ClariPhy raises $24M for chips to speed internet

To keep up with the growth of internet traffic, infrastructure companies have to constantly expand their network capacity. That’s fueling the interest in ClariPhy Communications, a chip company that is announcing today that it has raised $24 million in a third round of funding.

Irvine, Calif.-based ClariPhy has been working on optical networking chips for six years. It has launched its second-generation chips as network speeds advance from 10 gigabits per second to 40 or 100 gigabits per second.

The money comes from Oclaro (whose share of the total investment was $7.5 million), which is a business partner of ClariPhy’s. San Jose, Calif.-based Oclaro makes the optical networking gear that receives data over a fiber-optic network — which carries data in the form of laser light beams — and converts it into electrical signals. The ClariPhy components sit alongside the Oclaro components and transfer the data through a network. Oclaro has a $450 million revenue run rate and is growing revenues about 40 percent per year.

ClariPhy said other investors include other undisclosed telecom companies, as well as existing investors which include Norwest Venture Partners, Allegis Capital, Onset Ventures and Pacific General Ventures. ClariPhy will use the funding to deliver its next-generation MXSP chips. Those chips will be faster, more power efficient, and cheaper to make.

It’s necessary because network traffic is growing 40 percent a year for the next five years. ClariPhy’s chips can lead to a new generation of technology that will allow people to keep watching all sorts of video on the web. Big companies such as Verizon and AT&T need to buy this equipment to keep their networks from bogging down.

Alain Couder, chief executive of Oclaro, said the investment will ensure that his customers will have access to a complete solution to implement 100-gigabit-per-second networks. Oclaro started using ClariPhy’s first-generation chips in 2009 for its 10-gigabit-per-second network equipment.

Rivals include Cisco, which recently bought networking chip maker CoreOptics for $99 million, as well as Nortel and startup MultiPhy in Israel. ClariPhy has 72 employees in the U.S. and Argentina. Couder said ClariPhy has 10 customers, three of them announced.

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