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Apr 17th, 2013
Avago set to acquire CyOptics in $400M cash deal
Maker of single mode indium phosphide lasers and detectors to boost Avago’s presence in data centers and silicon photonics.
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Fig 1: After recording significant losses in 2008 and 2009, CyOptics swung to a net profit in 2010.
Fig 1: After recording significant losses in 2008 and 2009, CyOptics swung to a net profit in 2010.

Avago Technologies, the San Jose-based semiconductor manufacturer spun out of Agilent Technologies, is set to acquire indium phosphide (InP) optoelectronics specialist CyOptics for $400 million in cash. The deal, which still needs to be ratified by US regulators, follows a sharp recent uptick in fortunes for the Pennsylvania company. Following years of heavy losses, CyOptics swung to a net profit in 2010 and has nearly doubled its revenues since. Avago is aiming to exploit the company’s single mode laser and detector technologies in the fast-growing data center interconnect business, where there is escalating demand for longer-reach high-speed cables as internet traffic continues to spiral.

Whereas Avago’s existing products are typically based around VCSEL sources, CyOptics is seen as having higher-end technologies that are complementary to the existing portfolio. Avago also sees an opportunity to play in the emerging field of silicon photonics through the deal. Avago’s CEO Hock Tan said: "We believe CyOptics' leading InP technology and optical manufacturing capability will strengthen Avago's fiber-optics portfolio and accelerate our ability to capture next generation 40G and 100G enterprise and data center sockets. We also see interesting revenue growth opportunities in delivering a broad range of proprietary components to the market."

Fig 1: After recording significant losses in 2008 and 2009, CyOptics swung to a net profit in 2010 and since then has grown revenues at a compound rate of 40%. Profit figures for the full years 2011 and 2012 are unavailable.

Silicon photonics potential

In a conference call arranged to discuss the acquisition with investors, Tan expanded a little on that theme, saying: “CyOptics is a major industry supplier of lasers for several silicon photonic solutions. Along with Avago's packaging expertise and scale, CyOptics will give Avago an opportunity to support the silicon photonics industry with differentiated laser sources and platforms.” Tan added that a number of OEMs rely on CyOptics' lasers and receivers to serve the fiber-to-the-home market in China, a fast-growing market that doubled over the past two years to approximately 39 million units in 2012, the CEO said. The cash deal appears to represent a successful exit for investors including Jerusalem Venture Partners, which according to recent US Securities & Exchange Commission filings owns nearly 55% of CyOptics.

To read more: http://optics.org/news/4/4/12



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