``Optical networking is definitely an area of growth in the long-term,'' said Rama Shukla, a 22-year Intel employee and the general manager of its new photonics division.
Analysts said Intel will compete against perhaps 50 smaller photonics manufacturers and industry giant JDS Uniphase, whose ambitious acquisition strategy led to $50 billion in write-offs last year after customers drastically reduced spending on components and other networking gear.
``Intel and others are sort of placing their bets now for a year from now or two years from now,'' said Jeremy Donovan, chief analyst at Gartner Dataquest. Intel's capital and reputation may help it win customers over start-ups, he said, but the company's largest competitor in optical equipment is likely to be JDS of San Jose.
The optical components business is in its infancy compared with the highly automated semiconductor manufacturing industry Intel dominates. Testing and packaging traditionally have been done largely by hand, as workers using microscopes attach fibers to tiny devices, one at a time. Compared with chip making, volumes are smaller, too, with a limited number of large companies buying components for specific uses within networks.
JDS typically has focused on building standardized components, said RHK analyst John Lively. Intel aims to use a different model, building a repertoire of parts to perform very specific functions and then combining the components to fit customers' requirements. |
