Company changes with a rebound in mind

With new plant, new chief, Quantum Photonics is preparing for production

January 07, 2002|By TaNoah Morgan | TaNoah Morgan,SUN STAFF

As the telecommunications industry endures a slow period, one Howard County company is waiting in the wings, hoping to become profitable when the market returns.

Quantum Photonics, one of the latest photonics component makers in Howard County, recently hired a new chief executive officer, opened a production plant in Jessup three weeks ago and is expecting to finish a second round of funding with private investors next month.

The new developments put the company on pace to begin mass production of optical chips and lasers by the second half of this year and begin to generate revenue. Dan Petrescu, chief executive officer, said he hopes to have the company turning a profit by next year.

"We will be experiencing 3x growth," he said. "When you're a start-up, you've got to be like that, otherwise you might not make it."

Quantum Photonics is entering a field that has experienced exponential growth in the past decade, and an almost equally aggressive decline. Though leaders of most local photonics companies have predicted a recovery for later this year, the market is still flat as Quantum seeks to launch production.

The company will first produce a laser diode - a tiny contraption that uses an optical microchip to create a laser beam - to sell by the end of the year. The product is being tested by the company now.

Quantum's primary product, a fully assembled module, is scheduled to be available by the beginning of next year.

The company's focus is on integrating optical and electrical systems in its components, a hot trend among component makers, according to Canadian Imperial Bank of Commerce analyst Rick Schafer.

"You are starting to see a big move to integration," Schafer said. "The benefits would be smaller size, lower power consumption, lower cost. They're hitting on a big trend."

Quantum is far from being alone as a photonics component maker. Many heavy hitters, including JDS Uniphase Corp, Nortel Networks Corp. and Agere Systems Inc., and smaller local companies such as Optinel Systems, make the parts that drive photonics networks.

But Quantum has good backing. Optical Capital Group, Howard County's largest venture capital fund, was one of its first investors.

Quantum Photonics began in 1998 when Mario Degenais and Peter Heim, both of whom had been professors at the University of Maryland, College Park with extensive backgrounds in the photonics field, decided to try the market.

The two raised $8 million for the start-up within a year and left the university.

Last summer, the company built a clean-room production facility at its 40,000-square-foot headquarters in Jessup. Quantum hired Petrescu as chief executive in November to help guide the company into its production phase.

Its team of engineers and managers is familiar with the photonics industry, and many of them have strong backgrounds in the semiconductor industry, which grew in a similar way, Petrescu said.

Quantum's basic technology is a fiber-optic chip, similar to a microchip, that will allow makers of fiber-optic networks to perform more functions and several different functions on the same platform. The company says its products will drive down the cost of building a fiber-optic network, thereby speeding the proliferation of bandwidth and making high-speed access to the Internet more available.

Today, Quantum has about 48 employees, but Petrescu said he intends to hire more people as the company moves into the production phase.

Its second round of funding also is progressing well, he said. The company expects to close that funding next month.

"We're getting beyond the number we were targeting," he said. "There is a lot of interest in injecting funding into the company."

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