Jabil has announced that it would acquire the silicon photonics connector business from Intel for an undisclosed sum. Under the terms of the agreement, Jabil will obtain current silicon photonics-based pluggable optical transceiver product families and will continue to develop these product lines in the future.
The deal will strengthen Jabil's position in the lucrative data center connectivity market and enable it to compete for clients in different verticals, including AI cloud data centers and hyperscale cloud service providers. By contrast, Intel will focus on the development and manufacturing of its key products: processors and compute platforms. Meanwhile, Intel will not completely exit I/O solutions, the company said.
"In addition, in Q3, we decided 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," said Pat Gelsinger, chief executive officer, in prepared remarks for the company's earnings call. "This marks the 10th business we have exited in the last two-and-a-half years, generating $1.8 billion in annual savings and a testament to our efforts to optimize our portfolio and drive long-term value creation."
After absorbing Intel's silicon photonics business, Jabil promises to simplify the complexities typically associated with optical networking solutions by offering comprehensive photonics services such as component design, system assembly, and efficient supply chain management. Jabil expects that such an approach will help it expand the addressable market for its silicon photonics components.
"This deal better positions Jabil to cater to 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 present unique challenges, and we are committed to tackling them head-on and delivering innovative solutions to support the evolving demands of the data center ecosystem. This deal enables Jabil to expand its presence in the data center value chain."
Intel has been getting rid of non-key businesses in the last couple of years under the leadership of Pat Gelsinger. The company opted to exit multiple ventures, including 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 boost profitability.
