Jabil acquires Intel’s Silicon Photonics Connector Business

Jabil, a global manufacturing services company, has agreed to buy Intel’s silicon photonics connector business for an undisclosed amount. The deal will give Jabil access to Intel’s existing silicon photonics-based pluggable optical transceiver products and allow it to continue developing them in the future.

The acquisition will enhance Jabil’s capabilities in the data center connectivity market and help it serve customers in various sectors, such as AI cloud data centers and hyperscale cloud service providers. Intel, on the other hand, will concentrate on its core products: processors and compute platforms. However, Intel will not completely abandon I/O solutions, the company said.

“We also decided to sell the pluggable module part of our silicon photonics business in Q3, which will enable us to focus on the more valuable component business and optical I/O solutions for AI infrastructure scaling,” said Pat Gelsinger, CEO, during the company’s earnings call.

“This is the 10th business we have exited in the last two-and-a-half years, generating $1.8 billion in annual savings and demonstrating our efforts to optimize our portfolio and create long-term value.”

By integrating Intel’s silicon photonics business, Jabil aims to offer comprehensive photonics services that include component design, system assembly, and efficient supply chain management. Jabil believes that this approach will enable it to expand the market for its silicon photonics components.

“This deal positions Jabil better to meet the needs of our valued customers in the data center industry, including hyperscale, next-wave clouds, and AI cloud data centers,” said Matt Crowley, Senior Vice President of Cloud and Enterprise Infrastructure at Jabil.

“These complex environments pose unique challenges, and we are committed to addressing them and delivering innovative solutions that support the evolving demands of the data center ecosystem. This deal allows Jabil to increase its presence in the data center value chain.”

Intel has been divesting from non-core businesses in the past few years under Pat Gelsinger’s leadership. The company decided to exit several ventures, such as 3D NAND memory production and conventional SSD business, the Optane SSD business, notebook modem activities, the Barefoot switching, servers, and NUC desktops. These decisions are part of Intel’s broader strategy to focus more on its primary businesses to improve profitability.

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