Hot new chip drives up Mitel shares
Product that doubles bandwidth propels stock to
best gain in eight years
Bert Hill
The Ottawa Citizen; with files from Bloomberg News
Mitel Inc. stock took off at the
speed of light yesterday after it
announced a hot new product
aimed at the fibre-optic market.
Investors jumped on board
when Mitel said it has developed
a semiconductor product that
doubles bandwidth, or
transmission capacity, more
cheaply and effectively than
competing technologies.
The stock jumped $5.60 or 22
per cent to $30.70. In U.S.
after-hours trading, Mitel
continued to rise, scoring a 42
per cent gain to $24 -- it's
biggest one-day gain in eight
years.
Working with the National
Research Council, Mitel said it
has developed a prototype product that will be ready for testing by major
telecommunication companies early next year.
The Mitel-NRC collaboration could mean a new contender in the hot competition
involving Nortel Networks, JDS Uniphase and scores of start-up companies, to
design the next generation of fibre-optic gear.
Mitel started nibbling at the booming optical market recently with new products
aimed at fixing bottlenecks in local networks.
The optical market has been a favorite for investors for months because of the
huge demand and fat profits.
"I think investors looking for optical news are excited (by Mitel's
announcement), said Richard Woo, an analysts with Thomason Kernaghan &
Co. in Montreal. "There is demand for these products for sure."
Mitel said the new semiconductor product can boost the number of channels of
light on a single glass fibre from 16 to 40. That could double to 80 in the near
future using simpler and smaller chips.
The product uses something known as Echelle Gratings, which bounce light
signals off a staircase-like silicon chip structure to create new streams of light.
Dr. Richard Normandin, director-general of the NRC's Institute for
Microstructural Sciences, said Echelle gratings, around since the late 1800s, have
attracted intense fibre-optic research interest in the U.S., Canada, Sweden and
Japan in the last decade.
"Most people thought that that while the grating generates very accurate light
paths, there would be too much cross-talk (interference) as the number of
channels increased."
He said NRC and Mitel were the first to find ways to make the technology work
at high channel counts. Dr. Normandin said the work "is part of our mission to
look five years ahead of the market and de-risk the future."
Mitel senior vice-president Moris Simson said, "By being able to etch deep
enough, smooth enough and vertical enough into the silica, we have laid the
foundation for dramatic improvements."
Mitel said its expertise in silicon semiconductor production in Kanata labs and a
Bromont plant allowed it make a working chip that is much smaller than anything
on the market.
"With a 40-channel multiplexing device, we believe our footprint per channel is
five times smaller than competing alternatives," said Dr. John Miller, director of
photonics at Mitel's semiconductor division.
Most fibre-optic equipment uses thin film and filters to split light signals into
many streams and keep them separate as they travel.
But this product is labor intensive and costly to produce, particularly as channels
counts have risen.
Researchers are moving in several directions to find answers that will reduce
production costs and increase capacity.
One alternative is Fibre Bragg Grating, a technology that also bounces light
streams and allows only select ones to flow through by altering fibre with special
materials.Alacatel recently bought Innovative Fibres of Gatineau for $260 million
to gain access to Fibre Bragg technology, originally developed in federal
government labs.
And JDS Uniphase's pending $41 billion U.S. deal for SDL Inc. of San Jose will
give it access to Fibre Bragg amplifier modules, a hot property in the submarine
cable market.
Another alternative is Arrayed Waveguide Grating, which is based on
semiconductor materials.
Mitel said this technology, which is gaining support as channel counts rise from
16 to 40, is hampered by a larger chip size, exotic materials and production
costs.
Nortel Networks is a major buyer of Arrayed Wave chips produced by Bookham
Technologies in England. JDS has said it is working on its own variations
internally.
Nu-wave Photonics Inc., an 18-month-old startup which set an Ottawa record
this spring when it raised $59 million in second-round financing this spring, is
working on a chip-based approach to fibre-optic gear.
"There are lots of people who say they can do (wave multiplexing) on a chip,"
said Peter Schendel, a fund manager at Strathy Investment Management in
Toronto. "Lumenon (Innovative Lightwave Technology Inc. of Montreal) claims
it has such a beast. The question is, can people replicate it in vast quantities." |
