Showing posts sorted by date for query Huawei 100G. Sort by relevance Show all posts
Showing posts sorted by date for query Huawei 100G. Sort by relevance Show all posts

Tuesday, August 20, 2019

Cignal AI: Optical hardware spending on the rise

Optical hardware spending grew in every region and for every business segment during 2Q19, according to the most recent Optical Hardware Report from research firm Cignal AI. Huawei retained top market share worldwide and held steady despite a slowdown in China and increasing competitive and political pressures.

“Huawei managed to retain market share in what is typically its strongest quarter of the year,” said Scott Wilkinson, Lead Analyst at Cignal AI. “Despite the export ban of many optical components and the reports of competitive wins against Huawei in EMEA and APAC, Huawei market share remained steady.”

Additional Key Findings in Cignal AI's 2Q19 Optical Hardware Report:

  • WDM Long Haul Spending Up – Long haul spending recovered in every region except Japan, as compact modular equipment and new high-speed coherent optics impact investments.
  • WDM Metro Declines in North America But Grows in All Other Regions – Factors contributing to the NA decline are the lower price per bit of new high-speed optics and competing priorities like the 5G rollout.
  • SONET/SDH Hangs On – Growth in APAC and EMEA offset SONET/SDH’s ongoing decline in NA. This growth comes from expansions and upgrades to existing networks; there are no new builds.
  • China’s Growth Slows — Growth in China appears dramatic due to the ZTE shutdown and the absence of revenue a year ago. Excluding ZTE’s results, growth slowed.
  • Coherent Optic Shipments Tracking to Reach Nearly 1 Million 100G Equivalent Ports in 2019 – This represents a 40% increase in bandwidth over 2018.
  • Regional trends - This quarter marked a turnaround for CALA, reversing multiple quarters of decline with a YoY surge of 30%. EMEA also grew with expansion across all product segments. Overall growth in North America was minor and would have been negative again if not for an enormous SLTE revenue increase this quarter. Finally, the rapid expansion in Japan for the past few quarters settled down to a more moderate pace with Ciena, NEC, and Huawei as the prime beneficiaries.

Cignal AI also offers an interactive Optical Hardware Market Share Tracker to clients of the Optical Hardware Report and provides quarterly up-to-date market data for real-time visibility on individual vendors’ results as they are released.

Thursday, July 25, 2019

MaxLinear sees progress with 400G PAM4 DSP SoC

MaxLinear reported Q2 2019 net revenue of $82.5 million, down 3% sequentially, and down 19% year-on-year. GAAP gross margin was 53.4%, compared to 53.3% in the prior quarter, and 55.5% in the year-ago quarter. Non-GAAP net income was $16.0 million, compared to $13.5 million in the prior quarter, and $23.7 million in the year-ago quarter.

"We continued to execute on our new 14nm CMOS 4x4 Quad RF transceiver system-on-chip solution for the 5G wireless infrastructure market. These efforts addressing the 5G market continue to be exciting due to the additional content that we are growing on a per-system basis and increasing confidence in realizing revenues in the coming year. Also, our 400 gigabit PAM4 DSP SoC with integrated laser drivers and companion quad-TIA system solution is progressing extremely well with continued traction in the hyperscale data center market,” commented Kishore Seendripu, Ph.D., Chairman and CEO.

The company expects revenue in the third quarter 2019 to be approximately $77 million to $83 million. Due to continued restrictions and lack of clarity from the U.S. Government on the ability to ship product to Huawei, related revenues are excluded from our guidance until further direction is given.

MaxLinear cites momentum with its PAM4 DSP for 400G modules

Delta, a global supplier of power and thermal management solutions, has selected MaxLinear’s Telluride PAM4 DSP to develop its next-generation 400G-DR4 optical module. Delta’s proprietary single mode TOSA/ROSA design and package technology can be extended to DR4 single lambda optical modules.

MaxLinear’s MxL935xx Telluride family of SoCs are key components in the development of high-speed mega-scale data centers based on 100Gbps single lambda optical interconnects. The MxL935xx Telluride family of chips are the world’s first DSP SoCs with integrated electro-absorption modulated laser (EA-EML) drivers for 100/400Gbps optical interconnects and breakout mode clocking support for 400Gbps DR4 optical modules. The MxL93542 400G PAM4 DSP allows companies like Delta to develop a 400Gbps optical interconnect module in a compact form factor for intra-datacenter applications with a transmission distance up to 2 kilometers.

Molex has demonstrated MaxLinear’s “Telluride” (MxL935xx) pulse-amplitude-modulation (PAM4) digital signal processing (DSP) systems-on-chip (SoCs) for next generation 400G-DR4 and 100G-DR optical modules. Molex’s data center connectivity products include QSFP-DD, QSFP28, SFP-DD and 100G Lambda. Molex support for the Open19 Initiative with the Molex Impel Customized Data Cable solution aims to establish a new open standard for data center servers by delivering a flexible, scalable and secure platform.

