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Agere axes optoelectronics activities

14 Aug 2002

Agere Systems has today announced it is halting all of its optoelectronics activities with the loss of 4000 jobs.

Agere Systems, the top-tier US vendor, is to exit the optoelectronic components business by June of next year. The company will now focus exclusively on advanced IC solutions for wireless and fixed-line networking systems.

Management is seeking buyers for its opto operations, which accounted for about 10% of the company's revenues for the fiscal quarter ending June 2002.

Agere is to discontinue or sell its optoelectronics facilities in Dallas, Texas; Alhambra and Irwindale, California; and Matamoros, Mexico. The company's operations in Breinigsville and Reading, both in Pennsylvania, had already been earmarked for closure. The streamlining means that 4000 jobs will be lost by the end of next year.

"We are redefining Agere as a premier provider of integrated-circuit solutions to target the communications and computing opportunities that present the best long-term potential," said John Dickson, president and chief executive officer of Agere. "As we exit optoelectronics, our first priority will be to ensure that we fully support our opto customers and meet our commitments to them."

Dickson and his colleagues are effectively betting their shirts on a "fab lite" business model. More specifically, Agere will use foundries for standard process technologies, continue its IC assembly and test operations in Singapore and Thailand, and maintain its wafer manufacturing joint venture with Chartered Semiconductor.

Sales of optoelectronic components and modules for network applications have nose-dived over the past 18 months - largely as a result of capital spending constraints among established and alternative telecom operators. A glut of capacity in the core network is also delaying the roll-out of next-generation fiber-optic infrastructure.

According to RHK, a US telecom consultancy, worldwide sales of optoelectronic components will be worth about $2.3 bn this year - a 67% drop on the $7 bn in sales recorded in 2000.

Just last week, ADC Telecommunications announced that it was pulling out of the optical components business. The action affects the company's complete line of active and passive products, including tunable lasers, 980 nm pump lasers, dual-wavelength couplers and micro-optics devices such as collimators. Facilities in Canberra (Australia), Jarfalla (Sweden), Vadnais Heights (US) and Shakopee (US) will close. ADC expects to end its fiscal third quarter with around 9200 employees - a reduction of 3300 workers since November last year - and says it will continue to cut jobs through the rest of the year.

Joe McEntee is editor-in-chief of the FibreSystems magazine group.

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