Light Reading

Silicon Photonics Signals Red Alert for 100G

Craig Matsumoto
News Analysis
Craig Matsumoto
3/9/2012
50%
50%

LOS ANGELES -- OFC/NFOEC 2012 -- Silicon photonics appear poised to make a run at the 100Gbit/s module market, but it's not certain this should have established module vendors freaking out.

The technology was a hot topic at OFC/NFOEC primarily because Cisco Systems Inc. (Nasdaq: CSCO) just acquired Lightwire Inc. for US$271 million -- a mind-boggling figure for a company with no known revenues. (See Lightwire Points Cisco Toward 100G.)

That's got some analysts wondering if silicon photonics, a technology that's been lingering in the market for years, might suddenly be on the verge of something big.

For example, components vendor Kotura Inc. might be ready to take on the optical modules makers such as Finisar Corp. (Nasdaq: FNSR) and JDSU (Nasdaq: JDSU; Toronto: JDU), according to analyst James Kisner of Jefferies & Company Inc. "Our checks suggest Kotura aims to launch a proprietary 100Gbit/s transceiver on a similar timeframe as Cisco (by July 2013)," he writes in a report published Wednesday morning.

His report focuses on the damage this could do to Finisar. He thinks the Cisco acquisition alone "puts 5 to 8 percent of Finisar's current revenue at risk" and that silicon photonics "could potentially reduce the cost of a [40Gbit/s or 100Gbit/s] transceiver by 90 percent."

So we're looking at cheap competition and the prospect that Cisco, a big module buyer, might possibly build its own stuff. Sounds like a recipe for an optical freak-out, at least among data-center module vendors (most of the silicon photonics talk relates to the data center, not the telecom network).

But not everybody is buying into the theory.

Playing with blocks
For one thing, Kotura denies that it's making a transceiver module.

"We haven't decided that that's the right place for us to be, but definitely we want to do the chips for those," said Arlon Martin, Kotura's vice president of marketing.

A better way to describe the situation is that Kotura has built an "engine" that can be the core of a 100Gbit/s module, says analyst Brad Smith of LightCounting . Kotura, which has made much of its money selling variable optical attenuators (VOAs) into multiple markets, was at OFC/NFOEC discussing its 25Gbit/s modulators and detectors, elements that could be part of a 100Gbit/s module. And providing the building blocks that others can use to build products would be more Kotura's style, Smith says.

(Kotura has technically broken into the 100Gbit/s market, because it's sold VOAs into some vendors' 100Gbit/s modules, Martin notes. But the VOA isn't a central part that makes the module "go." No one calls you a module maker just because you have VOAs.)

Kotura's readiness for 100Gbit/s shouldn't be that surprising. Luxtera Inc. , the other longtime silicon photonics startup, announced in November a 100Gbit/s chip that can be the basis for an optical transceiver module. (See Luxtera Tries Its Hand at 100G.)

The big kahuna
And then there's Cisco. Some analysts have speculated that Cisco's real interest is in using silicon photonics for optical backplanes and on-board optical connections -- improving routers with faster speeds and lower power consumption.

That's true to some extent, but officials tell Light Reading they've really got optical modules on the brain.

"Initially, expect us to deliver product in the form of optical transceivers in 40Gbit/s and 100Gbit/s, and in terms of distance, let's go beyond distances that VCSEL [vertical cavity surface emitting laser] technologies can address," says Massimo Prati, vice president of Cisco's Central Engineering Operations.

So, three companies have silicon photonics parts that could go into a 100Gbit/s module. Even so, optical module makers don't need to worry yet, says Rafik Ward, vice president of marketing for Finisar, a (cough) optical module maker.

"In the business we're in and the volumes we're in, it's not clear to me that this is an economic game-changer," Ward says.

One stumbling block is that silicon chips aren't necessarily cheap to build when you're talking about a high-end, low-volume technology such as 100Gbit/s. Ward points out that high-end chips are expensive to build, with lots of money going into the mask sets that are used in manufacturing. "The economics may or may not make sense," he says.

Analyst Smith agrees: "I don't see that this is going to impact the price so much. This is a high-end technology. This is 100Gbit/s stuff." Moreover, 10Gbit/s is going to dominate data centers for a while, he notes. Silicon photonics vendors aren't targeting that area yet.

