23 July 2010


GigOptix grows 19% sequentially to record revenue of $6.3m for Q2

For second-quarter 2010, GigOptix Inc of Palo Alto, CA, USA, which designs modulator and laser drivers and transimpedance amplifier (TIA) ICs based on III-V materials as well as polymer electro-optic modulators, has reported record revenue of $6.3m. This is up 41% on $4.5m a year ago and up 19% on $5.3m last quarter (exceeding guidance of 10%). It is also the third consecutive quarter of sequential revenue growth that has exceeded $1m per quarter.

Of total revenue, $0.8m came from government contracts (up from just $0.1m last quarter), while $5.5m came from product revenue (up from $5.2m), driven by a significant increase in volume shipments across all high-speed optical markets. Specifically, revenue from 40G and 100G products rose more than 200% sequentially.

GigOptix reached volume shipments of its high-performance 100G DP-QPSK driver for DWDM, a market that Ovum forecasts to rise at a CAGR of 140% to more than 16,000 systems by 2015. Also, GigOptix recently received more than $2m in orders to supply 100G modulator drivers in 2010 to an existing leading systems customer. “We are unique in the marketplace in that we provide a 100G quad driver solution for use in next-generation 100G DWDM networking systems, and we continue to believe this market will be a strong growth driver for GigOptix,” says chairman & CEO Dr Avi Katz.

Also, in early May, GigOptix entered mass production and volume shipments of its GX3240 high-performance 40G RZDQPSK receiver amplifier (developed under collaboration with a tier-1 strategic telecom partner). More recently, the firm began high-volume production of its portfolio of transimpendance amplifiers (TIA) designed to address varied requirements of Fiber Channel, telecom and Ethernet 10G, 40G and 100G applications.

Gross margin of 56% is down on 60% a year ago due to the contribution from lower-margin CX products, which have been addressed aggressively (since last November's acquisition of analog and mixed-signal custom ASIC supplier ChipX Inc of Santa Clara, CA) in an effort to return the business segment to its 60% target (reflected by the improvement from GigOptix’s gross margin of 49% last quarter).

Though up from $0.1m a year ago, non-GAAP net loss has been cut from $1.1m last quarter to $0.4m. GigOptix has consequently achieved its first ever quarterly positive adjusted EBITDA (more than $0.2m), compared with a loss of $0.1m a year ago and $0.4m last quarter.

Despite this, due mainly to using cash to complete payments relating to the ChipX acquisition and for investments in working capital in order to support the rapid revenue growth, cash and investments fell during Q2 from $1.7m to $0.8m.

However, on 8 July, GigOptix closed a public offering to institutional investors of 2.46 million shares at $1.75 per share to raise $4.3m. This enabled the firm to strengthen its balance sheet, satisfy certain covenants under its line of credit with Silicon Valley Bank, and maintain lock-ups beginning 1 July for an additional 6 months associated with the 3.5 million shares issued in the ChipX acquisition.

During Q2, GigOptix began the first commercial sampling of a thin polymer on silicon (TFPS) modulator in a telecom application (its LX8400, for 40G). This underscores the benefits of the manufacturing partnership with electronics manufacturing services (EMS) firm Sanmina-SCI Corp of San Jose, CA, USA as the firms jointly ramp-up the production line in Shenzhen, China, says Katz. GigOptix remains on track to be fully qualified for production of its 40G modulators in fourth-quarter 2010. 

GigOptix also received further financing of $4.5m in government contracts to develop an On-chip Optical Interconnect, which combines GigOptix's driver technology with its TFPS optical technology to realize an integrated 100G driver/modulator solution for next-generation optical data communication applications up to 200G. “This development activity, earmarked for an additional $5m in government contracts expected to be received through 2011, will enable the company's new family of products for next-generation 100G and beyond integrated driver-TFPS modulators,” says Katz.

For third-quarter 2010, Hittite expects revenue to grow a further 5–8% sequentially, driven by continued demand for its 10G product line combined with ramping shipments of products for the 40G and 100G markets as major network providers accelerate the conversion of their existing systems. “We also expect to further improve our adjusted EBITDA and profitability metrics as we go forward,” comments chief financial officer Ron Shelton.

See related items:

GigOptix reports record revenue of $5.3m in Q1

GigOptix grows 54% in 2009 to $14.8m, but margins hit by ChipX acquisition

GigOptix gives update and outlook for 2010

GigOptix consolidates debt and cut interest costs

GigOptix begins full production of 10G, 40G and 100G TIAs

GigOptix starts shipping volume production orders of 40G RZ-DQPSK receiver amplifiers to tier 1 telecom OEM

GigOptix starts shipping 100G DP-QPSK driver

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