Intel enters new territory with photonics foundry
By Darrell Dunn
EBN
(03/12/02, 08:03:16 PM EST)
In a departure from its traditional mode of operation, Intel Corp. moved aggressively into another corner of the communications market with the creation last week of a photonics business unit that will provide a wide range of services, including foundry manufacturing.
The birth of Intel as a foundry purveyor may seem counter-intuitive to those who are used to thinking of the company strictly as a semiconductor supplier. Analysts said Intel's push to offer optical-IC manufacturing services may be an effort to maximize the company's available production capacity in a still-recovering market.
Others speculated that Intel is looking to shepherd the equity investments it has already made in dozens of small, fabless optical start-ups while establishing a manufacturing outlet for new companies that could help it further extend its growing communications reach.
“I'm sure Intel playing nice sounds a little strange to companies that don't feel Intel has been the nicest playmate in the past,” said Eric Mantion, an analyst at In-Stat Group, Scottsdale, Ariz. “The reality is, however, that Intel's core competency is not in making microprocessors, but in refining a process and getting good yields.
“A fab running at less than capacity is an inefficient fab, and it can be beneficial to provide those services, even if they possibly come at a discount,” Mantion said.
As part of the effort, Intel has dedicated a new 70,000-sq.-ft., 8in.-wafer plant in San Jose to photonics production, setting it up to become a leading provider of foundry services in a market undergoing transition.
“This is one of the most aggressive moves they've made to date,” said Sterling Perrin, an analyst at IDC, Framingham, Mass. “Even as the optoelectronics market has gone down, they've moved aggressively and without flinching. While the traditional component suppliers have suffered financially, reflecting the market, Intel hasn't had that problem. They've been able to acquire companies and technology at a low price point.”
According to its plan, Intel will provide photonic design and manufacturing services for optical component and systems manufacturers competing in the long-haul and metropolitan market segments. In addition to providing application-specific design libraries for components such as custom-array waveguides and other photonic building blocks, the company will offer customer-specified solutions at varying levels of integration, from wafers and die to subassemblies and finished photonic modules.
Right time, right approach
“The market is really not looking for standardized products,” said Rama Shukla, general manager of the Intel Photonics group. “Different customers have different integration requirements. We believe the ASIC business model is quite appropriate, and we're getting significant positive customer feedback.”
IDC's Perrin said that, given the current state of the photonics market, Intel's approach appears sensible. Many established players have had financial difficulties during the downturn, and the landscape is littered with small start-ups that could benefit from design and foundry services.
“A lot of the model for how this business will work is just being worked out now,” Perrin said. “I do think you need to cast a bit of a wide net when you're coming in as a new player. This is a bit of a leap for them, but in a lot of ways it does make sense.”
However, analysts also noted that Intel's optical-IC foundry model has been pursued and abandoned by others. Lucent Technologies Inc. launched a photonic ASIC business in the mid-90s, but shelved the effort. Telephotonics Inc., Wilmington, Mass., and Optical Micro Devices, Wootton Bassett, England, are still offering foundry production for passive photonic devices.
“Intel is not the first company to pursue something like this, and it has not proved successful,” said John Lively, an analyst at RHK Inc., South San Francisco, Calif. “Optical ASICs have been offered to the market before, but no one has gained any significant traction in the market. It's interesting that a company of Intel's reputation and size is doing it.”
Lively said the bulk of any business that Intel would create will have to come from systems-house, not optical-IC, suppliers. “The companies that Intel has invested in for the most part are small start-ups and are just developing products that are in the trial stage. I don't think they'd have the volume to provide a significant amount of business for this venture,” he said.
Weighty investment
Intel has been investing heavily over the past couple of years to build an optoelectronics business, acquiring such companies as Cognet, Giga, Level One, LightLogic, nSerial, and most recently, Templex Technology, a supplier of Bragg-Grating technology, a filtering and mixing technology used to make photonic components.
As part of Intel Ventures and its $500 million communications fund, Intel also has invested in more than 35 optics companies, many of which are expected to be customers of the photonics services business. Potentially, as Intel guides a small customer through its services program, the company could be groomed for acquisition.
“We believe this to be an area of growth, and a natural extension of what Intel is offering in the communications business,” Shukla said.
The creation of the photonics business is Intel's second foray into the services arena in the past six months. In September the company created Intel Microelectronics Services, a business aimed at providing IC makers and OEMs with design and logistics services for ASICs, ASSPs, and systems-on-a-chip.
That business is also working with other companies, including Amkor, Chartered Semiconductor, ChipPAC, Synopsys, Taiwan Semiconductor Manufacturing, and United Microelectronics, to provide software, design, and foundry services. Intel does not plan to use its own fabs for that business.
“This has been really interesting,” IDC's Perrin said. “They apparently really want to be a full-service ship. But I think, at least with this photonics effort, it's a move that is in direct response to what their potential customers are telling them they want.” |
