Industry Update

Zhone Technologies (Oakland) acquired last mile access equipment supplier NEC Eluminant Technologies (Chantilly, VA), a subsidiary of NEC USA. Products in the acquisition include the ISC-303 digital-loop carrier, VISTA Access SONET add/drop multiplexer, RC-28D and RC-28E M13 multiplexers, and FD-6 multiplexer. The acquisition of NEC Eluminant Technologies expands Zhone's customer base with the addition of some of the world's largest carriers while at the same time bringing new transport offerings that provide a bridge between existing copper-based loops and fiber optics.

·CyOptics (Waltham, MA) a developer of indium phosphide-based optical components, acquired the optical-component packaging capabilities of CENiX, a leader in the automated assembly and test of optoelectronic subsystems. The purchase includes CENiX's package design technology and automated manufacturing capability based in Allentown, PA. Founded in June 2000, CENiX has developed a proprietary state-of-the-art automated manufacturing facility that leverages intelligent software and ultra-high-precision hardware for low-cost and uniform production of optoelectronic components—over 10,000 components per month. In acquiring the new packaging factory, CyOptics gains the ability to provide a wide selection of components, including cooled and uncooled distributed-feedback lasers, electro-absorption modulated lasers, and PIN and APD receivers. In addition, CyOptics can supply customized parts for high-volume applications, including lasers and detectors for small-form-factor transponders and transceivers. Financial terms of the acquisition were not disclosed. CyOptics has hired the core manufacturing technical team of CENiX, while CENiX retains the optoelectronic-subsystem design and intellectual property assets that are part of its Irvine, CA, operation.

· Independent telecommunications provider Gila River Telecommunications (GRTI—Chandler, AZ) deployed the Metro-Optix (Allen, TX) CityStream 5000 multiservice provisioning platform in its network. Established in 1988 for the purpose of providing the Gila River Indian Community with telecommunications services, GRTI today offers customers business phone, Internet, cellular (Verizon Wireless), and satellite (Dish Network) services. The Metro-Optix platform is on the Rural Utilities Service (RUS) List of Acceptable Materials, which allowed GRTI to use RUS loan funds to purchase and deploy CityStream 5000. Terms of the deal were not disclosed.

·WilTel Communications Group (Tulsa, OK) will provide SBC Internet Services, an SBC Communications company (San Antonio, TX), 10-Gbit/sec OC-192c transport for SBC to build-out its national IP network and support the growth and expansion of its consumer and business Internet business. WilTel expects to activate the network within 75 days. The largest capacity agreement WilTel has undertaken as a company, it will turn up double-digit OC-192c routes nationwide among many cities within a very aggressive time frame. WilTel is SBC's preferred provider of underlying voice and data transport infrastructure as part of a strategic alliance formed in February 1999.

· Optical-component supplier Lightwaves2020 (San Jose, CA) and optical-controller provider Intelligent Photonics Control (Ottawa, Ontario) signed an agreement to jointly develop intelligent optical amplifiers. The amplifiers will be based on novel optical components from Lightwaves2020, and Intelligent Photonics' control platform, which consists of highly integrated optoelectronic technologies supported by standards-based software, and signal processing firmware and algorithms. This new amplifier is expected to offer unprecedented control and functionality in a low-cost, small-footprint solution.

·RBN (San Francisco), a designer and developer of carrier-class optical transport and switching platforms for the access, particularly the outside plant, and metro markets, announced the completion of its series C funding totaling $11 million from existing investors Allen & Buckeridge, Macquarie Technology Ventures, Optical Capital Group, Paecal Investments, and Redfern Photonics. To date, the company has raised a total of $40 million since its inception in February 1999. RBN designs and develops WDM systems that can be used in the central office, outside plant remote terminals, and enterprise environments.

·Fairchild Semiconductor (South Portland, ME) signed a long-term production agreement with micro-electromechnical systems (MEMS)-based all-optical-switching company OMM (San Diego). Fairchild will supply OMM with MEMS wafers for use in optical-networking applications. Currently, Fairchild is manufacturing and shipping wafers in volume to meet a rigorous qualification process by OMM for its commercially available line of photonic-switching products. The products are compliant with the telecommunications reliability and environmental standards from Telcordia Technologies. The Fairchild-OMM agreement was predicated on Fairchild's successful transfer of the SUMMiT IV process technology from Sandia National Laboratories, announced in October 2001. The SUMMiT IV MEMS process technology is a well-recognized micromachining process for high-reliability MEMS devices. Fairchild is the only company currently offering this technology for foundry manufacturing.

