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TMCNet:  OneChip Photonics Secures $19.5 Million in Venture Capital Financing from Leading Canadian and U.S. Investors

[March 17, 2009]

OneChip Photonics Secures $19.5 Million in Venture Capital Financing from Leading Canadian and U.S. Investors

OTTAWA --(Business Wire)-- OneChip Photonics today announced that it has secured $19.5 million in venture capital financing from leading Canadian and U.S. investors, including BDC Venture Capital, DCM, GrowthWorks Canadian Fund and Morgenthaler Ventures. This funding will enable the company to expand its operations globally and deliver the only fully integrated Fiber-to-the-Home (FTTH) transceiver technology on the market, which will provide higher performance than competing solutions at significantly lower cost.


"OneChip is well positioned to help system providers and carriers deploy FTTH more cost-effectively than ever before - and meet consumer and business demand for high-bandwidth voice, data and video services," said Jim Hjartarson, CEO of OneChip Photonics. "OneChip is one of only a few companies with new core intellectual property and advanced technology in the optical transceiver business that can sustain a competitive advantage over other optical component providers, which rely on conventional technology and assembly processes." OneChip Value Proposition OneChip Photonics develops and manufactures low-cost, high-performance optical transceivers - based on monolithic Photonic Integrated Circuits (PICs) in Indium Phosphide (InP) - for access networks and other mass-market broadband applications. OneChip's breakthrough approach and technology will remove the cost and performance barriers that have been impeding the ubiquitous deployment of Fiber-to-the-Home and enable new business and consumer broadband applications. Currently, the company is developing these low-cost, high-performance transceivers for Optical Network Terminals (ONTs) and Optical Line Terminals (OLTs) in Ethernet PON (EPON) and Gigabit PON (GPON) networks.

"Carriers and system providers recognize that an approach, which would eliminate assembly from multiple parts, is needed to lower the cost and improve the performance of transceivers and ONTs in optical access networks," said Dr. Lynn Hutcheson, vice president of communication components at Ovum, a global analyst & consulting firm with major offices in Boston and London. "OneChip's fully integrated technology can help unleash the potential of FTTH and other mass-market optical communications applications." OneChip Market Opportunity There is tremendous potential for FTTH to become widespread in access networks in the next three years, according to Ovum. It forecasts that the number of FTTx subscribers - including Fiber-to-the-Home (FTTH) subscribers and Fiber-to-the-Building (FTTB) subscribers - will increase from about 48 million by the end of 2009 to more than 100 million by the end of 2012. Today, FTTx broadband users comprise about 8 percent of all broadband users, according to Ovum, and it expects that FTTx broadband users will comprise about 16 percent of all broadband users by 2012. OneChip believes that its breakthrough approach and technology will strengthen the business case for broader deployment of FTTH worldwide. It also believes that this approach and technology will enable OneChip to claim a significant share of the FTTx optical transceiver market - one that Ovum estimates will grow from $387 million by the end of 2009 to $594 million by the end of 2013.

OneChip Competitive Differentiators Most current FTTH transceiver providers base their transceivers on either Discrete Optics or Planar Lightwave Circuit (PLC) designs. These designs offer low levels of integration and require assembly from multiple parts. There is little technical differentiation among them. Rather, vendors must compete on the basis of who can assemble the parts in a slightly cheaper fashion. And there is little opportunity to further reduce such costs.

OneChip Photonics is taking a new approach with its breakthrough PIC technology. OneChip is monolithically integrating all the functions required for an optical transceiver onto a single, Indium Phosphide (InP)-based chip. All active and passive components of the chip - including the Distributed-Feedback (DFB) laser, Optically Pre-Amplified Detector (OPAD), Wavelength Splitter (WS), Spot-Size Converter (SSC), and various elements of passive waveguide circuitry - are, uniquely, integrated in one epitaxial growth step, without re-growth or post-growth modification of the epitaxial material.

With respect to transmit performance, OneChip's single-frequency DFB lasers will offer a superior performance - much more suitable for longer-reach and higher bit-rate applications - than competing Fabry-Perot (FP) lasers. With respect to receive performance, OneChip's Optically Pre-Amplified Detector (OPAD) design is a higher gain-bandwidth solution than competing Avalanche Photodiode (APD) solutions. It also is a lower-cost solution, as it does not require a high-voltage power source.

OneChip's breakthrough monolithic Photonic Integrated Circuits have the smallest footprint on the market, the optical parts are aligned for life, and the parts are highly robust (resistant to vibration and other outside elements). Further, OneChip's PICs are designed for automated mounting on a silicon optical bench, without requiring active alignment, using industry-standard, automated assembly processes - resulting in high yields of good devices.

Utilizing automated production processes, OneChip can maintain the highest production scalability (easily ramping up and down) in the industry and respond rapidly to customer needs. Standard production processes also mean reliable supplies to customers, at the lowest prices on the market.

