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Page 1: Optical Transceivers for Datacom & Telecom 2020 - Yole ... · o Disaggregation vs. Vertical integration o Product portfolio of key suppliers • Competition o Key competitive factors

From Technologies to Markets

© 2020

Optical Transceivers for

Datacom & Telecom

Market and Technology

Report 2020

Sample

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22

SCOPE OF THE REPORT 7

METHODOLOGIES & DEFINITIONS 8

ACRONYM REFERENCE GUIDE 9

COMPANIES CITED IN THIS REPORT 11

ABOUT THE AUTHORS 12

IMPACT OF COVID-19 & BASIS FOR OUR SCENARIOS 13

EXECUTIVE SUMMARY 16

FROM TELECOMMUNICATION TO FIBER-OPTIC COMMUNICATION 44

• Historical perspective

• Introduction to telecommunication (TELECOM)

• Introduction to data communication (DATACOM)

• Data Communication (DATACOM) vs. Telecommunication (TELECOM)

• Fiber-Optic Communication (FOC)

o Overview

o Principle

o Optical transmitter/receiver

o Optical transceiver

o Benefits over metallic-based communication

o Classification of technologies

FIBER-OPTIC COMMUNICATION NETWORK ARCHITECTURES 58

• Typical public fiber network architecture

• Generic diagram of FOC network

o Overview

o Focus on data center network

o Example of Facebook data center topology

o Focus on 5G transport network

• Network devices for telecom and datacom

FIBER-OPTIC COMMUNICATION APPLICATION TRENDS 65

• Global network IP traffic growth

o Macro-trends

o Analysis

o Drivers

• Datacom vs. Telecom

• Trends in data center

o Digital transformation

o Data traffic

o The case of video

o Network architecture

o Challenges

o Mega & Colocation mega data centers

o Highlights

TABLE OF CONTENTS 1/5

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FIBER-OPTIC COMMUNICATION APPLICATION TRENDS 65

• Global IP traffic forecast

• Technical challenges - Shannon Limit

o Background

o Approaching it

o Handling it

o 5 physical properties for modulation and multiplexing

OPTICAL TRANSCEIVER MARKET FORECAST 84

• Total OT

o Shipments forecast by segment (2017-2025)

o Sales forecast by segment (2017-2025)

• Datacom OT

o Shipments forecast (2017-2025)

o Sales forecast (2017-2025)

o ASP forecast (2017-2025)

• Telecom OT

o Shipments forecast (2017-2025)

o Sales forecast (2017-2025) 1/2

o ASP forecast (2017-2025)

OPTICAL TRANSCEIVER INTRODUCTION 97

• Technology and trends

o Introduction

o Role of transceiver in networking

o Key technologies

o Key parameters

o Notations and terminology

• Introduction

• Form factor – Overview

• Form factor – Trends

• Suffixes for 100G OT and above - Overview

• Suffixes for 100G OT and above - Details

o Form factors

• Telecom - OT type by network connection

• Datacom - OT type by network connection

• Mapping by application and data rate

o Segmentation - Overview

o Segmentation - Multi-Mode vs. Single-Mode OT

o Key trends – Overview

o Key trends - Coherent technology/transceivers

o Silicon Photonics (SiPh) trend - Overview

o Silicon Photonics (SiPh) trend - Benefits

OPTICAL TRANSCEIVER APPLICATIONS 119

• Datacom trends

o Overview

o Focus on intra-rack interconnection

o Focus on inter-rack interconnection

o Focus on inter-DC interconnection

o Form factors - Interfaces used in datacenters vs. Data rates of OT

o Global trends - QSFP-DD & OSFP (400G & 200G)

o Global trends - QSFP56 & QSFP28 (200G & 100G)

o Status of migration to higher speed

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TABLE OF CONTENTS 2/5

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OPTICAL TRANSCEIVER APPLICATIONS 119

• Telecom trends

o Focus on Metro Core / Metro Access interconnection

o Focus on 5G and Wireless Optical Transmission interconnection

o Global trends - SFP28/QSFP28/QSFP56

o Global trends – CFP/CFP2/CFP4

o Global trends – CFP-DCO and ACO (coherent vs. direct detect)

