Reflecting on the Future.

DENNY MIU'S COMPANY IS POSITIONING ITSELF TO BE A LEADER IN FIBER OPTICS BY USING TINY MIRRORS TO MOVE DATA EFFICIENTLY

WHEN the first fiber-optical switch rolled off the assembly line last week at Integrated Micromachines Inc., it was more than the traditional milestone marked by a new product introduction.

It was also the most compelling evidence yet of how far this Monrovia company has come in reinventing itself since it shut down its automotive pressure gauge manufacturing operations last year and switched focus to fiber optics.

Though the two products may not appear to have much in common, in fact they are based on the same core technology developed by company founder Denny Miu, a former mechanical engineering professor at UCLA.

That technology is an advancement in the field of micro-electromechanical systems, or MEMS, which involves etching structures a few millimeters in size (or smaller) onto silicon chips that operate as tiny machines.

"When people tell you it can't be done, you don't know the exhilaration you feel when you do it," said Miu, 44, who started the company six years ago in a basement office at Caltech, along with a handful of associates.

The company has indeed come a long way since its 1995 founding, when Miu drew down on his savings to finance his search for an application for the technology he had developed during a joint three-year appointment at the Pasadena tech powerhouse.

Today, Integrated Micromachines employs 185 people, was the beneficiary last year of $45 million in venture capital funding (including $25 million from Cisco Systems) and is hard at work hoping to jump to the forefront in the emerging field of optical cross connects.

(Miu retains a 5 percent equity stake in the company.) Integrated Micromachines boasts that its technology - which uses tiny mirrors to reroute information traveling along fiber-optic cables - is superior because its electro-magnetically activated minors lose only half as much light as competitors' products lose in the switching process.

But it's been a bumpy road getting there.

Too far ahead

Miu said he has always envisioned using his technology in fiber-optic switching, but in 1995 there wasn't the demand for such an advance, since the Internet (a major user of fiber-optic lines) was still relatively immature. That slow start forced Miu to drain his savings to prop up the company.

The business managed, however, to attract $900,000 in angel funding in 1997 and 1998, and then it turned a corner in 1999 when a group of investors from Singapore were intrigued enough into plunk down $4 million.

But the investors wanted faster returns on their money, so Miu agreed to use his company's MEMS capabilities to manufacture pressure gauges while continuing to develop the fiber-optic switching technology.

Headquartered in the Calstart tech incubator in Pasadena at the time, the company began producing highly sensitive gauges for use in diesel engines, generating revenue of $15,000 a month.

Then, in 1999, a third group of investors, led by Adams Capital's general partner, George Ugras, could not understand why the company was spending time in the automotive field.

"What the company had was some phenomenal technology, probably some of the best MEMS on the planet," said Ugras, who holds a doctorate in physics from Yale. "The most obvious choice for the application was in optical switching."

Spurred on by a sense of urgency from a handful of competitors in similar start-up modes, Ugras convinced Miu to stop all production of the pressure gauges, which had become the company's lifeblood.

It did not go over well with everyone.

"I kind of kicked and screamed about it," said Art Huskey, who joined the company in 1999 to take over the duties of chief operating officer from Miu, who retains his titles of president and chief executive. "But we literally took all the engineers working on pressure gauges and moved them to fiber optics."

The company stopped producing pressure gauges in April 2000 and it is just now completing a deal to sell the pressure-gauge technology to another company, Huskey said.

The move to focus solely on fiber optics paid off last year, when Integrated Micromachines attracted the attention of Cisco in its most recent round of funding, allowing it to hire dozens more employees and move into its new 70,000-square-foot headquarters in Monrovia.

The first switches the company is producing are two-inch-long devices that simply turn optical streams on and off.

The company also plans to begin manufacturing another product this year, called a "dual optical attenuator," with various fiber-optic applications. But the company expects to make its real money from its "3D cross connect," which consists of an array of tiny mirrors that are able to move, reflecting light from one optical fiber to another as the information bounces from conduit to conduit on its way to its final destination.

Spotlight

Integrated Micromachines Inc.

Year Founded: 1995

Core Business: Fiber-optic switches

Revenues in 1999: $400,000

Revenues in 2000: $50,000

Revenues in 2001: $1.3 million (projected)

Employees in 1999: 12

Employees in 2000: 140

Employees in 2001: 185

Goal: To be the leader in large port-count, all-optical switches

Driving Force: The need to speed up the bottleneck caused by the existing generation of electronic fiber-optic switches in data transmission