He does think silicon photonics has a major chance to crack the data-center market, though. It's because VCSELs are struggling with high speeds. The devices can go 25 Gbit/s -- examples were dotted around the fringes of the OFC/NFOEC expo, Smith says -- but if they can't go further, or if 25Gbit/s VCSELs prove an unviable market, silicon photonics might step in.

While he doesn't buy that the Cisco/Lightwire combination will hurt Finisar that much, he does think it's going to have repercussions.

"I predict there's going to be a number of mergers in the transceiver space as a result of the Cisco thing," Smith says. They won't necessarily be silicon photonics -- more likely, the deals will be for any intellectual propoerty that helps with 100Gbit/s modules.

For more
To see all our OFC/NFOEC coverage, go to http://www.lightreading.com/ofc-nfoec.

— Craig Matsumoto, Managing Editor, Light Reading

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Pete Baldwin
50%
50%
Pete Baldwin,
User Rank: Light Beer
12/5/2012 | 5:39:56 PM
re: Silicon Photonics Signals Red Alert for 100G


Right -- Cisco would become more vertically integrated, selling modules of its own making.


If Lightwire got close to production with that kind of reach, well, that would help explain the acquisition. Everyone is still perplexed about the price, though.


I agree that Brad's point is interesting, about the Lightwire deal spurring more deals. The pieces are certainly out there -- you've got Acacia now making some noise about 100G transceivers. And in addition to Luxtera and Kotura, there's Aurrion, the latest John Bowers startup. Acacia doing a transceiver is sounding less and less nuts.

rhr
50%
50%
rhr,
User Rank: Light Beer
12/5/2012 | 5:39:56 PM
re: Silicon Photonics Signals Red Alert for 100G
I'd love to know how the analyst got the 90% cost reduction figure. It does look a big deal though - a disruptive technology in the hands of a key transceiver consumer. I assume Cisco will use the 40 and 100G modules to equip its own systems and also sell them to end users? Is that correct? -áAlso LightWire had SFP+ for metro distances-á(40 and 80km).-á

LightCounting's point that it will spur consolidation is interesting. I wonder how troubled competitive switch and telecom equipment makers are too?
Flook
50%
50%
Flook,
User Rank: Light Beer
12/5/2012 | 5:39:51 PM
re: Silicon Photonics Signals Red Alert for 100G


Are any of these companies you mention, including Lightwire, have anything to show for 100G other than slideware? Seems to me there's more marketing going on here at this point.

Pete Baldwin
50%
50%
Pete Baldwin,
User Rank: Light Beer
12/5/2012 | 5:39:44 PM
re: Silicon Photonics Signals Red Alert for 100G


Kotura's got product at 25G, for a 4x25 solution.  Luxtera participated in the 25G/28G demo at the OIF booth. I was under the impression Luxtera's 25G isn't yet in general availability but will be soon.


Lightwire, who knows.


So there really is some hardware to show.


As for putting it into final product, though -- as in, a transceiver you could buy right now -- I think you're correct that we're still not there yet.

Flash Poll
From The Founder
The New IP is actually bigger even than business. Like another hugely important tech that Light Reading is digging into right now, the New IP has the potential to change the world by fundamentally advancing what it is possible for people to achieve with communications.
LRTV Documentaries
The Three Cs of MWC15

3|2|15   |   2:33   |   (0) comments


My visit to this year's Mobile World Congress is going to dominated by three Cs – cloud, cells and coffee.
LRTV Huawei Video Resource Center
Huawei Shares Its Vision of the Future of Mobile Networks Innovations

2|26|15   |   2:30   |   (0) comments


Mobile broadband is changing our lives. It's reshaping the Internet, industry, and society. It allows us to freely connect with one another anytime, anywhere. At this year's Mobile World Congress, Huawei will share its latest insights and newest ideas and technologies that will shape the future of MBB. They will showcase their end-to-end MBB solutions that will ...
LRTV Huawei Video Resource Center
Accelerate Digitizing, Boost Digital Business

