Production at the Louisville, Colorado facility that JDSU gained when it bought Picolight in 2007 will be transferred to San Jose, California.
"We're consolidating this activity under one roof instead of maintaining two fabs," said Tom Waechter, JDSU chief executive officer.
The Colorado VCSEL fab is due to close before the end of September, combining all of JDSU's indium phosphide and gallium arsenide chip manufacturing in a single location. At the time it was purchased the facility housed 130 employees.
The move comes as part of JDSU's bid to elevate the gross profit margins for its optical communications business above 30%.
This division earned $89 million revenue in the March quarter, down 18.7% from $109.5 million in the previous period, and its gross margin was 20.7%.
JDSU's effort to cut optical communication costs also saw it begin to transfer ownership of its Shenzhen packaging operation to a contract manufacturer in the March quarter. Now under Sanmina's ownership, the Shenzhen site will perform the same functions it did under JDSU's ownership, as a paid service.
"By transitioning the facility we were able to maintain the skilled workforce and expertise in manufacturing our product, lower our fixed cost structures and leverage Sanmina's strength and operational expertise in raw material sourcing, all without re-qualifying our product," Waechter said.
The optical communication division restructuring is part of a broader struggle to fight falling sales and profit margins across the company.
At $280.6 million, JDSU's overall revenues for the first three months of 2009 were $103.3 million lower than the same period in 2008.
The company recorded an official $85.2 million total loss, including a $45 million charge arising as it was again forced to revalue its assets downwards.
This step, reflecting the current market value of prior acquisitions, follows on from a similar $700 million charge in the prior quarter, that led to an overall $705 million loss.
And the company expects further losses in this period, with its most optimistic revenue estimate — $285 million — allowing only slight growth.
JDSU's test and measurement division is following suit, with some products from its Indianapolis, Indiana, operations getting outsourced to Benchmark Electronics.
The company has already closed five test and measurement facilities in its effort to go from 19 research and development sites to just 12, and expects to close the final two this quarter.