Intel, Cisco, Corning in $63 m. deal for optical start-up

SAN FRANCISCO: Intel Corp., Cisco Systems Inc. and Corning Inc. on Monday

pooled in $63 million finance for Gemfire, a start-up aiming to make the

processing power of optical network components grow at impressive rates set by

integrated-circuits.

Founded in late 1995, Palo Alto, Calif.-based Gemfire has now raised more

than $85 million to develop fiber-optic components. According to chief executive

Richard Tompane, the company sees fiber-optic components developing the way

integrated circuits advanced from simple transistors to complex microprocessors.

"We see the same things happening in photonics as in the integrated

circuit industry," Tompane told Reuters. "If you remember the early

days when people made individual transistors."

Gemfire will display two key products at the Optical Fiber Conference 2001

from March 19-22, to show how optical components can be made smaller, more

powerful and less expensive.

"The first component is a Laser Pump Source array," Tompane said.

"For the first time it incorporates eight independently controllable

sources, which is important because it reduces cost and reduces packaging."

"The second product is a variable optical attenuator, which is much

smaller and uses very low power," Tompane said. "When you go to very

high channel-count systems of a hundred channels or even a thousand some day,

power and foot-print, or the size of the package, become very important. Having

a low-power design allows it to go into any environment rather than a very

carefully designed central office."

Joining Intel, Cisco and Corning on Monday as Gemfire's other corporate

investors were optical subsystems provider Finisar Corp. and communications

component maker TriQuint Semiconductor.

Gemfire's initial investors, venture capital firms Kleiner Perkins Caufield

& Byers, Mohr Davidow Ventures, Spring Creek Partners and Hook Partners,

also joined Monday's deal, just one of many recent large funding rounds for

optical start-ups.

On Feb. 23, for instance, year-old start-up Sigma Networks announced a

massive $435 million first-time funding round, which included an investment from

Cisco.

Sigma Chairman Reed Hundt, the former Federal Communications Commission

chief, told Reuters that the round - $145 million in cash and $290 million in

debt - showed investors are eager to fund developing technology for boosting the

quantity of data transmitted over optical networks.

(C) Reuters Limited 2001.