August 3, 2000 

Mitel Corporation (NYSE/TSE:MLT,) has produced working prototypes of photonic devices aimed at improving the price/performance ratio of Dense Wave Division Multiplexing (DWDM) by an order of magnitude or more. This working prototype chip is a key technical breakthrough that could cut costs and dramatically boost the performance of fiber-optic networks. DWDM is a key enabling technology to meet the insatiable demand for bandwidth on the backbone of the Internet. The technology allows more information to be carried over a single fiber by multiplexing (or mixing) multiple wavelengths of light.

Shares in the phone system and semiconductor company surged by as much as 21 percent after the announcement, as the market continued its love affair with firms developing equipment for the red-hot fiber-optic sector.

Mitel's breakthrough allows a higher number of wavelengths (or channels) of information to be multiplexed at lower cost. Currently most commercially available products handle 16 channels. Newer offerings can go to 40 channels using a technique called Arrayed Waveguide Grating (AWG) but are limited in capacity by the large dimensions of the chip and by performance constraints imposed by conventional production techniques. Sometimes, such devices are also expensive to manufacture as they employ complex materials and specialty processes. Mitel's tiny device which is 5 times smaller can guide as many as 80 channels, or wavelengths, onto a beam of light using standard semiconductor materials.

To overcome existing limitations, Mitel employed a different form of grating known as an Echelle Grating and tapped into its proven semiconductor fabrication expertise to develop a number of proprietary, patentable techniques and built a better chip. With Echelle Grating a laser is fired at a piece of reflective glass, shaped like a stair, that is mounted on a chip. Multiple reflections are then produced, with some wavelengths canceled and others reinforced. The results lead to a higher-capacity, single-chip device based on standard semiconductor materials that dramatically alters the economics of high-speed optical communications.

"Moving this technology to silicon instead of relying on more expensive and exotic materials, holds significant promise for cheaper, more reliable devices that are essential for high-speed optical transmission," said Dr. R. Normandin, director general, Institute for Microstructural Sciences, National Research Council of Canada. "Mitel's approach will positively influence performance and cost limitations."

"This is an example of what some people call disruptive technology," said Moris Simson, senior vice president and chief technology and marketing officer, Mitel Corporation. "By being able to etch deep enough, smooth enough and vertical enough into silica, we have laid the foundation for dramatic improvements in the capacity, size and cost of these devices."

Three fundamental capabilities are at the heart of Mitel's breakthrough: 

	Material Deposition, which allows thick layers of glass (or silica) to be deposited on a silicon base. Mitel is able to accurately control the material's uniformity and thickness, which makes its refractive index - hence performance - predictable.
	Precision Etching, which allows the Echelle grating function to work. The challenge here is to deliver the optical multiplexing capability by allowing light to reflect and then propagate with extreme precision.
	Product Realization, which entails qualifying the resultant devices and their physical packaging in a hermetic enclosure. The challenges here are to ensure that the device's performance is not affected by the polarization of light and to push the envelope in automation to obtain higher yields than competing alternatives.

"With a 40 channel multiplexing device, we believe our footprint per channel is five times smaller than competing alternatives, " said Dr. John Miller, Director of Photonics, Mitel Semiconductor. With this level of miniaturization, our approach provides unprecedented scalability leading to higher capacities and reduces the need for expensive, highly specialized amplifiers in the network. Mitel's current prototype conforms to the ITU-T grid with 100 GHz channel spacing. An 80-channel 50 GHz device is also in development."

The optical multiplexer family of products resulting from this research will be called **LightRider™ and will be targeted to DWDM equipment serving metropolitan area networks. This market is currently estimated at US $375 million and forecasted to reach US $2.04 billion by 2004. Mitel expects to provide its lead customers with LightRider samples for evaluation by early next year.

This development program is another step in Mitel's progress in photonics and optoelectronics. The company continues to explore new frontiers with research organizations and universities, and recently established the Mitel Photonics Fund at the University of Ottawa to foster advanced multidisciplinary research.

About Mitel 
Mitel Semiconductor specializes in connectivity solutions for the communications and medical industries with a product range that includes components for both wired and wireless networks; microelectronics for enabling the convergence of voice and data; optoelectronic devices for high-speed Internet systems; and applications-specific integrated circuits (ASICs) for medical applications such as pacemakers and hearing aids. For more information visit Mitel Semiconductor.

Mitel is a global provider of semiconductors and communications systems for converging voice and data networks in a rapidly evolving Internet economy. The company has annual revenue of $1.4 billion and employs some 6,000 people worldwide. For more information visit Mitel Corporation.