o Status of migration to higher speed

OPTICAL TRANSCEIVER TRENDS 136

• 400G and beyond

o Trends heading to 400G

o Drivers & Benefits

o Key applications

o New interface types and form factors to be deployed

o Datacom - 400G applications

o Datacom - 400G compatibility with legacy systems

o Telecom - 400G applications

o Telecom - Pluggable coherent ZR/ZR+

• Introduction

• Use cases

• Coherent optical transmission

• Form factors

• Cost effective architecture

• Technology outcomes

• Toward silicon photonics

OPTICAL TRANSCEIVER TECHNOLOGY 155

• Introduction - Key parameters in fiber-optic communication

o Introduction

o Overview of parameters

o Optical wavelength bands

o Bandwidth & reach/distance

o Single Mode Fiber (SMF) and Multi-Mode Fiber (MMF) - Description

o Single Mode Fiber (SMF) and Multi-Mode Fiber (MMF) - Modal Distortion

o Dispersion

o Modulation - Analog vs. Digital signals

o Modulation - Pulsed code modulation

o Modulation - Intensity modulation vs. Coherent modulation

o Modulation - Pulsed code modulation - RZ and NRZ

o Modulation - Pulsed code modulation - PAM4

o Modulation - Toward higher data rates

o Parallelization

o Multiplexing - Overview

o Multiplexing - TDM & WDM

o Multiplexing - Configuration of digital coherent optical transceiver circuit

o Multiplexing - Fixed grid vs. Flexible grid

o Forward error correction

o Highlights - Advances of optical transmission technologies in recent years

o Conclusion

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TABLE OF CONTENTS 3/5

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OPTICAL TRANSCEIVER TECHNOLOGY 155

• Evolution along silicon switching

o Overview - Situation in data centers

o PAM4 technology impact on switch chip technology

o Trends

o Communication vs. Computing technology

o Disruptive improvements in silicon switches

• Fiber-optic communication scaling

o Background of network traffic

o Technology scaling differences

o Single-wavelength optical transceivers and coherent transceivers

o Client / Ethernet transceivers

o Fiber capacities of commercial WDM systems

o Outlook

• Conclusion

o Possible future speeds - Datacom and telecom

o Future - What shape will 800G ethernet take?

o Inside a DC

o Paving the way (Telecom)

OPTICAL TRANSCEIVER KEY COMPONENTS 202

• Introduction

• Laser diode

o 2 main types - EEL and VCSEL

o Wavelength and material choice

o Comparison of EEL (DFB & FP) and VCSEL

o Technology platform/type vs. Reach distance

o Uses case example - 100G data center

o Integration with InP optical modulator (for coherent emission)

o Trend of silicon photonics

• Photodiode

o Device types overview

o Photodetection principle

o Comparison of photodetectors

o Wavelength and material choice

o Integration with InP based mixers (for coherent detection)

• Toward Photonic Integrated Circuits (PIC)?

OPTICAL TRANSCEIVER INDUSTRY 221

• Introduction

• Mapping of key players (at transceiver level)

• Market shares

o 2017-2019 evolution - Datacom and telecom

o 2017-2019 evolution - Datacom

o 2017-2019 evolution - Telecom

• 2017-2019 revenue growth/decline for OT suppliers

• 2020 revenues trends

• Technology platform - Indium Phosphide (InP) vs. Silicon Photonics (SiPh)

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TABLE OF CONTENTS 4/5

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OPTICAL TRANSCEIVER INDUSTRY 220

• Recent Mergers & Acquisitions (M&A)

o Overview

o InP platform - II-VI acquired Finisar

o InP - Lumentum acquired Oclaro

o InP - Others

o Silicon photonics - Acquisitions of Cisco

o Silicon photonics - Others

• Supply chain

o Overview

o InP platform - The different models in DATACOM

o InP platform - The different models in TELECOM

o SiPh platform

• Strategy

o Positioning and level of integration of key OT players

o Disaggregation vs. Vertical integration

o Product portfolio of key suppliers

• Competition

o Key competitive factors

o Small players vs. Large players

• Cost aspects - Multi-mode vs. Single-mode transceivers 1/2

• Silicon photonic

o Transceivers suppliers

o Manufacturing aspects

• Focus on China

o Historical perspective

o Recent trends

• Global trends

• Trend with the 400G era

o 400G for DCI and coherent technology

o Transition aspects – Overview

o Transition aspects - Focus on PAM-4

o Transition aspects - Focus on 400GbE ecosystem

o Getting ready for the future

o Pluggable coherent 400ZR+ - Market opportunities

o Pluggable coherent 400ZR+ - Players positioning

APPENDIX 270

• Glossary

• OSI Model

• Fiber-optic communication network evolution

• Fibre channel

• Infinband

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TABLE OF CONTENTS 5/5

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77

Optical

Communication

Datacom

Telecom

Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020

SCOPE OF THE REPORT

Yours needs are

out of the report’

scope?

