LOUISVILLE, Colo. — Picolight Inc., the optical communications developer a founded in 1995, is being acquired by JDSU for $115 million in JDSU stock, the companies said Tuesday (Feb. 27). The purchase price also includes an additional $10 million in cash that is contingent on Picolight meeting revenue targets.

The vertical cavity surface-emitting laser (VCSEL) developer was founded by two former executives of Vixel Corp., Stan Swirhun and Jack Jewell. Originally, Picolight planned to manufacture standalone VCSELs for sale to component companies and OEMs, but decided after the telecom recession to package laser arrays in standard transceiver packages for metropolitan access markets.

Jewell has remained with Picolight, while Swirhun moved to Zarlink Semiconductor to launch a new optical components business. Since then, Picolight's 850- and 1,310-nm transceiver products have found a significant market in enterprise and carrier-edge applications.

Meanwhile, the budding VCSEL business has become more tightly controlled by key optical players.

Vixel abandoned VCSEL components to focus on data storage. It was eventually acquired by Emulex Corp. Finisar picked up Honeywell's VCSEL business in 2004. Agilent Technologies spun its VCSEL group, along with several component and chip operations, into Avago Technologies. Bookham bought Avalon Photonics, and newcomer Alight Technologies A/S acquired Infineon Technologies' VCSEL business.

Mike Ricci, senior vice president and general manager of JDSU's optical communications group, said JDSU had previously relied on Picolight as a transceiver supplier, while conducting its own VCSEL research, but the Picolight acquisition "represents our first move into integrated VCSEL transceivers, and in this business right now vertical integration counts for everything."

Picolight chief executive Steve Hane said the deal assumes that JDSU would retain most of Picolight's management team, including himself, Jewell and Tom White, vice president of components. Ricci added that JDSU is committed to retaining and expanding Picolight's development and preproduction plant here. Picolight outsources some wafer steps and component assembly, but performs its own epitaxial growth and VCSEL device processing. Ricci said he saw no reason for that to change.