Corning expands and closes Pirelli deal

17 Jun 2002

Corning plans to invest more than USD 150 million to increase capacity at its Benton Park Plant in Benton Township, Pennsylvania, in the US, which developed erbium-doped amplifier and dispersion compensation modules. The company intends to increase its capacity in amplifier modules by more than 50% and in dispersion-compensation modules by more than 200%.

"Our ability to grow at, or beyond, market rates is dependent upon our ability to achieve the manufacturing scale and unit volume that is necessary to be responsive to our broadening customer base," said Frank R Little, vice-president and general manager of Optical Transport Products, Corning Photonic Technologies. "While the telecommunications industry is difficult to predict, we expect that the demand for our photonic modules will continue to be very strong." Industry-analyst reports forecast strong double-digit growth in the photonic-components market through 2002.

The company has also completed the previously announced acquisition of Pirelli's 90% interest in an optical-components and devices business for approximately USD 3.6 billion. In a separate transaction, Corning bought the remaining 10% of the firm, which was owned by Cisco Systems for 5,473,684 shares of Corning common stock.

Pirelli's optical-components and devices business, based in Milan, Italy, is a manufacturer of lithium niobate modulators, pump lasers, certain specialty fibers and fiber gratings that are used in optical networks.

The addition of lithium niobate technology will broaden Corning's portfolio as the company continues to position itself as a leading supplier of photonic products to optical-layer firms. Lithium niobate modulators are ideally suited for use in high-speed, long-haul optical communications networks. Additionally, the capabilities of Pirelli's optical-components business in 980 nm pump lasers for submarine use will directly complement and supplement Corning Lasertron's terrestrial 980 nm pump manufacturing facilities.