Contact us for a custom:

In scope Out of scope

Optical

Transceivers• Technology

• Industry

• Market

Optical

Communication

Datacom

Telecom

Optical Fibers,

Connectors,

Equipments,

Services

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METHODOLOGIES & DEFINITIONS

Market

Volume (in Munits)

ASP (in $)

Revenue (in $M)

Yole’s market forecast model is based on the matching of several sources:

Information

Aggregation

Preexisting

information

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Acacia Communication, Accelink, Adtran, ADVA, Alibaba, Amazon Web services, Apple, Applied

optoelectronics Inc (AOI), Arista, ATOP, AZ by CyrusOne, Baidu , Broadcom, ChampionONE, Ciena

(Cyan), Cisco, ColorChip, Dell, E.C.I. Networks, Ekinops, Emcore, Eoptolink, Facebook, Fiberhome,

Finisar (now II-VI), Foxconn Interconnect Technology (FOIT), Fujitsu Networks, Fujitsu Optical

components, Gigalight, Google, HG Genuine Optics, Hisense Broadband, Huawei, Huawei,

HUBER+SUHNER Cube Optics AG, IBM+Softlayer cloud services , II-VI, Infinera (Coriant, Transmode),

InnoLight, Inphi, Intel, IPG Photonics (Menara Network), J.P. Morgan, Juniper Networks, Lumentum,

Macom, Mellanox, Microsoft, NEC, NeoPhotonics, Nokia (Alcatel Lucent), NTT Electronics, Oclaro, OE

Solutions, Oplink (MOLEX), Padtec, Rackspace , Ranovus, Renesas (Integrated Device Technology),

Rockley Photonics, Sicoya, Skorpios technologies, Source Photonics, ST, Sumitomo, Tencent, Verizon ,

Xtera, Yahoo, ZTE and more…

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COMPANIES CITED IN THIS REPORT

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1010

Martin Vallo

Dr Martin Vallo is a Technology & Market Analyst specializing in solid-state lighting technologies, within the Photonics, Sensing & Display division at Yole Développement (Yole).With 9 years’ experience in semiconductor technology, Martin is currently involved in the development of technology & market reports as well as the production of customconsulting projects at Yole.

Prior to his work at Yole, Dr Vallo worked at CEA (Grenoble, France), with a mission focused on the epitaxial growth of InGaN/GaN core-shell nanowire LEDs by MOCVDand their characterization for highly flexible photonic devices. Martin graduated from Academy of Sciences, Institute of Electrical Engineering (Slovakia) with an engineeringdegree in III-nitride semiconductors.

Pars Mukish

Pars Mukish holds a master’s degree in Materials Science and Polymers from ITECH in France and a master’s degree in Innovation and Technology Management from EM Lyon, also in France. He works at Yole Développement, the ‘More than Moore’ market research and strategy consulting company, as senior market and technology analyst in the fields of LED, OLED, lighting technologies, and compound semiconductors, He performs technical, economic, and marketing analyses. In 2015, Pars was named business unit manager for emerging sapphire, LED/OLED, and display/lighting activities.

Previously, he worked as marketing analyst and techno-economic analyst at CEA, a French research center for several years.

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ABOUT THE AUTHORS

Biographies & contacts

Contact: [email protected]

Contact: [email protected]

Contact: [email protected]

Dr. Eric Mounier

With more than 20 years of experience in MEMS, sensors and photonics applications, markets, and technology analyses, Eric provides deep industry insight intoMEMS and photonics current and future trends.

He is a daily contributor to the development of MEMS and photonics activities at Yole, with a large collection of market and technology reports as well as multiplecustom consulting projects: business strategy, identification of investments or acquisition targets, due diligences (buy/sell side), market and technology analysis, costmodelling, technology scouting, etc.

Eric has contributed to more than 250 marketing/technological analyses and 80 reports, helping move the MEMS and Si photonics industry forward. Thanks to hisextensive knowledge of the MEMS, sensors, and photonics-related industries, Eric is often invited to speak at industry conferences worldwide.

Moreover, he has been interviewed and quoted by leading media throughout the world. Prior to working at Yole, Eric held R&D and Marketing positions at CEALeti in France. Eric has a Semiconductor Engineering degree and a Ph.-D in Optoelectronics from the National Polytechnic Institute of Grenoble.

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Impact of COVID-19 & Basis for our scenarios

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• The COVID-19 has deep implications for the telecom infrastructure supply chain. The disease is affecting China and isspreading within Asia and into Europe and North America – the most important markets wherein the datacom and telecomtechnologies have been heavily deployed.

• End users spending on IT infrastructure (server and enterprise storage systems) will decline in 2020

• Interesting situation is in optical networking market. Demand for networking and cloud services is huge today. Due tosanitary confinement people work and communicate from home as well as take advantage of digital entertainmentconnected to the internet. Telecom networks and data centers will continue to operate while most of the manufacturingand travelling businesses are shutting down. Network and datacenter operators will try to maintain high bandwidth forstorage and streaming services and continuously working on enhancing network capacity.

• Demand for optics by Chinese data-center operators (Alibaba, Baidu, Bytedance, Tencent, …) is very strong with theChinese government support for deployment 5G and cloud data centers. That means the future scenario for opticalcommunication sector doesn't have to end badly if manufacturing of optical systems and module restart in 3 months andChinese consumers will continue subscribing cloud services this year.

