ALEXANDER H. TULLO, C&EN NORTHEAST NEWS

Chemical companies are beginning to see the light. As many firms in other industries abandon optoelectronic components, several chemical makers are establishing footholds in the sector. Companies such as Rohm and Haas, DuPont, and Dow Corning say chemistry gives them an edge, allowing for lower cost and better performing materials and components for telecommunications.

	BEAMING A scientist at Dow Corning's Midland, Mich., laboratory develops advanced photonics materials.
	DOW CORNING PHOTO

Roy Rubenstein, a senior analyst with RHK, a South San Francisco-based telecommunications consultancy, defines optoelectronics as processing light for conversion into electronic signals and vice versa. Thus, the term covers applications ranging from compact disc players to electronic displays. But the area of growing interest to chemical companies is in optical telecommunications components, sometimes called photonics.

This wouldn't seem like the best time to be entering the telecommunications business. According to RHK, the size of the global market for telecommunications optoelectronic components has shrunk from $8 billion at its height in 2000 to $1.5 billion this year.

Rubenstein blames the burst of the tech bubble. "It has been extremely severe for all the optical component players because the carriers are cash strapped," he says. "A lot of optical component companies figured this would be a promising and growing market, but as these companies came into fruition, the markets have disappeared."

The result was bankruptcies and fire sales. For example, the optoelectronic components maker Haleos declared bankruptcy in 2002. Corning and Alcatel announced in March they would sell their photonics businesses to photonics components company Avanex in exchange for equity positions.

But chemical producers instead see opportunity. For the most part, they are staying away from the long-haul fiber-optic network market and focusing on more promising markets, such as technologies that give users broadband connection to networks. And they think these markets need lower cost components that only chemistry can make happen.

Louay Eldada, chief technology officer of DuPont Photonics Technologies, which was formed in July 2002 to develop and market integrated photonic devices, says the growth of broadband access in metropolitan areas will require low-cost components. RHK rates the metro market for optical components at about $720 million per year. "There is nothing about the long-haul market that we cannot address," Eldada says. "However, the long-haul market has all the capacity that it needs; the bottleneck is in the metropolitan areas."

Gary S. Calabrese, Rohm and Haas's chief technology officer, agrees. "Broadband has now started to drive fast data interconnection into metro access," he says. "There is a need for lower cost technology because this market will employ hundreds, if not thousands, of times as much access technology gear as do the long-haul networks."

Cost is a big part of DuPont's business model. The company has offered Polyguide acrylate waveguides for data communication applications for about 15 years but is now developing integrated photonics devices for telecommunications. "A year ago, as most people were exiting photonics, DuPont found it was a good time to enter the field, as favorable deals were on the market," Eldada says.

One such deal was DuPont's purchase last July of Boston-based Telephotonics, which Eldada cofounded. Since then, DuPont has bought another small optoelectronic components business from an undisclosed company. With the acquisition, DuPont has a wide range of polymeric photonic components under development, such as circuitry that allows optical signals to be pulled in and out of fibers.

THE GOAL of companies that make telecommunications systems is to reduce their component costs by 90% in 10 years, Eldada says, but he predicts the current devices made with individual components won't get there. "You cannot imagine doing it other than with integration," he says. "If you package discrete components, there is a limit to how much you can reduce your cost." For example, DuPont was able to simplify a system of 48 different components into a single part. "We can offer solutions that are one-third the cost of discrete solutions, and by 2010, we see ourselves at a tenth of the cost."

Stuart Bush, optical components market development manager at Dow Corning, says chemistry will help deliver this integration. Dow Corning is leveraging its silicon chemistry into optoelectronics, developing applications such as waveguides and optical fiber coatings. "Silicones have some inherently good properties that lend themselves really well to these types of applications: high optical transmission rates and very good thermal and operational stability," he says.

And this chemistry, Bush says, can reduce costs and even make possible widespread application of optical computer chips, used in simple telecom applications today but a potential rival to electronic chips far in the future. "We are looking at some novel new materials in the early developmental stages where we are trying to add functionality for optical components," Bush says. "We hope to make an optical chip that can do what maybe 10 or 100 optical chips can do today."

Eldada says chemical companies can tailor solutions by engineering the molecular structure of polymeric materials. "Companies that buy materials off the shelf and try to put them together have problems that are not easily surmountable," he says. "Materials companies like DuPont can tweak the properties of any material. We definitely have an advantage."

And in the long run, Eldada says, polymer-based optoelectronic components will prove to have advantages over current glass-based components, which he says have performance and yield issues.

HOWEVER, RHK's Rubenstein points out that many of the companies that failed were working with polymers. "Glass has gained market acceptance while polymers have yet to," he says. "These chemical companies are in it for the long term and have the financial clout--and now the time--to bring polymers to the marketplace. So maybe their enthusiasm is well founded. But this polymer work will only start having an impact from 2005 onward, at the earliest."

Calabrese says Rohm and Haas is looking at a similar timeline. Strong in semiconductor materials, the company doesn't want to miss the boat in optoelectronics. The new sector, he says, is an extension of its Shipley and Rodel electronics materials businesses and its capabilities in polymers and high-speed packaging of electronics components. "Basically, with growth in Internet and broadband, we want to leverage that capability into the emerging optoelectronics market," he says.

About a decade ago, Rohm and Haas started to look at optoelectronics and, more recently, took a broad approach to the market, "betting on the race" and not "betting on a particular horse," Calabrese says. "We wanted to take a broad approach, and not get too specific too early, so we could preserve options for growth as things emerged."

Now, Calabrese says, Rohm and Haas is doing more horse betting. It has experimental polymer waveguides and other devices applicable to next-generation technologies such as optical circuit boards. "Ultimately, the technology

	ELECTRONIC CHEMICALS

would move to something like a circuit board where you have individual components with embedded optical interconnections--a true optical circuit board," he predicts.

However, others say optical chips are as much as 20 years out. DuPont's Eldada says that a 0.5- by 0.5-inch optoelectronic chip today can accommodate only 50 to 100 functions, comparable with electronic chips in the 1970s.

To broaden its position beyond waveguides, Rohm and Haas formed an alliance with, and took an equity position with, Coviant, which has technology for optical component manufacturing; it also acquired Haleos for $3.1 million. "The transition into optical circuit board materials is actually quite normal and feels very comfortable for us," Calabrese says, noting that the component area lagged for the company.

And competing in the sector in a strong way is what these chemical companies aim to do, despite the failures of others before them. "Though telecom is down, we see a lot of opportunity there still," Bush says. "The basic drivers--the increased data transmission rates, the need for increased bandwidth, global growth--are very viable and push toward a need for new technology. We see this as a pretty good time to be getting in."