Anadigics purchased Telecom Devices for $28 million in cash, with additional incentives that could bump the price to $45 million if Telecom Devices' revenues surpass a run rate of $12 million for 2001.

Most chip companies are turning to exotic semiconductor materials to build 40-Gbit/second networking devices. Both Anadigics and Vitesse Semiconductor Corp. (Camarillo, Calif.) have pledged to use indium phosphide (InP) for their 40-Gbit/s components, while other companies such as IBM Corp. are leaning toward silicon germanium.

Telecom Devices makes InP laser diodes in wavelengths from 1,300 nanometers to 1,550 nm. The company owns its own indium phosphide fab in Camarillo and even grows some of its own InP ingots, said Bami Bastani, Anadigics' chief executive, in a conference call with press and analysts. Anadigics plans to expand significantly on Telecom Devices' InP production, which Bastani said could grow to "hopefully a $100 million run rate" in revenues, up from a $10 million run rate currently.

"You will see a tremendous amount of infusion of know-how into Telecom's existing fab line," Bastani said.

Telecom Devices' lasers will be a good fit with Anadigics' planned InP devices, because ultimately customers will demand products that integrate photonics and electronics components, Bastani said. Anadigics had already planned to provide electronic parts such as modulators and transimpedance amplifiers, and now with the Telecom Devices acquisition will be able to provide parts for the photonics side.

Anadigics' first OC-768 (40-Gbit/s) components are in development and could be announced by the end of this year, Bastani said.

In addition to photodiodes, Telecom Devices also manufactures products such as large-area detectors and micromachined lenses.