Mellanox halts silicon photonics activities

Mellanox Technologies, a supplier of smart interconnect solutions for data centre servers and storage systems, has announced that it will discontinue its 1,550nm silicon photonics development activities, effective immediately, as a result of the business not growing as much as anticipated.

The move has led to Mellanox letting go its silicon photonics team, made up of around 100 people. 

The discontinuation will result in an estimated aggregate charge of $21 million to $24 million, Mellanox has said, including approximately $4 million to $5 million of cash expenditures – mostly related to the severance costs of reducing staff – as well as approximately $17 million to $19 million of other charges, consisting primarily of non-cash items.

However, it 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.  Mellanox expects to recognise most of the restructuring charges in the first quarter of 2018. 

'The Mellanox board of directors and management team continually review our strategic priorities and investments to ensure they meet our future goals. 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 1,550nm silicon photonics development activities,' said Eyal Waldman, president and CEO of Mellanox Technologies. 'We appreciate all of the efforts of the silicon photonics team over the years and wish them success in their future endeavors.'

There will be no impact for the company's variable optical attenuators (VOA) product, Mellanox has said, with a minor impact on the LinkX cables and transceivers product line. The company plans to execute on its roadmap to deliver 200 gigabit, 400 gigabit and beyond cables and transceivers solutions on schedule, utilising other technologies including Mellanox's own IC designs. The company intends to retain the silicon photonics intellectual property. 

Mellanox will provide more detail on its 2017 results and 2018 outlook in its fourth quarter earnings report which will take place on January 18, 2018. 

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