Mellanox deal to buy IPtronics increases focus on optical interconnects

04 Jun 2013

Venture-backed Danish company is set to join silicon photonics specialist Kotura under Mellanox's wing.

Mellanox Technologies, the Nasdaq-listed provider of interconnects for servers and storage systems, has committed further to next-generation technologies based on optics.

The company, which is in the process of acquiring the silicon photonics specialist Kotura for $82 million, has now agreed to buy Denmark-based IPtronics for just under $50 million in cash.

IPtronics, whose board of directors – along with that of Mellanox – has unanimously approved the deal, is a fabless provider of chips used in parallel optical interconnects, such as high-speed VCSEL drivers. It has offices in Copenhagen and Menlo Park, California, and has previously raised some $16 million in venture capital.

Following the Kotura announcement just a couple of weeks ago, the move to acquire IPtronics gives Mellanox further technological support for the transition to 100 Gb/s optical interconnects, whether based on silicon photonics or more conventional approaches.

As with the Kotura deal, this latest transaction is expected to close in the second half of 2013, subject to the completion of certain closing conditions. IPtronics products already feature in Mellanox’s current interconnect products, and Mellanox says that it will be better placed to offer a complete range of next-generation optical connectivity for data center customers to meet growing network traffic demands.

Specifically, IPtronics sells multichannel VCSEL driver, modulator driver and transimpedance amplifier chips, with Mellanox stressing the benefits of “significantly” lower power consumption and lower costs compared with existing products.

The company explained: “The technology Mellanox will acquire bridges the gap between optical and electrical interfaces and enables system providers to overcome the physical constraints of using copper-based connections in high-speed interfaces and backplanes.”

European R&D base
Following completion of the deal, Mellanox plans to establish its first European research and development center in Roskilde, near Copenhagen, and to further expand its customer support there for existing customers and partners.

Mellanox CEO Eyal Waldman said: “The proposed acquisition of IPtronics is highly complementary [to] our recently proposed acquisition of Kotura. IPtronics’ parallel optical interconnect ICs further solidify our strategy to have a full end-to-end solution for the server and storage interconnect.”

“We expect that the acquisition of IPtronics’ technology and their development team will better position us to continue to offer faster interconnect solutions at 100 Gb/s and beyond, with higher-density and lower power at a lower cost.”

Niels Finseth, the co-founder and CEO of IPtronics, which currently has 20 employees and partners with STMicroelectronics on chip manufacturing, said: “We are delighted to join the Mellanox team and look forward to working together to drive the combined company’s further growth.”

The proposed acquisition is subject to customary closing conditions, including the receipt of applicable regulatory approvals.

• Avago Technologies CEO Hock Tan expressed some skepticism about the claims being made for silicon photonics during the company’s latest investor conference call last week.

Discussing Avago’s second quarter of fiscal year 2013, Tan said that silicon photonics had generated a lot of media attention, but could still prove to be a difficult technology to implement. “[It’s] more talk than products,” said the CEO, adding, “It could be very expensive compared with VCSEL technology.”