·Ripley (Cromwell, CT), a manufacturer of wire and cable preparation tools, acquired the products and intellectual assets of Amherst FiberOptics from Communication Dynamics. Details of the acquisition have not been made public. Beginning immediately, Ripley will be adding the fiber-optic tools acquired in the acquisition to its Miller product line.

· Component supplier Molex (Lisle, IL), acquired certain assets of Schott Optovance, including the Optical Shuffle high-density fiber-optic interconnect and Light Dealer product lines. Molex has completed the transfer of the operation to its Bolingbrook, IL, facility. Terms of the acquisition were not provided. Schott Optovance was a subsidiary of Schott Corp. (Yonkers, NY), whose base product is special glass. Schott Corp. is the North American headquarters for the Schott Group (Germany).

·Northlight Optronics AB announced the acquisition of Ericsson Optoelectronics (Stockholm), the optoelectronic-component business unit of Ericsson. The purchase includes the development and manufacturing activities as well as the 48 employees of the business unit. Ericsson retains 9.9% ownership in the new operation. Northlight will build on Ericsson's 20-year-plus track record of proven manufacturing and design capability of long-wavelength optical transmitters and receivers. The initial product range includes distributed-feedback/electro-absorption (DFB-EA)- and DFB-laser transmitters and high-speed receivers to 10 Gbits/sec. The 48 Ericsson employees will become employees of Northlight, which designs and manufactures optical transmitters and receivers for long-haul, metro, and high-speed LAN applications.

· United Kingdom service provider THUS plc has selected the Ciena (Linthicum, MD) multiservice CWDM platform to support its LAN extension services known as "City Ethernet." The deal allows THUS to offer carrier class, metropolitan, and national Ethernet services at gigabit speeds to the enterprise market. City Ethernet is a high-speed metro Ethernet service that allows enterprise customers to link sites through private Ethernet connections operating at the same high speed as their office network. National Ethernet is a high-speed offering that extends the benefits of City Ethernet to include flexible bandwidth and tariffs to meet all customer needs and budgets.

·Marconi plc (London) announced that the U.S. Department of Defense is the first customer of its 10-Gbit/sec (OC-192c/STM-64) ATM port card, a high-speed interface for Marconi's flagship multiservice switch-router, the BXR-48000. The sale also marks the general availability of Marconi's new 10-Gbit/sec ATM interface, which enables network operators to move information at the highest feasible speeds while secured by encryption technologies. Marconi is the first vendor to announce the sale of 10-Gbit/sec ATM interfaces. The U.S. Naval Research Laboratory validated the interface in 2002, and the first sale of the interface came in December to the Defense Department. The DoD, which was also the first customer for the 480-Gbit/sec BXR-48000 switch-router will use the 10-Gbit/sec ATM interface for classified applications in multiservice broadband network expansion projects.

· Component and module supplier OpsiTech (Grenoble, France, and Summit, NJ) announced its arrayed-waveguide-grating-based multiplexer/demultiplexer product family has successfully passed the Telcordia GR-1221 qualification. The technology also has been approved for use by a major network system manufacturer, according to the company.

· The Welsh Development Agency (WDA—Cardiff Wales, UK) announced plans for the development of a national business incubation and research facility dedicated to the growth of the optoelectronics industry. Known as OpTIC Technium (Optronics Technology and Incubation Centre), the 82,000-sq-ft, $21-million facility will include 24 incubator units, a state-of-the-art clean room, and a technology center where researchers from industry and academia can combine talents to develop new products and processes. Additionally, conference, training, and restaurant facilities will enable OpTIC to become a national venue for science and technology. Located at the heart of an existing cluster of optoelectronics companies in St. Asaph, North Wales, with fast links to Manchester, Liverpool, and Ireland, OpTIC will be fully operational in the fall. The close proximity of OpTIC to the University of Wales at Bangor, with such resources as the Centres of Excellence for Technology and Industrial Collaboration, Centre for Industrial and Commercial Opto-electronics, and Institute for Bioelectronic and Molecular Microsystems, will further enhance the climate for optoelectronics companies locating there. OpTIC is part of the Technium program, a Welsh program designed to generate and grow innovation-based businesses by providing assistance to multinationals, small and medium enterprises, and budding entrepreneurs. As part of the Technium project, OpTIC will offer access to cost-effective, cutting-edge technology and expertise, customized training programs, incubation support, broadband fiber-optic links to commercial and university networks, a steady supply of highly qualified graduates, advice in marketing and intellectual property rights, and access to venture capital sources as well as technical development support from the WDA and other governmental organizations. The project is a partnership of the Welsh Opto-electronics Forum, European Union funding, the WDA, and the private sector. Applications are now being accepted for companies interested in participating and construction is already underway.

