Intel eyes optics

April 24, 2001: 2:11 p.m. ET

Chip leader agrees to buy three fiber-optic component makers in expansion move

NEW YORK (CNNfn) - Chip leader Intel Corp. on Tuesday said it will buy three privately-held companies that specialize in components used in optical networking equipment.

Financial terms of the deals, which a spokesman said were negotiated separately but announced concurrently, were not disclosed. The company said these latest moves are part of a broader effort to extend its business into the networking and communications area.

Intel is the world's largest supplier of microprocessors used in personal computers. But during the past two years, the company has sharpened its focus on the market for chips used in networking and communications, making a raft of acquisitions and expanding its unit focused specifically on those end markets.

The companies Intel said it will acquire are Cognet Inc., nSerial Corp., and LightLogic Inc., whose products all are used to convert data transmitted through light waves into electrical signals that can be used in standard computer networks.

These latest buys extend Intel's reach into the potentially lucrative market for components designed to speed the flow of data over the Internet using fiber-optic technology. Although that market has been a point of weakness lately – highlighted Tuesday by a bleak outlook from JDS Uniphase, the No. 1 supplier of optical-networking components – Intel executives said the purchases fit very well with Intel's long-term strategy.

"Despite the current slowdown in sales of networking and communications gear, we believe that the investments we're making to add key opto-electronic capabilities, together with the company's core strengths in semiconductor technology, will enable Intel to lead in this industry when the inevitable recovery occurs," Mike Ricci, vice president and general manager of Intel's optical products group, said in a statement.

Intel entered the fiber-optic components fray with its acquisition last year of Giga A/S, through which it has been developing silicon chips for communications equipment that sends data over long distances at 10 gigabits per second, or Gbps. The company currently is working to increase the speed of those components to 40 Gbps.

Shares of Intel (INTC: Research, Estimates) were down 60 cents at $29.72 in afternoon Nasdaq trade Tuesday.