Mellanox ends 1550-nm silicon photonics work

Mellanox Technologies, Ltd. (NASDAQ: MLNX) says it has ceased research on 1550-nm silicon photonics. Approximately 100 employees will lose their jobs as a result.

Mellanox Technologies, Ltd. (NASDAQ: MLNX) says it has ceased research on 1550-nm silicon photonics. Approximately 100 employees will lose their jobs as a result.

"The Mellanox Board of Directors and management team continually review our strategic priorities and investments to ensure they meet our future goals. We began our review of the silicon photonics business in May of 2017, but as the business did not become accretive as we had hoped, we decided to discontinue our 1550-nm silicon photonics development activities," said Eyal Waldman, president and CEO of Mellanox Technologies. "We appreciate all of the efforts of the silicon photonics team over the years and wish them success in their future endeavors."

Mellanox entered the silicon photonics field with the acquisition of Kotura Inc., a deal announced in 2013 (see "Mellanox to buy silicon photonics developer Kotura"). Mellanox paid approximately $82 million for the assets, which included a line of variable optical attenuators that the company says will be unaffected by the cessation of the 1550-nm silicon photonics work. The LinkX cable and optical transceiver lines will feel what Mellanox called a "minor impact" from the action. The company will continue to pursue development of active cables and optical modules for 200-Gbps, 400-Gbps, and higher rate applications on the company's existing schedule via what Mellanox describes as "other technologies including Mellanox own IC designs." The company also will retain the silicon photonics intellectual property.

Shutting down the operations shouldn't materially affect fiscal 2018 revenues, company management believes. The executives expect fiscal 2018 non-GAAP operating expense savings of $26 million to $28 million, as well as an estimated aggregate charge of $21 million to $24 million. The charge includes approximately $4 million to $5 million in cash expenditures, most of which will go to severance costs, as well as approximately $17 million to $19 million of other charges. Most of these charges will be recognized in the first quarter of 2018.

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