2|26|15   |   6:14   |   (0) comments


A new digital revolution is leading us to a better connected world. Together with millions of digital partners, Huawei will help CSPs to build their digital service ecosystem and aggregate a wide variety of digital services. In this video, we find out how Huawei is going to help CSPs implement digital operations.
LRTV Huawei Video Resource Center
The Secret Recipe to Enabling Hyper-Growth Industries

2|26|15   |   3:38   |   (0) comments


With a number of successful cases on network capability exposure, Huawei is going to share the secret recipe to enabling hyper-growth markets with a step-by-step approach.
LRTV Documentaries
BTE 2015 Is Bigger & Even Better

2|25|15   |   03:13   |   (4) comments


This year's Big Telecom Event (BTE) in Chicago is going to provide more opportunities than ever for networking, getting to grips with key industry challenges and opportunities and, equally as important, having some fun.
LRTV Interviews
Light Reading ICT Leaders Roundtable at MWC 2015

2|12|15   |   1:07   |   (2) comments


On Sunday March 1, 2015, Light Reading will host an ICT Leaders Roundtable in partnership with Huawei. At this half-day event, CIOs, analysts and researchers will discuss key industry trends like virtualization in the cloud with a specific focus on new business models. Located at the luxurious Renaissance Hotel near the Fira Barcelona, space is limited so please ...
LRTV Documentaries
Going Green in 2015

2|12|15   |   02:04   |   (0) comments


Energy efficiency is set to be an incredibly hot topic in the telecom industry this year.
LRTV Custom TV
SDN & NFV: Where Are We Going From Here?

2|11|15   |   11:27   |   (0) comments


Vitesse Semiconductor CTO Martin Nuss gives his perspective on why SDN and NFV should be tightly interconnected and how he sees the industry moving forward.
LRTV Documentaries
Time for Gigabit Europe?

2|9|15   |   01:27   |   (4) comments


Gigabit broadband networks are springing up all around the US and they'll soon become more commonplace in Europe.
LRTV Interviews
Brocade Brings New IP Vision to 2020 Vision Executive Summit

2|3|15   |   4:23   |   (0) comments


In December 2014, Light Reading gathered telecom executives in Reykjavik, Iceland to discuss their vision for high-capacity networks through the end of the decade. The intimate, interactive meeting was set against the backdrop of Iceland's spectacular natural beauty. As one of the event's founding sponsors, Brocade's Kelly Herrell shared his company's strategy at ...
LRTV Interviews
Brocade's Kelly Herrell on the New IP

2|2|15   |   12:36   |   (0) comments


In December 2014, Steve Saunders sat down with Brocade VP of Software Networking Kelly Herrell at Light Reading's 2020 Vision executive summit in Reykjavik, Iceland. They spoke about Brocade's approach to the New IP, the future of the telecom industry, and more.
LRTV Huawei Video Resource Center
Dr. Dong Sun Talks About Carriers' Digital Transformation & Huawei’s Telco OS

1|29|15   |   6:28   |   (0) comments


Dr. Dong Sun, Chief Architect of Digital Transformation Solutions at Huawei, discusses how telecom operators can become digital ecosystem enablers and deliver optimal user experiences that are in real-time, on-demand, all-online, DIY and social (ROADS).
Upcoming Live Events
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
All Upcoming Live Events
Infographics
Net neutrality, broadband services and the current outlook on data consumption, as presented by the New Jersey Institute of Technology.
Hot Topics
10 Weirdly Useful IoT Devices
Eryn Leavens, Copy Desk Editor, 2/24/2015
Small Cells Enabling Location Services
Sarah Thomas, Editorial Operations Director, 2/25/2015
Verizon Takes Radio Dot to Detroit, VoLTE Overseas
Sarah Thomas, Editorial Operations Director, 2/27/2015
FCC Adopts Title II Rules
Alan Breznick, Cable/Video Practice Leader, 2/26/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Check out Light Reading's interview with Jay Samit, the newly appointed CEO of publicly traded SeaChange International Inc. With a resume that includes Sony, EMI, and Universal, Samit brings a reputation as an entrepreneur and a disruptor to his new role at the video solutions company. Hear what he had to say about the opportunities in video, as well as the outlook for cable, telco, OTT and mobile service providers.
G'day! And welcome to an entirely new feature on Light Reading -- our weekly "CEO-to-CEO" interview.