Scion Seeks to Slice Components Costs
Has Scion Photonics Inc. made a big leap forward in reducing the cost of photonic integrated circuits? The components it exhibited at last month's Optical Fiber Communication Conference and Exhibit (OFC) suggest it might have.
For a kickoff, Scion created quite a sensation by showing a multiplexer chip containing 17 (yes, seventeen) separate Arrayed Waveguide Gratings (AWGs), all fully fiber-interfaced, on a single piece of silicon. It's probably the largest photonic integrated circuit in the world. What's more, Scion had connected up all the devices to prove that they worked.
Perhaps nobody actually needs 17 AWGs on a single chip right now, but that's not the point. The point is that Scion was able to showcase some impressive manufacturing expertise -- and that expertise will enable Scion to make high-performance photonic integrated circuits at a fraction of the cost of those from other vendors, according to Venkatesan Murali, the company's enthusiastic COO.
But it was more than just a technology demonstration, Scion also showed real products, which are available now, according to the company. They include VMuxes, comprising an AWG integrated with multiple variable optical attenuators; optical channel monitors; and "colorless" AWGs that can be reused for different groups of wavelengths in the C-band (also called cyclic frequency AWGs).
These parts started shipping to two customers in the last few weeks, Murali revealed to Light Reading. And he expects Scion to sign a major customer before the end of the current quarter.
Scion's sales pitch is very well oiled, despite the fact that it claims to have no sales and marketing people in the company at all. Here's the version we heard from Murali:
Integrated components based on AWGs have come under pressure recently, he says. Prominent companies like Agere Systems (NYSE: AGR) have dropped AWGs in favor of traditional thin-film filter muxes (see Agere Favors Thin-Film Filters). And an alternative technology, the bulk diffraction grating, is starting to look attractive for high-channel count systems, the niche where AWGs used to reign supreme (see Lightchip Launches 'AWG Killer').
Scion's proposing to reverse that trend, by making AWGs so cheap they'll be the technology of choice even for very low channel counts (see Scion Offers $100/channel AWGs). "We know that we can start taking on the thin-film filter community at eight channels," Murali claims.
How is it going to do this? By leveraging the economies of volume manufacturing. While technically Scion is a spinoff of disk-drive head manufacturer Read-Rite Corp., which provided the investment and facilities for the company to get started, it appears that the show was soon taken over by a bunch of people from Intel Corp. (Nasdaq: INTC). And, it has to be said, Intel does knows a thing or two about semiconductor manufacturing.
A materials scientist by education, Murali worked at Intel for 13 years in its microprocessor and memory products section, gaining experience in semiconductor wafer fabrication, advanced assembly and fabrication techniques, and optics. Scion's two VPs of engineering and its VP of materials were also at Intel and have similarly distinguished pedigrees. In fact, it's worth noting that four out of the six key executive positions at the company are connected with manufacturing.
The upshot of all this expertise is that Scion gets yields that are double the industry norm, according to Murali. Japan's NTT Electronics Corp. (NEL), a key vendor of AWGs and photonic circuits, gets only one or two dice per wafer, he contends (see Japan's NEL Targets Metro). Scion, which fabricates its devices on eight-inch wafers, claims 50 dice per wafer. That translates directly into much lower manufacturing costs.
The only other fabs that use eight-inch wafers are U.K foundry Optical Micro Devices Inc. (OMD) and Intel's new photonics fabrication facility (see Intel Intros Photonics Unit). Most other AWG vendors still use four-inch wafers, which have one quarter the area.
One interesting nugget of information about the startup -- and this isn't apparent from the company's Website -- is that at least some, if not all, of the ex-Intel executives spent their later years at Intel in its VC division, Intel Capital. As one of the most active VCs in the industry, Intel Capital has invested in more than 400 companies, a sizeable number of them in telecom, giving Scion's executives access to a vast amount of intelligence about potential competitors in the industry.
On the technology front, Scion seems to have plenty of innovations up its sleeve. For instance, it has developed a evanescent-field VOA (variable optical attenuator), which is similar in principle to the technology that Molecular OptoElectronics Corp. (MOEC) and ProtoDel International Ltd. use for their VOAs. Scion applies the idea to a waveguide rather than to a piece of fiber (see ProtoDel Pushes Passives for a description of the fiber version).
Evanescent-field VOAs consume less electrical power than competing technologies, which are usually thermo-optic. A 40-channel VMux from Lightwave Microsystems Corp., for example, requires 17.5 Watts, Murali contends, whereas a similar device from Scion consumes only 8W. (On its Website Lightwave actually claims power consumption of under 20 W at 65 ºC or under 25 W at O ºC.)
Another important area is software, says Murali. He says Scion has written its own software to simulate the optical, thermal, and mechanical properties of the devices before fabricating them. As a result, the devices are always right first time, Murali claims. That's one of the key reasons the company can crank out devices from start to finish in as little as two weeks. Its competitors, he contends, take anything from three weeks to several months to perform the same service.
John Midgely, CEO of Lightwave Microsystems isn't buying it: "If something sounds too good to be true, then it probably is."
However, we could only find one chink in Scion's story. As Lightwave's VP of marketing Ferris Lipscomb puts it, "It [Scion's technology] is fundamentally low cost, but only in high volume. And nobody's running in volume right now.
"In the boom times people would order blanket orders of 50, or even 100 a month," he adds. "Now people are ordering exactly what they need." Even in the good times, medium volume was as high as it ever got in terms of pricing.
Lightwave says that its prices are below $200 per channel. Prices have come down drastically in the last 12 months, according to Lipscomb. But, in general they haven't reached $100 per channel -- Scion's target.
He goes on to note that true price comparisons are still tricky: "People toss numbers about. But until you look at the specification and the volume required, it's really impossible to compare. For every customer the specification is negotiated, almost on a custom basis."
Scion's main shareholder is Read-Rite. The other investors are Integral Capital Partners and Tyco International Ltd. (NYSE: TYC; London: TYI). Scion's funding to date totals $30 million.
— Pauline Rigby, Senior Editor, Light Reading