A wavelength converter or demultiplexer device comprising first and second stages (30, 40). For wavelength converter action, the first stage impresses an intensity modulation (IM) and phase modulation (PM) on a CW input signal (λ1) carried by an input DATA signal (λ2) using cross phase modulation in a non-linear optical element (46). The first stage in an embodiment is a semiconductor laser amplifier loop optical mirror (SLALOM) which has a semiconductor optical amplifier (SOA) as the non-linear optical element. The second stage has a non-linear transfer function and impresses a further IM on the optical signal responsive to the PM impressed in the first stage. In an embodiment, the second stage is a polarization maintaining fiber (PMF) optical loop. The transfer function of the overall device is thus improved by making it steeper and more time confined. This is achieved by combining a fast first stage with a second stage that has a non-linear transfer function, so that the residual PM from the first stage synchronously drives a nonlinear process in the second stage.