Mellanox ceases 1550nm silicon photonics development

Mellanox Technologies is stopping development of its 1550nm silicon photonics technology and products, effective immediately. About 100 people will lose their jobs as a result.

Mellanox gained its silicon photonics activities through the 2013 acquisition of Kotura in a deal valued at $82 million. The start-up had developed a line of variable optical attenuators (VOA) in silicon photonics, and believed that its technology showed great promise to drive down the cost of high-speed interconnect products.

However, the Kotura team was not able to demonstrate that silicon photonics could fulfill that potential.

‘The Mellanox Board of Directors and management team continually review our strategic priorities and investments to ensure they meet our future goals,’ said Eyal Waldman, president and CEO of Mellanox Technologies. ‘We began our review of the silicon photonics business in May of 2017, but as the business did not become accretive as we had hoped, we decided to discontinue our 1550nm silicon photonics development activities. We appreciate all of the efforts of the silicon photonics team over the years and wish them success in their future endeavours.’

While Mellanox plans to continue selling and supporting the VOA product line, it will use alternative technologies, including its own integrated circuit designs, to deliver on its roadmap for cables and transceivers at 200G data rates and beyond.

The decision is expected to have only a minor impact on Mellanox’s LinkX range of cables and transceivers for cloud, enterprise and storage applications, which includes PSM4 products based on silicon photonics (see Mellanox and Accelink partner on 100G PSM4 transceivers).

Mellanox said it intends to retain the silicon photonics intellectual property.

The discontinuation of Mellanox’s 1550nm silicon photonics development activities is not expected to have an impact on fiscal 2018 revenues and is projected to result in expected fiscal 2018 non-GAAP operating expense savings of $26 million to $28 million.

Also, this action is anticipated to result in a charge of between $21 million and $24 million, including $4 million to $5 million of cash expenditures – mostly related to severance costs – as well as $17 million to $19 million of other charges. Mellanox expects to recognise most of the restructuring charges in the first quarter of 2018.