• In conclusion, we assume different negative impact on telecommunication infrastructure systems. Elements of the impactinclude changing demand expectations from the buyers, supply chain shortages and logistical delays, short-term componentprice increases, and a suppressed economic and social climate. Even though a demand for bandwidth is high, the opticalcommunication industry will be negatively impacted in sales due to less investing to the legacy infrastructure instead ofhigher investing to the new ecosystems.

ECONOMIC OUTLOOK

Initial statements

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Server and Enterprise Storage Systems

• Middle case / Best case

• How long this recession will last is also unclear now.

• The current probable scenario server market revenues will decline 4-6% year over year

• The enterprise storage systems market is expected to decline 5-7% year over year

• The both servers and storage systems return to growth in the second half of the year

Optical networking systems and modules for datacom and telecom

• Middle case / Best case

• How long this recession will last is also unclear now. Difficult to predict the economic situation in thenext 3-6 months.

• The downturn in optical networking and transceiver sales should be short time. We expect that it willbe followed by a very strong recovery, given the new urgency for adding bandwidth across thenetworking infrastructure.

• The optical transceivers market is expected to decline >10% in Q1 and <8% in Q2 due to slow restartmanufacturing in China.

• Demand continues to be solid, we expect that unfulfilled Q1 and Q2 demand will be shipped insubsequent quarters.

BASIS OF OUR SCENARIOS

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OPTICAL TRANSCEIVER MARKET – ANALYSIS BY APPLICATION

Optical transceiver market revenue forecast by segment (2019 vs. 2025)

$3.7B

$4B

2025

$17.7B

2019

$7.7B

Datacom

Telecom

$5.6BCAGR 7%

$12.1BCAGR 20%

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• Data communication refers to the transmission of information between two or more points mostly using fiber glass as a communicationchannel and some specific form (set of 0’s and 1’s) understandable to that channel. In this report data communication are linked with thedatacenters and typical transmission distance is up to 100km (DCI).

• Data communication system ensure:

• Delivery: The system must deliver data to the correct destination. Data must be received by the intended device or user.

• Accuracy: The system must deliver data accurately. Data that have been altered in transmission and left uncorrected are unusable.

• Timeliness: The system should transfer data within time. Data becomes useless if it is delivered late. In case of video, audio and voice data, timely delivery meansthat data is delivered as it is produced.This type of delivery is called real-time transmission.

• Telecommunication is the transmission of signals over a distance for the purpose of communication. In modern times, this process almostalways involves the use of electromagnetic waves or optical fibers by transmitters and receivers.

• Telecommunication term defines any assisted transmission. It could be telephone, telegraph, radio,TV, even smoke signals.

• Telecommunication system consists of three elements:

• A transmitter that takes information and converts it to a signal;

• A transmission medium that carries the signal;

• A receiver that receives the signal and converts it back into usable information.

Data CommunicationVs.Telecommunication

• They are both a form of communication; data communication is a subset of Telecommunication

• Telecommunication sends data between two links by means of electromagnetic. (Like satellite), while data communication means send data bytelecommunication, it consists of codes of 0’s and 1’s.

• In computer means, data communication is digital data and telecommunication is equipped to send digital data to receiver.

• Telecommunication is any communication over a distance. Data communication usually implies digital, and often excludes voice services.

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FROM TELECOMMUNICATION TO FIBER-OPTIC COMMUNICATION

Data Communication (DATACOM) vs. Telecommunication (TELECOM)

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FIBER-OPTIC COMMUNICATION NETWORK ARCHITECTURES

Generic diagram of FOC network - Overview

Telecom networks

Long-haul networks

Datacom networks

*5G network and Wireless access network is not part of datacom network

*Source: NTT

WDM systems

LAN

SONET/SDH

FTTx

5G

5G networks

LONG-HAUL• High performance • Fiber constrained

METRO• Space and power

constrained• Pay as you grow model

EDGE• Shorter product life

cycles• Cost and power sensitive

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FIBER-OPTIC COMMUNICATION APPLICATION TRENDS

Global network IP traffic growth - Macro-trends

The trend is accelerating the increase in the average number of devices and connections per household and per capita.

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2018

2023

6.1B

~18.4B

~29.3BCAGR 10%

14.7B

Global device and connection growth

(Market share 2018 → 2023)

Other (2% → 4%)

Tablets (4%→3%)

PCs (7%→4%)

TVs (including game consoles) (13%→11%)

Non-Smartphones (14%→5%)

Smartphones (27%→23%)

Machine-to-Machine (M2M) (33%→50%)

4.8B

6.7B2.7B

1.6B

2.4B

3.2B

1.4B

1.2B0.7B

0.8B

0.4B

1.1B

(Source: Cisco Annual Internet Report)

• Each year, various new devices with increased capabilities and intelligence are introduced and adopted in the market.

