Optoelectronics startups show fruit-bearing sprouts

Oct. 1, 2000
Heavy venture-capital rains in fertile Silicon Valley soil have got all kinds of things sprouting lately, particularly of the optoelectronics species. According to a report from research-firm Venture One, quoted in the San Jose Mercury News (Aug. 13, 2000), "Venture capitalists spent $14.4 million on three Bay Area optical networking deals in 1995.

Heavy venture-capital rains in fertile Silicon Valley soil have got all kinds of things sprouting lately, particularly of the optoelectronics species. According to a report from research-firm Venture One, quoted in the San Jose Mercury News (Aug. 13, 2000), "Venture capitalists spent $14.4 million on three Bay Area optical networking deals in 1995. Last year they pumped $608.11 million into 86 local optical networking startups. In just the first half of this year, they've spent $794.5 million on 65 local deals. . ."

When it rains that heavily in California, a cornucopia of colorful plant varieties, rarely seen in recent drought-prone years, bursts into bloom. And so it is with optoelectronics startups.

Take long-wavelength vertical-cavity surface-emitting lasers (VCSELs), for instance. Constance J. Chang-Hasnain has taken a sabbatical from her professorial duties at the University of California-Berkeley to start Bandwidth9 (Fremont, CA). The spin-off company is racing to market with technology for producing VCSELs in the 1.3- to 1.5-µm range that will enable rapid data-communications growth, particularly in metropolitan-area networks (see figure).

Chang-Hasnain described the Bandwidth9 VCSEL technology in a technical session at the annual Conference on Lasers and Electro-Optics (CLEO; San Francisco, CA).1 More recently, in August, Nova Crystals (San Jose, CA), a privately held company founded by researchers at Cornell University (Ithaca, NY), announced the successful demonstration of an electrically pumped 1.3-µm VCSEL, also targeted at the data-communications market.

Start-ups growing fast

Stuff like this would grow heartily in a typical drought year. It's your basic native Silicon Valley plant. But in the current venture-capital monsoon, something else is happening. We are actually witnessing the evolution of the fruit-bearing sprout. Optoelectronics startups are growing so fast that manufacturing systems are developing while their products are still somewhere between the "gee-whiz" and prototype stages.

Bandwidth9, for instance, is still in the manufacturing-development phase for long-wavelength VCSELs and other components and subsystems for the wavelength-division multiplexing (WDM) and optical-communications market. Yet, in August, Camstar Systems (Campbell, CA) announced that Bandwidth9 had already contracted with them for the installation of a computerized manufacturing-execution system (MES).

In the "olden days" of pre-Internet data communications and telecommunications strategies, manufacturing-control software grew popular in semiconductor integrated-circuit manufacture because of major cost savings that could be realized by gaining as little as one yield point in the manufacturing process, according to Camstar sales director Dan Estrada. But raging floods of venture-capital investment and expectations have optoelectronics companies currently purchasing MESs before production lines have begun to roll and, in some cases, even before factories have been built. "One of our objectives in installing InSite [the Camstar MES system] during the engineering phase was so that we could make a seamless transition to full production mode when that time comes," said Phil Worland, vice president of operations at Bandwidth9.

Of course, Bandwidth9 is just one example of the state of affairs in optoelectronics, which Estrada described as "supply constrained. Whoever can make the most the quickest will win."

The clear winner so far, however, is Camstar, which announced a second-quarter sales increase of its MESs of 400% over the same period in 1999, driven primarily by growth in optoelectronics. First-half revenues jumped 60% above the first half of 1999, and the company's employee base has just about doubled. All of this has happened during a period of about eight months, simultaneous with thick growth of the Camstar optoelectronics customer base from ground level to a heavily laden tree, bearing the likes of Anadigics (Warren, NJ), Axsun (Boston, MA), AXT (Fremont, CA), Bandwidth9, Emcore (Somerset, NJ), JDS Uniphase (JDSU; San Jose, CA, now including E-TEK, OCLI and SDL), Lightwave Microsystems (San Jose, CA), Lucent (Holmdel, NJ, now including Ortel, Spectran), New Focus (Santa Clara, CA), and Sumitomo Sitix Silicon (Phoenix AZ).

In the case of JDSU, Camstar more than once during the past eight months has found itself acquiring a new customer, just before JDSU acquired that company also. This ostensibly thwarted the appearance of growth in Camstar's numerical customer basebut also provided the kind of problem that many companies would love to have. Camstar had signed a multimillion-dollar enterprise licensing agreement with JDSU last December for MES software.

The MES software basically oversees the manufacturing process, at a level above the operational testing software on the production floor (such as LabView, which is already used in many optoelectronics applications) and below the level of product-data-management software, which provides the design parameters. In Camstar's case, the software handles a range of discrete and nondiscrete manufacturing styles that include both the process style of traditional semiconductor manufacture and the assembly style of WDM component manufacture, which has contributed strongly to its popularity in the verdant optoelectronics market, Estrada said.

So just as the startups in the optoelectronics market are blooming rapidly, Estrada is seeing his sales cycles (from product introduction to purchase) shrinking from a traditional six to eight months to a currently dizzying six to eight weeks, while installation times are shrinking to about half the old eight-month norm; a record-breaking installation at E-TEK, where everything worked out just right, took place in 42 days.

One also wonders to what degree these shifts are simply climatic variations brought about by unseasonal venture-capital precipitation in optoelectronics and to what degree they represent long-term evolutionary change. The object-oriented MES software allows concurrent tracking of parametric data at all levels throughout the manufacturing process. It also enables remote process control from a central location and allows a manufacturer and supplier to share data for tracking relevant parameters throughout the supply chain. Ironically, or perhaps fittingly, the sprouts that are promising enhanced data communications also seem to demand it as a growth requirement.

REFERENCE

  1. W. Yuen et al., High performance 1.6-µm single-epitaxy top-emitting VCSEL, CLEO 2000 technical presentation, San Francisco, CA (2000).

About the Author

Hassaun A. Jones-Bey | Senior Editor and Freelance Writer

Hassaun A. Jones-Bey was a senior editor and then freelance writer for Laser Focus World.

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