LightCounting Market Research’s recent report on optical integration investigates the global market opportunity for integrated optical components including silicon photonics for the next five years. An interview with LightCounting CEO and report author, Vladimir Kozlov.
LightCounting’s report on photonic integration has several notable findings. The first is that only one in 40 optical components sold in the datacom and telecom markets is an integrated device yet such components account for a third of total revenues.
Another finding is that silicon photonics will not have a significant market impact in the next five years to 2021, although its size will grow threefold in that time.
By 2021, one in 10 optical components will be integrated and will account for 40% of the total market, while silicon photonics will become a $1 billion industry by then.
Integrated optics
“Contrary to the expectation that integration is helping to reduce the cost of components, it is only being used for very high-end products,” says Vladimir Kozlov, CEO of LightCounting.
He cites the example of the cost-conscious fibre-to-the-home market which despite boasting 100 million units in 2015 - the highest volumes in any one market - uses discrete parts for its transceivers. “There is very little need for optical integration in this high-volume, low-cost market,” he says
Where integration is finding success is where it benefits device functionality. “Where it takes the scale of components to the next level, meaning much more sophisticated designs than just co-packaged discrete parts,” says Kozlov. And it is because optical integration is being applied to high-end, costlier components that explains why revenues are high despite volumes being only 2.4% of the total market.
Defining integration
LightCounting is liberal in its definition of an integrated component. An electro-absorption modulated laser (EML) where the laser and modulator are on the same chip is considered as an integrated device. “It was developed 20 years ago but is just reaching prime time now with line rates going to 25 gigabit,” says Kozlov.
Designs that integrate multiple laser chips into a transceiver such as a 4x10 gigabit design is also considered an integrated design. “There is some level of integration; it is more sophisticated than four TO-cans,” says Kozlov. “But you could argue it is borderline co-packaging.”
LightCounting forecasts that integrated products will continue to be used for high-end designs in the coming five years. This runs counter to the theory of technological disruption where new technologies are embraced at the low end first before going on to dominate a market.
“We see it continuing to enter the market for high-end products simply because there is no need for integration for very simple optical parts,” says Kozlov.
Silicon photonics
LightCounting does not view silicon photonics as a disruptive technology but Kozlov acknowledges that while the technology has performance disadvantages compared to traditional technologies such as indium phosphide and gallium arsenide, its optical performance is continually improving. “That may still be consistent with the theory of technological disruption,” he says.
There are all these concerns about challenges but silicon photonics does have a chance to be really great
The market is also developing in a way that plays to silicon photonics’ strengths. One such development is the need for higher-speed interfaces, driven by large-scale data centre players such as Microsoft. “Their appetite increases as the industry is making progress,” says Kozlov. “Six months ago they were happy with 100 gigabit, now they are really focused on 400 gigabit.”
Going to 400 gigabit interfaces will need 4-level pulse-amplitude modulation (PAM4) transmitters that will provide new ground for competition between indium phosphide, VCSELs and silicon photonics, says Kozlov. Silicon photonics may even have an edge according to results from Cisco where its silicon photonics-based modulators were shown to work well with PAM4. This is where silicon photonics could even take a market lead: for 400-gigabit designs that require multiple PAM4 transmitters on a chip, says LightCounting.
Another promise silicon photonics could deliver although yet to be demonstrated is the combination of optics and electronics in one package. Such next-generation 3D packaging, if successful, could change things more dramatically than LightCounting currently anticipates, says Kozlov.
“This is the interesting thing about technology, you never really know how successful it will be,” says Kozlov. “There are all these concerns about challenges but silicon photonics does have a chance to be really great.”
But while LightCounting is confident the technology will prove successful sooner of later, getting businesses that use the technology to thrive will require overcoming a completely different set of challenges.
“It is a challenging environment,” warns Kozlov. “There is probably more risk on the business side of things now than on the technology side.”