Intel Dumps Its Silicon Photonics Bells And Whistles Into Jabil's Lap

Intel is shedding its silicon photonics transceiver module business as part of restructuring and cost-cutting measures, offloading it to manufacturing company Jabil.

Silicon photonics is the blending of optical and silicon technologies, and in the case of transceiver modules, these are used to connect an optical fiber to a network interface (NIC) or switch, usually in the form of a pluggable module.

The transaction will see Jabil take on the sale and manufacturing of Intel's current silicon photonics-based optical transceiver product lines, as well as research and development for future generations of the hardware.

Intel disclosed the divestment during its recent Q3 earnings call, but Jabil has now confirmed that it is the recipient of this part of the semiconductor giant's business.

Financial details of the agreement have not been disclosed, and the companies are working together to finalize the transition by the end of the calendar year.

Announcing the move, Intel chief Pat Gelsinger said: "In Q3, we made the decision to divest the pluggable module portion of our silicon photonics business, allowing us to focus on the higher-value component business and optical I/O solutions to enable AI infrastructure scaling."

Gelsinger pointed out this is the tenth business area the company has exited in the last two-and-a-half years, a process he claimed has generated $1.8 billion in annual savings, and which he labelled as "a testament to our efforts to optimize our portfolio and drive long-term value creation."

Jabil already has a photonics business unit, through which it offers customers component design, system assembly, and streamlined supply chain management for deploying optical networking solutions.

The deal with Intel will better position Jabil to cater for customers in the datacenter industry, specifically hyperscale and AI cloud bit barns, said Matt Crowley, senior veep of cloud and enterprise infrastructure.

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"These complex environments present unique challenges, and we are committed to tackling them head-on and delivering solutions to support the evolving demands of the datacenter ecosystem," he said in a statement.

Safroadu Yeboah-Amankwah, Chief Strategy Officer at Intel, said the chip biz is going focus on silicon photonics components for existing markets and emerging applications.

Intel said in 2022 that it planned to reduce spending by $3 billion from this year, ramping up to $10 billion by 2025. The cost cutting has already seen it shutter the Data Center Solutions group that made servers, selling the designs to computer maker MiTAC, and also close down its Next Unit of Computing (NUC) mini PC business, offloading this product line to PC maker Asus. ®