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Technology Stocks : Nanovation Technologies,Inc.

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To: BDR who wrote (399)8/19/2000 12:38:34 AM
From: BDR  Read Replies (1) of 417
 
Nanovation Comes Down to Earth
AUGUST 16, 2000
lightreading.com

Since Nanovation Technologies Inc. dumped its big-spending CEO a few weeks ago (see
Nanovation's CEO Gets The Heave-Ho ), the optical-chip startup has come down to earth with
quite a big bump.

Yesterday, it announced consolidation that will shift Nanovation's HQ from Miami to a rather less
glamorous location: Northville Township, Michigan (see Nanovation Consolidates ). And that, it
turns out, is symbolic of other changes occuring at the developer of optical integrated circuits.

In particular, Nanovation now says that it'll use silica-on-silicon materials technology to make its
chips. That's a big come-down from its ambitious plans to use indium phosphide to set it apart
from the competition. Nanovation "still has faith in indium phosphide," CTO Gary Bjorklund told
Light Reading yesterday. “But it’s turning out to be a long-term research program."

Here’s what’s going on:

Nanovation is aiming to make the optical equivalent of ASICs (application-specific integrated
circuits) – chips tailored to the requirements of OEMs, which might incorporate both passive and
active devices. (Passive devices require no electrical power and do things like splitting light into
different wavelengths. Active devices require power and typically emit, detect, amplify, or switch
light.)

In general, different materials have to be used for making passive or active devices, but indium
phosphide holds out the promise of being suitable for making both types -- which is one of the
reasons Nanovation liked it.

Nanovation also liked indium phosphide's very fast switching speeds. “It’ll switch in a
nanosecond, 10 million times faster than an electro-mechanical switch,” Bjorklund says. In
addition, it’s also possible to cram a lot of devices onto a small indium phosphide chip, because
the waveguides are particularly narrow and can steer light around very sharp corners.

Manufacturing indium phosphide chips, however, is challenging. It’s proved particularly tough to
make the 3D trumpet-shaped funnels that steer light from the much thicker cores of optic fiber into
the narrow waveguides in the chip itself, according to Bjorklund.

Nanovation did some market research to figure out whether indium phosphide was worth the
hassle and got some surprising results. “There’s no compelling need for fast switching,"
acknowledges Bjorklund. "We got a rude awakening."

This awakening has led Nanovation into focusing its work on silica-on-silicon, a material used by
a number of other startups -- notably Lightwave Microsystems Corp. and Kymata Inc. It’s easier
to make silica-on-silicon chips using standard semiconductor processes, but the material is only
suitable for passive devices.

There is a way around this problem -- by selectively carving out the material to make tiny
mechanical devices using MEMS (micro-electro-mechanical system) technology. Nanovation
demonstrated this in chips that it showed at the Optical Fiber Conference (OFC) last March.

These developments come courtesy of a partnership with Cronos, the MEMS manufacturer
bought by JDS Uniphase Inc. (Nasdaq: JDSU) earlier this year (see JDS Uniphase Moves Into
MEMS ). Bjorklund says that Cronos has been “an excellent partner” but acknowledges that it
may not last forever. If Nanovation starts stealing business from JDSU, JDSU could pull the plug.

-- Peter Heywood, international editor, Light Reading
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