Mitel and Canadian National Research Council Form Alliance for Photonics - Brief Article

Fiber Optics Business, March 15, 2001

Mitel Corp. and the National Research Council of Canada are forming a new photonics company, Optenia, to develop technology for dense wavelength division multiplexing (DWDM) communications for fiber optic networks.

The formation of Optenia is seen as the next step in a research and development collaboration between Mitel and the research council, which last year reported encouraging results of the exploratory findings of the two concerns. Optenia is receiving financial support as well as technical and human resources help from Mitel, the research council, and other investors. Mitel, citing ongoing negotiations, would not name the investors.

Optenia is expected to have 25 scientists and engineers with multidisciplinary expertise in materials science, device modeling and characterization, microfabrication expertise and, finally, optical-networking systems and related applications knowledge. It will build upon the collaborative efforts already established by Mitel and the research council.

A Mitel spokesman said employees would be drawn evenly from his company and the research council.

"By forming Optenia... we are pooling resources and capabilities needed to develop a promising new technology while ensuring we are well-positioned to capitalize on its success," said Kirk K. Mandy, president and CEO of Mitel.

"Our approach will also ensure that Mitel remains tightly focused on its core business, which is delivering communications ICs that support broadband connectivity," Mandy said.

Mitel recently announced that it planned to turn itself into a pure-play semiconductor company by selling off its communications systems division for $350 million in cash and a minority interest in a business controlled by Terence H. Matthews, a co-founder of Mitel. Last August, Mitel and the research council disclosed that the promise of significant product potential caused them to form research and development collaboration. The formation of Optenia is expected to accelerate development, as well as open new avenues for other research, officials said.

Mitel said Moris Simson, now senior vice president of strategy and corporate development, will come over to Optenia as CEO.

"Optenia was formed to push the frontiers in optical communications by designing and manufacturing components targeted at dense wave division multiplexing," Simson said. "Our products will appeal to providers of high-performance optical Internet systems, in particular those concentrating on the local Internet."

Mitel said market research suggests a North American market for DWDM and optical networking equipment for more than $15 billion by 2003, with optical components reaching about $3 billion, with an annualized growth rate of 50 percent.

Initially, Optenia will target the mux/demux market, which is expected to represent more than half of that component business.

As part of the arrangement, Mitel's Bromont plant will become a strategic manufacturing site for Optenia, which will use the facility as a foundry and development location for new "microfabrication techniques," the company said.

The investment and equity stake were not expected to materially affect Mitel's financial performance for its current fiscal year.