Intel quits optical network market

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Intel quits optical network market

Chip giant US$3b out of pocket as it offloads business to Cortina Systems.

Intel has sold its optical networking components business to Cortina Systems for US$115 million. 

The transaction went through on 8 September and follows last week's announcement that Intel is to shed 10,500 employees by 2008.

Cortina is a supplier of communications semiconductor products for the carrier infrastructure market.

The company used a broad selection of Intel's Ethernet media access controllers and physical layer devices, as well as Intel's entire portfolio of transport and service framers, optical transport forward error correction framers, and T1/E1 line interface products.

Bill Chatwell, general manager of Intel's optical networking components division, said: "Intel is honing its focus in the communications and embedded market segments to align with our core businesses."

At just US$115m the sale represents a significant loss for Intel. The chip giant's optical components business was kick-started by the acquisition of LevelOne Communications in August 1999 for US$2.2 billion, and GIGA A/S in March 2000 for US$1.25 billion.

Both companies were acquired on the back of the huge build-out of telecoms infrastructure in the US that predicted exponential growth for telecoms traffic because of the rapidly growing internet market.

But the build-out stopped abruptly when the dotcom market failed, and much of the optical networks are now dark and waiting for customers.

Cortina looked to the purchase as a way of broadening its range quickly and offering new features to current customers.

Amir Nayyerhabibi, chief executive at Cortina, said. "This acquisition greatly broadens our offering to give Cortina a comprehensive portfolio of products for network infrastructure applications.

"The substantial customer overlap was a key driver for this acquisition, and customers support our decision to bring these products together under the Cortina brand."

The two companies have pledged to work together to complete a smooth transition of the business and will try to maintain support to their existing customers.
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