NTT Electronics and Oki form alliance to strengthen their optical device businesses

8 August 2003 Tokyo Lightwave -- NTT Electronics Corp. and Oki Electric Industry Co., Ltd. recently reached an agreement to form an alliance covering a wide range of optical devices, including the integration of two companies' production lines.

8 August 2003 Tokyo Lightwave -- NTT Electronics Corp. (NEL) and Oki Electric Industry Co., Ltd. recently reached an agreement to form an alliance covering a wide range of optical devices, including the integration of two companies' production lines.

The alliance aims to enhance product performance, cost competitiveness, and management efficiency in the optical communications device market by combining both companies' expertise in products, process technologies, and production capabilities. The new integrated production lines will be in operation in early August.

"In the optical component business area, many mergers and acquisitions have been reported, but this will be the first significant such alliance in Japan," reports Dr. Hiroshi Yoshimura, managing director and executive director of the Photonics Business Group of NEL. "NEL will be able to improve and strengthen the component business through this alliance."

"Through the alliance, Oki will be able to further enhance its base in the optical communication device business, which can be expected to grow along with the expansion of broadband networks," adds Masaharu Nishiwaki, president of the Optical Components Company at Oki Electric. "Both Oki and NEL have strengths in this area. We believe that both companies' technologies and skills in production and sales will prove complementary, resulting in excellent solutions that satisfy customer requirements."

Both NEL and Oki play in the optical communication device market. NEL excels in process technology for high-speed laser diodes with greater-than 2.5-Gbit/sec products, as well as wavelength multiplexing products. Oki's strengths lie in its product lineup and volume production technology for photodiodes from 2.5-Gbits/sec to 10-Gbits/sec and 2.5-Gbit/sec laser diodes.

Per the agreement, the two companies will integrate their wafer-process and volume-production technologies for laser diode chips, photodiode chips, modulators, and hybrid-functioned devices into NEL's production lines. They will enhance each product lineup by jointly developing new optical communications devices and by offering each product through OEM, which will result in reducing development time and redundant investment. In order to strengthen sales capabilities, NEL and Oki will also effectively use their sales channels to reinforce their respective activities. Through these measures, the two companies intend to increase their competitiveness and expand business.

While the two companies cooperate for the integration of wafer process and the effective use of sales channels, they also aim to extend the alliance range for further enhancement of their optical communications device business. This includes the study for the improvement of assembly process and the effective usage of mutual resources.

Outline of the alliance:
1. Integration of wafer process (chip production)
The alliance integrates the two companies' production facilities, and prepares production lines at the NEL Ibaragi plant for joint operation.

2. Effective use of both companies' sales channels
The alliance increases both companies' sales by expanding their product lineup and by using both companies' sales channels.

3. Joint product development
The alliance effectively uses the two companies' technologies and know-how, through which they aim to improve product development efficiency as well as to decrease development time.

4. Possible expansion of the scope of the alliance
The two companies will study the potential expansion of the alliance, including the integration of assembly processes and offshore manufacturing.

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