Avago Technologies has announced a definitive agreement to acquire optical component player CyOptics. The value of the acquisition, at $400 million (€304 million), is double CyOptics’ revenues in 2012. CyOptics’ sales were $210 million (€160 million) last year, up 21 percent from the previous year.
Avago’s acquisition will make it the optical component industry’s second largest company, behind Finisar, according to market research firm, Ovum. The deal is expected to be completed in the third quarter of the year.
The deal will add indium phosphide and planar lightwave circuit technologies to Avago’s vertical-cavity surface-emitting laser (VCSEL) and optical transceiver products. In particular, Avago will gain edge laser technology and photonic integration expertise. It will also inherit an advanced automated manufacturing site as well as entry into new markets such as passive optical networking (PON).
Avago stresses its interest in acquiring CyOptics is to bolster its data centre offerings – in particular 40G and 100G data centre and enterprise applications – as well as benefit from the growing PON market.
“Avago has seen that there are challenges being solely a short-distance supplier, and there are opportunities expanding its portfolio and strategy,” said Daryl Inniss, Ovum’s vice president and practice leader components.
Such opportunities include larger data centres now being built and their greater use of singlemode fibre that is becoming an attractive alternative to multimode as data rates and reach requirements increase.
Another factor motivating the acquisition is that short-distance interconnections are being challenged by silicon photonics. “In the long run silicon photonics is going to win,” said Inniss.
The company says it has no plans to enter the longer distance optical transmission market beyond supplying optical components.
By Roy Rubenstein
Press release: Avago Technologies to Acquire CyOptics, a Leading Optical Chip and Component Supplier to the Datacom and Telecom Markets
Gazettabyte: Avago to acquire CyOptics