·WilTel Communications Group (Tulsa, OK) finalized deals with China Telecom (Beijing) to sell partial capacity interest in the China-U.S. Submarine Cable Network, equivalent to 29 half-circuit STM-1s of telecommuncations capacity. The agreement allows China Telecom to increase its capacity between the United States and China to meet their increased demand for voice, data, Internet, and video services in China.

·Sagitta (Hauppauge NY), a supplier of systems for fully automating the polish-clean and inspection of fiber-optic components and connectors, announced a strategic partnership agreement with distributor U-Tech of Taiwan. Effective immediately, U-Tech will become the exclusive representative in Taiwan for Sagitta's fiber-optic process equipment.

·Corning (Corning, NY) announced that PT Perusahaan Gas Negara (PGN), a state-owned Indonesian gas company, has selected Corning Vascade L1000 optical fiber for its undersea Indonesian network. That is the first installation of Vascade L1000 fiber in Southeast Asia. The 292 cabled-kilometer network, which will connect Sumatra to Singapore via the Indonesian island of Batam, will contain about 9,400 km of Vascade L1000 fiber. This advanced undersea singlemode fiber is designed for short-haul submarine networks operating at higher data rates, including 10 Gbits/sec. In addition to managing existing gas-pipeline networks, PGN is developing the Indonesia Gas Transmission Network, including a real time gas distribution management system requiring sophisticated online communications. PGN selected Vascade L1000 optical fiber as the backbone of this system.

·Etisalat, the United Arab Emirates (UAE) Telecommunications Corp., announced the completion of the Etisalat IP infrastructure with the deployment of M160 routing platforms from Juniper Networks (Sunnyvale, CA). The M160 routers have been installed in points of presence throughout the IP network. Juniper's authorized distribution partner in the UAE, Alpha Data played a central role throughout the pre- and post-sales process and was responsible for the supply and installation of the Juniper's routers in the Etisalat network. Alpha Data will also provide the necessary technical support going forward. As part of the agreement, Alpha Data contracted Juniper's professional services group to assist in the deployment of the IP backbone as well as the development of new IP services.

· A memorandum of understanding between the League of Arab States and International Telecommunication Union (ITU—Geneva) has been signed, creating a framework for cooperation for the ITU and League of Arab States to coordinate efforts in setting up and implementing telecommunications projects of common interest. The agreement strengthens ties between the two organizations in the fields of telecommunications, information and communication technologies and informatics. It also establishes a mechanism to ensure the coordination, implementation, monitoring and evaluation of a wide range of projects and activities in these fields.

·Molex (Lisle, IL) and KiloLambda Technologies (Tel Aviv) signed an agreement to collaborate on the development and marketing of a multiwavelength source. The project is based on KiloLambda's proprietary technology to generate hundreds of highly stabilized wavelengths in a narrow spacing as low as 1 MHz. KiloLambda will develop the chip and subsystems that generate the wavelengths while Molex will develop the chip-to-fiber coupling interfaces and handle the marketing and sales of the final product. The project was evaluated by examiners from the American National Institute of Standards and Technology (NIST) and by the Office of the Chief Scientist of the Israeli Ministry of Industry and Trade. Following the examiners' recommendations, the Israel-U.S. Binational Industrial Research and Development (BIRD) Foundation Board of Governors approved the project and a grant for $1 million. The BIRD Foundation, which is based in Israel, promotes strategic partnerships between Israeli and American companies in various technological fields. The BIRD Foundation funds projects without taking any equity. Funds are repaid only as royalties on actual sales. In projects that do not reach actual sales, BIRD participates in the risk without demanding repayment of its investment.

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