•The average number of devices and connections per capita will grow from 2.4 in 2018 to 3.6 by 2023

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FIBER-OPTIC COMMUNICATION APPLICATION TRENDS

Datacom vs. Telecom 1/2

The driver applications of the fiber-optic network are lagerly digital applications and services.

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Digital optical communication

TelecomDatacom

DatacentersMetro access

<100 km

Metro core

100 – 800 km

Long haul

>800 km

• New era of connectedness is increasingly universal

• The capacity of the digital communications networks must increase exponentially

• More than 20 billion connected devices and machine learning and artificial

intelligence will continue to accelerate this trend

The rapid rise of internet

traffic that is going through

mega data centers operated

by hyperscalers.

Deployment of modern communications has rapidly expanded from being the

domain of telecom service providers to deployments by enterprises and

service “mega” data center enterprises.

Wireless - 5G

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OPTICAL TRANSCEIVER MARKET

TOTAL OT shipments forecast by segment (2017-2025)

The OT market is expected to grow from 183 Munits in 2020 to 211 Munitsin 2025, mostly driven by Ethernet optical modules.

CAGR2020-2025 = +6%.

• Although the total shipments in 2020 can decrease up to 15% in the worst scenario, the total revenue is expectedto moderately increase. It is a result of much more expensive optical modules above 100G of data rate. Howeverthe operation costs - price for transmission of 1G/s is rapidly decreasing.

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OPTICAL TRANSCEIVER MARKET

DATACOM OT revenues forecast (2017-2025) 1/2

The OT marketfor Datacom is expected to grow from $4.2B in 2020 to $12.1B in 2025.

CAGR2020-2025 = 24%.

• The Datacom market growth will be driven by adoption of expensive higher data rate optical modules which migrate from core/spine networks down to inter-rack connections.

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OPTICAL TRANSCEIVER INTRODUCTION – TECHNOLOGY & TRENDS

Key technologies

Details of Chip components - laser and photodiode are available in the chapter Optical Transceiver Components

Components

Scheme

Technologies

Chip Optical Sub-Assembly Transceiver

Bill of materials

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10G-25G 40G 200G100G 400G

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OPTICAL TRANSCEIVER INTRODUCTION – TECHNOLOGY & TRENDS

Form factors - Mapping by application and data rate

LONG-HAULMETRO Core

METRO Access/Inter

DC

METRO Access/5G

LAN/Intra DC

SFP

QSFP

XFP

SFP28

CFP2-LR/ER CFP4-LR/ER

TelecomDatacom

100 – 800 km > 800 km10-120 km<10 km

CFP-DCO

5”x7”module

CFP2-ACO

CFP2-DCO

OSFP/QSFP-DD

ZR/ZR+

4”x5”module

CFP8-LR

SFP+

QSFP28 –

SR/DR/FR/

CWDM/PSMQSFP+

QSFP56 –

SR/DR/FR

QSFP-DD

OSFP – SR/DR/FR

QSFP-DD

OSFP – LR/ZR

QSFP56 –

LR/ER

QSFP28–

LR/ER/LWDM

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OPTICAL TRANSCEIVER INTRODUCTION – TECHNOLOGY & TRENDS

Key trends - Coherent technology/transceivers

The coherenttechnology isconsider as a most advancedbut also mostexpensivetechnologytoday.

The MM, SM and coherent transceivers have been driven by scaling of various electrical and optical technologies.

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Multi mode transceiver Single mode transceiver Coherent transceiver

Application

Laser

source

Modulation

Reach

Short reach (hyperscale DC,

enterprise, storage)Long reach (hyperscale DC) Long reach (Telecom)

VCSEL

850 nmxxx xxx

xxx NRZ, PAM4 xxx

3 m – 100 m xxx > 10 km

Advantage/

Disadvantage

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OPTICAL TRANSCEIVER INTRODUCTION – TECHNOLOGY & TRENDS

Silicon Photonics (SiPh) trend - Benefits

• Smaller photonic components:

Size matters when we talk about device integration intosub-systems. As an example, for sensing applications, opticaltechnology has the highest sensitivity but lacks ofminiaturization because most of the time hybrid dies needto be assembled together and long optical path is required(thus the optical module is often bulky). So, photonic offersthe best combination of high accuracy and long lifetime andfurther integration opens the way to portable systems forconsumer applications.

• Lower power consumption:

Data centers are extremely power-hungry and willconsume a significant fraction of the world electricity if notechnology shift occurs. Photonic proposes lower energy-consumption solutions that could be turned into reducedheat dissipation, lower environmental footprint and loweroperating costs. In a previous Yole report (2015 DataCenters), we shown Si photonics interconnects couldreduce power consumption by 5-10%.

• High data rates:

Here again, data rates are increasing in data centers as weare heading to 400Gb/s. Direct Attach Cable with Copperis limited to 30m and 10Gb for intra data centerinterconnects. For longer distance and data rate, InP and Siphotonics are used. For example, Infinera ICE5, announcedonly 24 months after ICE4, delivers a significant leap incapacity per wavelength, from 200G to 600G, and offersimprovements in fiber capacity, reach and power efficiencyto address the most demanding high-scale applications.