OneChip also recognizes that optical communications are becoming economically and technologically mandatory in areas outside of traditional telecommunications. OneChip is poised to introduce photonics integration into other high-volume business and consumer markets, where its breakthrough PIC technology can reduce costs and improve performance.

About OneChip Photonics OneChip Photonics is a privately held company, headquartered in Ottawa, Canada, that develops and manufactures low-cost, high-performance optical transceivers - based on monolithic Photonic Integrated Circuits (PICs) in Indium Phosphide (InP) - for access networks and other mass-market broadband applications. OneChip's breakthrough approach and technology will remove the cost and performance barriers that have been impeding the ubiquitous deployment of Fiber-to-the-Home (FTTH) and enable new business and consumer broadband applications. For more information, please contact OneChip at 613-226-6117 or info@onechipphotonics.com, or visit our Web site at www.onechipphotonics.com.

OneChip Investor Contacts: Johanne Bissonnette                     Katja Gehrt BDC Venture Capital DCM 514-283-7929 650-475-2686 johanne.bissonnette@bdc.ca kgehrt@dcm.com   Tracey Morrison Ching Wu GrowthWorks Morgenthaler Ventures 604-862-6098 650-388-7620 tracey.morrison@growthworks.ca ching@morgenthaler.com OneChip Investor Profiles: About BDC Venture Capital BDC Venture Capital is a major venture capital investor in Canada, active at every stage of a company's development cycle, from seed through expansion. Its focus is on technology-based businesses with high growth potential that are positioned to become dominant players in their markets. Established in 1975, BDC Venture Capital has invested in over 400 firms to date. It currently manages some $500 million in venture capital investments in the life sciences, telecommunications, information technology, and advanced technology sectors, as well as investments in funds. Visit www.bdc.ca for more information.

About DCM DCM is an early stage venture capital firm supporting entrepreneurs building world-class technology companies. The firm's partners manage U.S. $1.6 billion and have funded leading technology companies, including 2Wire, 51job (Nasdaq: JOBS), @Motion (Openwave), About.com (The New York Times Co.), All About (Jasdaq: 2454), Arroyo (Cisco), Clearwire (Nasdaq: CLWR), Dang Dang, eDreams (TA), Foundry Networks (Nasdaq: FDRY), HireRight (Nasdaq: HIRE), Internap (Nasdaq: INAP), IPivot (Intel), JCI (Nasdaq Japan - Hercules: 9424), Neopath Networks (Cisco), Neutral Tandem (Nasdaq: TNDM), nQuire (Siebel), PGP Corporation, Recourse Technologies (Symantec), RockYou, Sigmatel (Nasdaq: SGTL), SMIC (NYSE: SMI), Sling Media (EchoStar), VanceInfo (NYSE: VIT) and Vimicro (Nasdaq: VIMC). With offices in Silicon Valley, Beijing and Tokyo, DCM offers hands-on operational guidance and access to an extensive network of resources, including close relationships with many of the Pacific Rim's leading companies and investors. For more information, please visit DCM's website at www.dcm.com.

About GrowthWorks* GrowthWorks™ managed funds provide investment capital for Canadian companies and tax-advantaged investment opportunities for Canadian investors. GrowthWorks, Canada's leader in venture capital investing+, manages approximately $750 million in assets through the Working Opportunity Fund (EVCC) Ltd., GrowthWorks Atlantic Venture Fund Ltd., GrowthWorks Commercialization Fund Ltd. and GrowthWorks Canadian Fund Ltd. GrowthWorks identifies, analyzes and structures investments in companies with high growth potential. Particular emphasis is placed on IT, Life Sciences and Green Technology sectors. For more information, please visit www.growthworks.ca.

About Morgenthaler Ventures Morgenthaler Ventures is a leading, national venture capital team with offices in Menlo Park, CA; Boston, MA; and Boulder, CO. It concentrates its investments in information technology and life sciences. Morgenthaler's IT Team focuses on systems, software, Internet and mobile investments. Morgenthaler's Life Science Team focuses on biotechnology and medical devices. The firm has approximately $3 billion under management and has funded more than 300 companies over its 40-year history. For more information on Morgenthaler and its portfolio companies, please visit www.morgenthaler.com/ventures.

OneChip Photonics and the OneChip Photonics logo are trademarks of OneChip Photonics. All other trademarks or service marks mentioned in this document are the property of their respective owners. ©2009 OneChip Photonics. All rights reserved.

* GrowthWorks refers to affiliates of GrowthWorks Ltd. and includes: GrowthWorks Capital Ltd., manager of the Working Opportunity Fund (EVCC) Ltd.; GrowthWorks WV Management Ltd., manager of GrowthWorks Canadian Fund Ltd. and GrowthWorks Commercialization Fund Ltd.; and GrowthWorks Atlantic Ltd., manager of GrowthWorks Atlantic Venture Fund Ltd. GrowthWorks is a registered trademark of GrowthWorks Capital Ltd.

+ Based on dollars invested by managed venture capital funds during the period January 1, 2008 - January 1, 2009 and excluding investments by government and government agencies and investments made in Quebec.

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