Squeezing Money From Modules
Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC) released its latest forward error correction (FEC) chip, while Vitesse Semiconductor Corp. (Nasdaq: VTSS) trotted out a line of transponder components, called Smart-LINK, that includes a FEC chip and some transceiver chips. Startups such as Aelis Photonics Inc. and Scintera Networks Inc. showed off previously announced dispersion compensation technologies. (See Aelis Demos ReachExtender, Scintera to Demo EDC, AMCC Intros FEC Mappers, and Vitesse Intros Smart-LINK Chips.)
At a deeper level, five companies banded together to start a multisource agreement (MSA) for the transmitter and receiver optical subassemblies (TOSA/ROSA) for XFP (see Five Vendors Launch Transmitter MSA).
Technologies such as FEC and electronic dispersion compensation (EDC) can increase a transponder's range by cleaning up the signal, allowing it to traverse a longer distance while still being readable. But there's an implication that has module vendors more interested: You can keep the transponder's range constant, but use cheaper optics.
In other words, a technology such as FEC "allows you to have more slop in the spec," says Neal Neslusan, director of product marketing for AMCC's WAN division.
The argument works because chips are cheap compared with optics. Vitesse claims the tradeoff can cut prices in half. An 80-kilometer module using less-expensive modulators and drivers -- plus select Vitesse chips, of course -- could wind up costing around $1,500 instead of $3,000, says the director of product marketing for Vitesse's transport division, Tony Conoscenti [ed. note: ...who is obviously "in the know"].
Price merits extra importance here, because chip, component, and module makers don't have many ways to distinguish themselves when dealing with MSAs such as Xenpak. "The MSA is doing the module specs, and the standards committees are doing the networking specifics. What it comes down to is margin to those specs (in other words, bigger tolerances), cost, and availability," Conoscenti says.
Separately, there's that TOSA/ROSA partnership, members of which so far include Fujitsu Quantum Devices Ltd., Mitsubishi Electric Corp. (Tokyo: 6503), Oki Electric Industry Co. Ltd., Opnext Inc., and Sumitomo Electric Industries Ltd.
The idea is to produce specifications for the optics -- lasers, receivers, and so on -- that go inside the XFP module. In addition to specifying component sizes, the TOSA/ROSA MSA will likely cover nitty-gritty issues such as defining which leads are power and ground. This should result in some cost savings, as 70 percent of a transponder's cost is in the optical subassembly, says Ed Cornejo, director of applications marketing at Opnext.
Cornejo hints that the TOSA/ROSA MSA could apply to Xenpak and X2 modules as well. "All three use the same optics," he says.
Officials at Picolight Inc., which sells subassemblies but is not involved with the MSA, seemed unimpressed. CEO Stan Swirhun notes that XFP optics have to fit within a couple of standard formats anyway, although he admits it might be helpful to uniformly define items such as those power and ground leads. "I'm not sure this is going to convince every manufacturer to change their designs, but if [these five companies] are all aligned, they might see some market pickup," he says.
— Craig Matsumoto, Senior Editor, Light Reading