• Lower $/Gbps:

In 2015, Facebook specified a 100G transceiver usingsingle-mode fiber it believes it can drive to a cost of $1/GB.This $1/Gb limit has been one of the cost target of the lastyears for the optical transceivers community. To hit thelower costs, the tech giant relaxed distance requirementsto 500m down from 2km and eased specs on operatingtemperature and product lifetime. Today, with an averageselling price of $200 for a 100Gb transceiver, we are at$2/Gb. Si photonics can leverage the benefits from the ICmanufacturing industry to lower the costs down.

• Leverage semiconductor industry:

Manufacturing PICs is taking benefitfrom the batch manufacturing of theIC industry thus lowering cost down.

• Better reliability:

Compared to legacy optics withhybrid integration.

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25

OPTICAL TRANSCEIVER APPLICATIONS – DATACOM TRENDS

Status of migration to higher speed

Due to the ongoing large increases in bandwidth demand, Data Center connections are expected to move from 25G/100G to 100G/400G

Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020

Within the data center racks

2017 20182015 2016 2019 2020 2021

10G

25G

100G

40G

100G

400G

Between data center racks

Data Center Interconnect & WAN

10G DWDM withTunable laser

100G/200G Coherent

400GE & Coherent

Volume ramp

Starting to

be deployed

Being deployed

Starting to

be deployed

Being deployed

Being deployed

Starting to

be deployed

Volume ramp

Starting to

be deployed

Future

Volume ramp

Volume ramp

Volume rampStarting to

be deployed

Starting to

be deployedVolume ramp

800GStarting to be deployed

Source: Finisar

• Rapid evolution of DSPs for optical

communication technologies shorten

life cycle of the single mode and the

multimode optics used in the data

centers.

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26

OPTICAL TRANSCEIVER TRENDS – 400G AND BEYOND

New interface types and form factors to be deployed 1/2

New formfactor standards are emerging for all types of interconnections

Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020

CFP8• 1st generetion 400G form

factor

• Applications: metro core

routers and DWDM client

interfaces

• Slightly smaller than CFP2

• Support• CDAUI-16 16x25G NRZ

• CDAUI-8 8x50 PAM4

QSFP-DD and OSFP• 2nd generetion 400G form factors

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27

• Coherent modules

significantly larger

than their intensity

modulated

counterparts

• Need for powerful

digital signal

processors and the

use of discrete

optical components.

• Targeted long-haul

applications

OPTICAL TRANSCEIVER TRENDS – 400G AND BEYOND

TELECOM - Pluggable coherent ZR/ZR+ - Coherent optical transmission 2/2

With rising data demand, data center operators are seeking a low power, small form-factor solution to cover edge-DCI distances.

Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020

DCO/ACO → 400G ZR → 800G ZR

• Advances in CMOS

• Integrated optics

• Coherent digital

signal processor

(DSP) designs

• DSP coding and

equalization

algorithms

Past Today (ZR)

industry efforts to deliver a viable coherent solution

Future (800G)

These modules will provide the necessary bandwidth increases for the regional or metro networks

for the mega-DC operators such as Google, Microsoft, Amazon, Facebook, and many others.

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28

OPTICAL TRANSCEIVER TECHNOLOGY - KEY FOC PARAMETERS

Overview of parameters

This chapter will provide the reader with a rudimentary understanding of inevitable fiber optic communication parameters and their impact on today’s trends.

Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020

Optical wavelength bands Bandwidth SMF/MMFReach/Distance

Dispersion Modulation Multiplexing Parallelization

Page 29: Optical Transceivers for Datacom & Telecom 2020 - Yole ... · o Disaggregation vs. Vertical integration o Product portfolio of key suppliers • Competition o Key competitive factors

29

OPTICAL TRANSCEIVER TECHNOLOGY - CONCLUSION

Possible future speeds - Datacom & Telecom

Heading toward higher speeds the range of form factors should be reduced to maintain compatibility.

Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020

Source: Ethernet Alliance

Now

100G/200G/

400G

Top cloud

data centers

Rest cloud

data centers

Large

enterprises

Rest of

enterprises

Services

Provides

(Telecom)

2025

800G/1.6T

100G 800G

100G/400G

100G 400G

100G/400G 1.6T

800G/1.6T

Page 30: Optical Transceivers for Datacom & Telecom 2020 - Yole ... · o Disaggregation vs. Vertical integration o Product portfolio of key suppliers • Competition o Key competitive factors

30

OPTICAL TRANSCEIVER TECHNOLOGY - CONCLUSION

Paving the way (Telecom) 1/2

The idea concept is to use the same 100G/200G/400G pluggable digital coherent optics (DCO) module across all distances.

