Wednesday, May 17, 2017

LightCounting expects Ethernet transceivers to drive silicon photonics market

LightCounting, in a research note on the silicon photonics (SiP) market, has reiterated its forecast for the product segment based on updated projections for sales of Ethernet and DWDM transceivers, specifically finding that while the share of SiP products in the total market has not changed significantly the product mix has, and noting that the success of SiP will be more dependent on Ethernet transceivers and less on DWDM modules.

LightCounting notes that projection for sales of active optical cables (AOCs) and embedded optical modules (EOMs) have not changed since its AOC-EOM report of December 2016, with demand for AOCs in early 2017 consistent with forecasts, although stating that the EOM market was very slow in the first quarter. However, it expects Intel to start shipping SiP-based EOMs in 2018 to support its latest supercomputer project.

The research firm notes that EOMs and co-packaged optics/ASICs were key topics at OFC 2017. In particular, supporting its long term forecast for SiP-based EOMs LightCounting cites Ayar Labs, which announced its first product - SiP-based EOMs – designed to sit adjacent to complex ASICs to enable connectivity with network interface cards. The first chip is designed to support 3.2 Tbit/s of capacity. Such SiP-based solutions are able to operate at the high temperatures required for EOM applications.

In terms of optical transceiver technology, LightCounting reports that in 2016 the market of over $6 billion was largely made up of InP devices, split roughly equally between discrete and integrated InP products and accounting for around $4.5 billion of the total. The SiP market segment accounted for around $500 million, with the remainder accounted for by integrated and discrete GaAs devices.

In 2017, the SiP-based optical transceiver market is forecast to rise to around $700 million, in a total market of approximately $7 billion, growing to just over $1 billion in 2019 and around $2.2 billion by 2022, when the total optical transceiver market will reach around $11.5 billion.

LightCounting observes that while SiP technology has been proven in terms of technical performance, it remains to be seen whether it can help the optical components industry move towards sustainable profitability.

The research firm notes that in this context the performance of Acacia has been encouraging, although the company's products are neither high volume nor low cost. In addition Luxtera, whilst a privately held company, is believed to have had a good 2016 and likely gaining share in the PSM4 segment based on the first quarter earnings report of Applied Optoelectronics.