Feature: TriQuint integrates to boost margins

Within three months of signing the deal, the company had consolidated Agere s sprawling manufacturing facilities into two operations: a wafer- and chip-fabrication plant in Breiningsville, Pennsylvania, and a component- and module-assembly production line in Matamoros, Mexico.

Now, following several significant product launches earlier this year, the newly named TriQuint Optoelectronics is strengthening its portfolio of integrated optical modules.

"Our focus is really on the transmit and receive interfaces, and within that the focus is on transceivers and transponders," explains Stefan Rochus, marketing director for TriQuint Optoelectronics. "The market has moved from discrete lasers and detectors to highly integrated modules, and that is where we are now directing our R&D and manufacturing investments."

That refocusing effort has not been without its casualties. In June the company sold its 980 nm pump-laser product line to JDS Uniphase, and also plans to sell off its interests in EDFAs, silica waveguides and lithium-niobate modulators.

That will leave a broad range of discrete lasers and detectors, as well as transmitters, receivers and an expanding portfolio of more integrated transceivers and transponders.

Earlier this year, for example, the firm extended its Netlight line of small-form-factor transceivers to support extended-reach interfaces of up to 120 km in Gigabit Ethernet and Fiber Channel applications as well as LR-1 and LR-2 interfaces for optical transmission over distances of 40 and 80 km.

TriQuint now offers a full line of small-form-factor pluggable (SFP) transceivers for datacom and telecom markets that incorporate digital diagnostics and comply with the relevant multiservice agreements (MSAs).

Since the acquisition, TriQuint has also introduced a range of transponders conforming to the 300-pin MSA that operate over distances of 2 to 80 km. Although other MSAs covering 10 Gbit/s modules are emerging, Rochus believes that 300-pin transponders will dominate over other form factors for some time to come. "Fiber Channel is the main driver for form factors such as XFP, but at the moment there is no aggressive push for 10 Gbit/s Fiber Channel," he says.

Crucial to the company s strategy of building integrated modules is the introduction of so-called "optical engines" - essentially transmit/receive optical subassemblies (TOSA/ROSA) that include a laser or detector and any necessary laser driver or receive amplifiers - that are small enough to fit into any of the form factors available today.

"These engines are much smaller than a standard 14-pin butterfly package," explains Rochus. "By using similar TOSA/ROSA packages in a variety of different modules we increase the manufacturing volume of our engines and drive economies of scale."

Optical engines are available for both 2.5 and 10 Gbit/s applications. Although the design inside the package depends on the application, and whether cooled or uncooled lasers are required, all of the engines exploit the same manufacturing platform.

"We have a silicon optical bench that supports different laser and detector chips, and then assembles the silicon optical bench into the package," explains Rochus. "Having a single transmit engine that will fit into different form factors allows us to be very flexible if the market shifts from one form factor to another."

Along with TriQuint s growing focus on integrated modules, the company is still innovating at the component level. For example, it has combined an electro-absorption-modulated laser (EML) with an external locker to create a wavelength-stabilized EML that operates over 600 km at 2.5 Gbit/s. A 360 km version has also been developed to be tunable over four channels at 50 GHz.

Added to that is a distributed-feedback laser operating at 1.5 mm that works with an external lithium-niobate modulator to deliver tunability over eight channels at 50 GHz. Also new is a set of 10 Gbit/s receivers and a 10 Gbit/s uncooled laser and transmitter operating at up to 20 km and targeted at transponder manufacturers.

This continued design activity in components, and in particular at 10 Gbit/s data rates, reinforces TriQuint s position as a vertically integrated module manufacturer.

"We are using TriQuint s GaAs ICs in our transponders, which were just building a presence in the fiber-optic market-place before the acquisition," says Rochus. "We don t need to buy these components externally, so we don t have to stack up margins and we can be competitive on price."

There are some clear synergies between TriQuint s expertise in GaAs devices and its knowledge in InP-based laser manufacturing. But the integration of Agere s optoelectronics business into TriQuint has not gone as smoothly as was first predicted. At the time of the acquisition, TriQuint was forecasting that the optoelectronics business would generate earnings of $50-75 million in 2003, but revenues for the first half of the year has totaled just $17 million.

"We certainly lost market share during the transition, but we sized the business correctly in the first quarter to address the market reality," says Rochus. "We have now rebuilt our customer relationships and are on track to see some significant growth. We are not far away from cash-flow break-even."

According to Rochus, TriQuint plans to expand its portfolio of SFP transceivers and 300-pin transponders still further. "That s where our focus is and without a doubt that is where the market is heading," he says.

* This article originally appeared in FibreSystems September 2003 p36.