Intel Connects Cables business to have gross margins exceeding 50% and to be the fastest growing segment of the acquired assets," commented Reuben Richards, Emcore executive chairman.

"The active optical cable business has good growth potential," said Daryl Inniss of technology analysts Ovum. "Emcore has experience in parallel optics and indeed its captive supply of lasers and receivers puts it in good stead to make a high-margin product. The only concern is whether this business will be another niche or will proliferate into a big business. Standardization among the different active optical cables is required to grow volumes and help further push down cost."

Intel will now shift its focus onto investments in core communications and embedded market segments, according to a statement. It will also continue to develop the USB 3.0 specification, which is expected to support optical and silicon photonics research and development.

In a separate announcement, Emcore took the first steps towards separating its fibre-optics and photovoltaics businesses into separate corporations, a move claimed to allow the maximizing of potential for both business units. No further details were given, pending the preparation of a strategic plan to maximize operational efficiencies during the change.