• New coherent pluggable modules QSFP-DD, OSFP and CFP2-DCO will drive a paradigm shift in how DCI is deployed by cloud and telecom service providers, enabling high-density IP over DWDM on switch and router platforms that also have the performance required for metro and long-haul networks.

Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020

DR4, FR4,

400G

CWDM

QPSK/8QAM/16QAM (400G ZR/ZR+)

Coherent

Pluggable DCO/100G/200G/400G

DWDM

Inside DC DCI (Any distance)

10 km5 m 800 km 10 000 km2 km 100 km

Distance

PSM4, LR4,

CWDM4

100G

CWDM

PAM4 (100G, QSFP-DD)

Coherent

100G/200G/400G/600G

DWDM

QPSK/8QAM/16QAM

Coherent

100G/200G/400G

DWDM

QPSK/8QAM

Coherent

100G/200G/300G

DWDM

Inside DC DCI (Metro Access) DCI (Metro Core) DCI (Long Haul)

10 km5 m 800 km 10 000 km2 km 100 km

Distance

Past

1. Coherent DSP ASICs have been designed for dedicated transport boxes. The power consumption and package size had not been sufficiently optimized for QSFP- DD or OSFP. These boxes add cost and dissipate power.

2. Lack of Interoperability across generations of coherent solutions for 100G and 200G.

3. Lack of a clear application space, as the conventional coherent technology had been deployed in many forms across various distances and optical fibre span configurations.

Future

• Development of an industry-wide ecosystem

that supports pluggability and a new era of

interoperability for 400G.

• The ecosystem based on ZR will enable telecom

and cloud providers to not only deploy solutions

for DCI edge applications up to 120km but also

use the same 100/200/300/400G solutions across

the entire DCI infrastructure.

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31

VCSELDFB FP

–++

+ ++–

++

+++ –

++ ++

+

AlGaAs/AlAs

InGaAsN/GaAsInGaAsP/InP InGaAsP/InGaP

– –

OPTICAL TRANSCEIVER KEY COMPONENTS

Laser diode - Comparison of EEL (DFB & FP) and VCSEL

Different laser diode technologies are present in optical communication sector depending on transmission distance and speed.

Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020

xx

Mbps

xx

Mbps

xx

Gbps

xx

Gbps

xx

Gbps

xx m

xx m

xx km

xx km

xx km

1.3 µm DFB

Single Mode

1.3 µm Fabry-Pérot

Single Mode

850 nm VCSEL

Multi Mode

1.55 µm

DFB

Single Mode

Externally

Modulated

850 nm LED

Multi ModePAROLI*

Multi Mode

Multiple

Fibers

*PAROLI = Parallel optical link

Transmission Speed

Tra

nsm

issi

on

Dis

tan

ce

Page 32: Optical Transceivers for Datacom & Telecom 2020 - Yole ... · o Disaggregation vs. Vertical integration o Product portfolio of key suppliers • Competition o Key competitive factors

3232

• Event though much higher ASP of telecom optical transceivers (coherent technology or outdoor graded), revenues fromdatacom dominated recent years due to deployment of high volume ethernet transceivers and AOCs for cloud builders,large enterprise and HPC centers

• Splitting market into datacom and telecom is becoming more blurred as metro networks which were typical telecom beforeare more attractive for interconnections of data centers. If the coherent technology will go down in cost and thus becomefeasible to be implemented in data centers we won’t be able to distinguish technologies addressing datacom and telecommarkets.This segmentation can disappear.

Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020

OPTICAL TRANSCEIVER INDUSTRY

Market shares - 2017-2019 evolution - DATACOM & TELECOM 3/3

Datacom

(revenue)

XX%

Telecom

(revenue)

XX%Datacom

(revenue)

XX%

Telecom

(revenue)

XX% Datacom

(revenue)

XX%

Telecom

(revenue)

XX%

201920182017

Page 33: Optical Transceivers for Datacom & Telecom 2020 - Yole ... · o Disaggregation vs. Vertical integration o Product portfolio of key suppliers • Competition o Key competitive factors

3333Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020

OPTICAL TRANSCEIVER INDUSTRY

Market shares - 2017-2019 evolution - TELECOM 1/2

Total

2019:

$x.xxB

Total

2018:

$x.xxB

Total

2017:

$x.xxB

x% x%

2017 2018 2019

Page 34: Optical Transceivers for Datacom & Telecom 2020 - Yole ... · o Disaggregation vs. Vertical integration o Product portfolio of key suppliers • Competition o Key competitive factors

34

OPTICAL TRANSCEIVER INDUSTRY

Technology platform - Indium Phosphide (InP) vs. Silicon Photonics (SiPh)

The InPplatform and Silicon Photonics will coexist in the future.

Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020

Silicon Photonics – SiPhIndium Phosphide – InP

Page 35: Optical Transceivers for Datacom & Telecom 2020 - Yole ... · o Disaggregation vs. Vertical integration o Product portfolio of key suppliers • Competition o Key competitive factors

3535

• In recent years we saw the strategicalinvestment of the market leaders tostrengthen their positions.

• In spite of consolidations the marketis still very fragmented. Manycompanies compete and there is nosingle or small group of companieswhich dominate the market.

Future:

• We expect aggregate merger andacquisitions activity to be related to:

• Technology expertise

• High volume production and low costto meet mainly hyperscalersexpectations

• Strengthening the position in the region– China or USA

Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020

OPTICAL TRANSCEIVER INDUSTRY

Mergers & Acquisitions (M&A) – Outlooks

Hyperscalers, Cloud builders, Enterprises, HPC centers

(Customers)

Optical modules vendors

(Suppliers)

Disaggregated

supply chain

Vertically

integrated

Page 36: Optical Transceivers for Datacom & Telecom 2020 - Yole ... · o Disaggregation vs. Vertical integration o Product portfolio of key suppliers • Competition o Key competitive factors

36

OPTICAL TRANSCEIVER INDUSTRY

Strategy - Product portfolio of key suppliers

Different strategies is also projected into the product portfolio and segment interest.

Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020

DATACOM TELECOM

EthernetFibre

channelInfiniband AOCs

SONET/

SDH

CWDM/

DWDM

5G &

Wireless

Bidi

AccessCoherent

High Speed

Components

II-VI (+Finisar)

Lumentum (Oclaro)

Foxconn Interconnect Technology (FIT)

HG Genuine Optics

Accelink

Sumitomo

InnoLight

Source Photonics

Cisco (Acacia)

Fujitsu Optical components

MOLEX (Oplink)

NeoPhotonics

Macom

HUBER+SUHNER Cube Optics AG

NTT Electronics

Not in portfolioIn portfolio

Page 37: Optical Transceivers for Datacom & Telecom 2020 - Yole ... · o Disaggregation vs. Vertical integration o Product portfolio of key suppliers • Competition o Key competitive factors

37

OPTICAL TRANSCEIVER INDUSTRY

Trend with the 400G era – Transition aspects – Focus on PAM-4

Broadcom and Inphi are two large and trusted suppliers of 400GbE PAM-4 silicon – both trying to offer customers a differentiated solution.

Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020

In the past Today

• Completing 400GbE ecosystem from different

suppliers should guarantee a competitive

supply chain for 400GbE module makers

trying to ramp production at the end of 2019

• Integrating retimers into the optical

transceiver modules is an intermediate

step to SiPhI. PAM-4

100GbE 400GbE

$250 – $400 $3,500 – $10,000 < $3,000

400GbE

2017/2018 2019/2020

Page 38: Optical Transceivers for Datacom & Telecom 2020 - Yole ... · o Disaggregation vs. Vertical integration o Product portfolio of key suppliers • Competition o Key competitive factors

38

OPTICAL TRANSCEIVER INDUSTRY

Trend with the 400G era – Pluggable coherent 400ZR+ – Players positioning

Plenty of companies are investing $500M in total to bring 400ZR to the market.

Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020

DSP (TROSA) Optical module Level of integration

- - QSFP-DD/CFP2-DCO Vertically integrated

- - QSFP-DD -

Yes - - -

Yes - - -

- - - Vertically integrated

- - QSFP-DD -

Yes - - -

- - QSFP-DD -

No - - -

Yes - - Component manufacturer

- - - Telecom modules manufacturer

- - - Vertically integrated

- - QSFP-DD -

Yes - - -

- - - -

Ciena, Infinera, Acacia,

and Inphi are planning

a fully vertically

integrated strategy to

cover the broadest

possible market reach

As component

developers repurpose

their designs to

address adjacent

markets, more and

more companies are

beginning to endorse

some form of 400ZR

in their future

roadmaps.

Page 39: Optical Transceivers for Datacom & Telecom 2020 - Yole ... · o Disaggregation vs. Vertical integration o Product portfolio of key suppliers • Competition o Key competitive factors

39

Contact our

Sales Team

for more

information

39

Contact our

Sales Team

for more

information

InP Wafer and Epiwafer Market – Photonic and RF Applications

VCSELs – Market and Technology Trends 2019

Silicon Photonics 2020

GaAs Wafer and Epiwafer Market: RF, Photonics, LED, Display and PV

Applications 2020

Edge Emitting Lasers: Market and Technology Trends 2019

Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020

YOLE GROUP OF COMPANIES RELATED REPORTS

Yole Développement

Page 41: Optical Transceivers for Datacom & Telecom 2020 - Yole ... · o Disaggregation vs. Vertical integration o Product portfolio of key suppliers • Competition o Key competitive factors

41About Yole Développement | www.yole.fr | ©2020

CONTACTS

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+33 4 72 83 01 80

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