Nortel Networks Creates Fiber Optic Components Business Unit, Sells Off Microelectronics Operations to Stmicroelectronics

Nortel Networkso better focus its technical and production capabilities, <%=company%> (Brampton, ON) is reorganizing its fiber optic components businesses into a separate business unit called High Performance Optical Components Solutions. Headed by Barbara Callaghan, president, the business unit will market to both Nortel's networking segments and to the optical networking market at large.

With showpieces Xros and CoreTek, the new business will concentrate on the development of lasers, receivers, and microelectronic components. The business unit will comprise approximately 6,000 company employees, with primary locations in Harlow, UK; Paignton, UK; Ottawa, ON; and Research Triangle Park, NC.

In related news, STMicroelectronics N.V. (Pouilly, France) has acquired Nortel's silicon semiconductor production operations (Ottawa, Canada) for approximately $100 million. The total price is subject to purchase price adjustments and the achievement of certain milestones that will result in earn-out payments to Nortel Networks. Under the terms of the agreement, approximately 470 Nortel Networks employees will receive offers of employment from ST. No job losses are anticipated as a result of today's announcement.

Upon completion of the acquisition, slated for the second or third quarter, the two companies will enter into a six-year agreement under which ST will supply Nortel with silicon semiconductor devices; the agreement is worth an estimated $2 billion over the first three years of its term, alone. The companies will also enter into a technology development agreement that will involve Nortel licensing certain manufacturing processes to ST. The agreement represents a follow-on of a similar agreement signed in 1993.

Edited by Kristin Lewotsky, Photonics Online