News Article

Still Too Many III-V Fabs, Says Finisar CEO

Six years on from the telecom meltdown of 2001, there are still twice as many III-V fabs than are needed to meet the current demand for lasers and photodetectors, claims Finisar CEO Jerry Rawls.

The problem of overcapacity in the fiber-optic components industry has barely changed since 2001.

That s according to Jerry Rawls, CEO at component and module maker Finisar, the US firm that itself owns two III-V wafer facilities.

"This is a very challenging market sector," Rawls told investors at a conference call to discuss the firm s latest financial quarter, in which it missed its initial revenue guidance significantly.

"There are still too many of us [suppliers]," said the CEO. "Overcapacity and consolidation among our customers customers means that there is a lack of pricing power, while we need to spend lots of money on research and development."

Over recent years, Finisar has been one of the few companies in the fiber-optic components sector to make a profit (see related stories), but it has had supply problems of its own.

Rawls described a confluence of "train wrecks" that dented the company's sales during the latest period.

Ironically, given his comments, one key problem in the recent quarter was that Finisar was unable to meet expected sales of 10 Gbit/s transceivers because of a shortage of lasers emitting at a specific wavelength.

Finisar does not make these chips itself, and was forced to qualify a second source of the lasers, which are used in C-band wavelength division multiplexing (WDM) applications.

This and other problems meant that Finisar missed its initial revenue target by around $6 million, eventually posting just under $101 million in sales.

But, with all these problems now said to be resolved, Rawls forecast a return to growth in the next quarter, in which he expects Finisar to post sales of $104-108 million.

A key part of Rawls strategy for the future is to expand the company's range of products so that it can address some key applications that Finisar does not currently serve.

One example is in the tunable laser sector, now worth some $400 million per year according to some estimates. To address this area, Rawls is planning to exploit some novel laser technology acquired through the company s March 2007 take-over of Azna, with a commercial product slated to appear in the second half of 2008.

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