Inphi to buy coherent DSP developer ClariPhy Communications for $275 million

Communications semiconductor Inphi Corp. (NYSE: IPHI) says it will extend its work in high-level modulation formats into coherent transmission with the acquisition of ClariPhy Communications Inc. Inphi will pay $275 million in cash and assume certain liabilities in a deal expected to close this December.

Communications semiconductor Inphi Corp. (NYSE: IPHI) says it will extend its work in high-level modulation formats into coherent transmission with the acquisition of ClariPhy Communications Inc. Inphi will pay $275 million in cash and assume certain liabilities in a deal expected to close this December.

ClariPhy got its start in electronic dispersion compensation (see, for example, "ClariPhy clarifies market direction, touts technology advancements"). However, it made its fortune with development of coherent DSP ASSPs for line-side 40- and 100-Gbps applications, targeting optical transport systems houses who wanted to compete with the likes of Ciena Corp., Nokia/Alcatel-Lucent, and Huawei but lacked the in-house ASIC expertise to create their own coherent devices. At 100G, the company began with the LightSpeed-II (see "ClariPhy unveils 100G Lightspeed-II SoC for coherent CFP transceivers") in competition with NEL, then beat NEL to market with a device that could accommodate both 100 and 200 Gbps aimed at pluggable CFP2-ACO transceivers, the LightSpeed-II CL20010. ClariPhy has since unveiled the LightSpeed-III for 400-Gbps designs. The company also competes with Acacia Communications, which now offers the coherent DSPs it has used in its coherent optical modules as a standalone product.

Inphi, meanwhile, already has a line of drivers, transimpedance amplifiers (TIAs), and other devices for coherent system designs (see, for example, "Inphi offers SMT 32-Gbaud coherent quad linear driver" and "Inphi offers first OIF-compliant 100G coherent TIA and high-sensitivity 40G linear TIA"). It also had begun to address demand for direct-detect modulation formats with higher orders than NRZ, particularly PAM4 (see "Inphi unveils second-generation PAM4 chipset for 50/100/400 Gigabit Ethernet"). The acquisition of ClariPhy will give Inphi the ability to support the two current primary choices for data center interconnect (DCI) as well as more fully address a wider range of applications on the line side.

"With the acquisition of ClariPhy, we are completing our product portfolio as the leading component and platform supplier for optical networking customers," said Ford Tamer, president and CEO of Inphi. "The ClariPhy coherent DSP complements Inphi TIA, driver, optical PHY, and silicon photonics components to provide system OEM and module customers high-performance and low-power platform solutions. Following closing, we expect to have platform offerings for long-haul, metro, DCI edge, and intra-data center applications. We believe this will provide customers with faster time-to-market, proven quality, and competitive cost."

Inphi plans to integrate ClariPhy's engineering team into its current staff. In addition, Nariman Yousefi, ClariPhy's current CEO, will run what would become Inphi's Coherent DSP business unit. Inphi also cited ClariPhy's vice president of engineering and DSP architect, Oscar Agazzi, as a key addition.

Inphi asserts the acquisition will make it "one of the most comprehensive component and platform suppliers across all three optical market segments -- inside/outside data centers, metro, and long haul," in the words of the press release that announced the deal. However, Andrew Schmitt, founder and lead analyst at Cignal AI, believes that Inphi may not be comprehensive enough to take full advantage of its pending new assets. In particular, combining optical components (which Inphi currently doesn't have) with the ClariPhy DSPs to create modules and other subsystems would make a stronger play, Schmitt believes.

"Strategically, I think it makes sense for someone like Inphi," Schmitt said on a Piper Jaffray analyst call earlier this year in regard to a potential Inphi/ClariPhy tie up. "I would argue that it makes more sense for an optical component company to take that approach – someone like an Oclaro, an NEL Photonics, or a Finisar. Because then they can, in essence, deploy the same model that Acacia has deployed. That is, being able to closely couple all the optics and the DSP to sell a full subsystem. Whereas Inphi can't really do that."

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