ColorChip, a global leader in photonic integrated transceivers, has selected MaxLinear’s Telluride (MxL935xx) pulse-amplitude-modulation (PAM4) digital signal processing (DSP) systems-on-chip (SoCs) for their next generation 400G-DR4 and 100G-DR1 optical modules. The new optical modules join ColorChip’s multi-generational optical engine platforms, based on proprietary SystemOnGlass™ technology. ColorChip’s multi-generational optical engine platform has been refined over several generations of transceivers. Its PAM4 100G and 400G optical interconnects based on MaxLinear’s Telluride family are expected to be commercially available later this year.

Monday, June 3, 2019

Huawei to sell its stake in subsea business to Hengtong

Huawei Technologies has agreed to sell its 51% stake in Huawei Marine Systems Co Ltd to Hengtong Optic-Electric Co Ltd, a supplier of optical networking products company based in Jiangsu province. The deal was disclosed in a filing by Hengtong to the Shanghai Financial Exchange. Financial terms were not disclosed.  The remaining 49% in Huawei Marine Systems is held by Global Marine.

Hengtong is already a leading supplier of submarine power cables, submarine optical fiber cables, optical fiber composite submarine cables, special underwater cable, transoceanic communication system accessories and high voltage power cables.

Nikkei Asian Review: Undersea cables -- Huawei's ace in the hole

Huawei Marine is estimated to be building about 30 subsea cables at the moment, most under 1,000km in length, and is making rapid strides to catch up to market leaders Subcom, Alcatel Submarine Networks and NEC, according to this report by Nikkei Asian Review.

The article discusses Huawei's progress in the subsea sector in light of the U.S. government's blacklisting of Huawei.

West Africa Cable System upgraded to 32X100G

The West Africa Cable System (WACS) has been successfully upgraded to 32*100G wavelengths configured on the longest optically amplified single fiber span stretching 11500km from South Africa to Portugal.  WACS has two network operation centers and 15 landing points in 14 countries spanning West Africa and Europe. Huawei Marine, which was the contractor, said the upgrade employed Flex Grid and Optical pass-through technologies, and now represents...

Hengtong supplies 3,000 km of submarine cable for Chile FOA

Hengtong, a supplier of various kinds of wire and cables based in Suzhou, China, delivered 3,000km of submarine optical cable for Chile FOA Project. Hengtong said it has now manufactured and delivered over 10,000km of submarine optical cable for projects overseas. The company is also introducing a number of new products including submarine equipment fitting stations, a stereo intelligent anchor observation system, two-stage composite cables for...

MARS subsea cable brings terabit capacity to Rodrigues Island

The MARS subsea cable has landed on Rodrigues Island, a 108-square-kilometre outer island with a population of 41,000 that forms part of the nation of Mauritius. MARS, which is the first submarine cable system to connect the islands of Mauritius and Rodrigues, was deployed by Huawei Marine on behalf of PCCW Global. The 730km cable uses Huawei's advanced 100G WDM transmission technology for system design capacity of 16 Tbps. Frederick Chui, Senior...

Huawei Marine advances PEACE subsea cable project

The Pakistan East Africa Cable Express (PEACE) Cable project, which will connect Asia, Africa and Europe, has entered into the cable and material manufacturing stage. The PEACE cable system will span 12,000 km and is designed for 200G, 16Tbps per fiber pair connectivity. The ready for service date is targetted for the first quarter of 2020. The project is being developed by PEACE Cable International Network Co., Ltd, a subsidiary of China's HENGTONG...

South Atlantic Inter Link subsea completed from Cameroon to Brazil

Construction of the South Atlantic Inter Link (SAIL) subsea cable between Cameroon and Brazil has been completed. The 6,000 km subsea cable was installed by Huawei Marine Networks. It follows a direct path from Kribi (Cameroon) to Fortaleza (Brazil). The system features a 4 fiber pair configuration supporting 100G wavelengths for a total capacity of 32 Tbps. The SAIL consortium is a joint investment by China Unicom (with its wholly-owned subsidiary,...

Monday, February 4, 2019

West Africa Cable System upgraded to 32X100G

The West Africa Cable System (WACS) has been successfully upgraded to 32*100G wavelengths configured on the longest optically amplified single fiber span stretching 11500km from South Africa to Portugal.  WACS has two network operation centers and 15 landing points in 14 countries spanning West Africa and Europe.

Huawei Marine, which was the contractor, said the upgrade employed Flex Grid and Optical pass-through technologies, and now represents the world's longest 100G system.

Ma Yanfeng, Vice President of Huawei Marine said, “The WACS Consortium selected Huawei Marine to expand the system’s capacity, and looking once again to Huawei Marine verified our product solution capabilities, quality, and process improvement capabilities. Thanks to the WACS Consortium for its trust in Huawei Marine. We will continue to accumulate experience from the project and strive to improve connections between Africa and the world.”

Tuesday, January 29, 2019

Cignal AI: Coherent Port Pricing Trends

The cost of coherent optical ports continues to drop steeply, according to a newly published report from Cignal AI using data from 3Q18. Trend analysis is provided based on past performance and future expectations as the industry migrates to fourth-generation solutions (400ZR).

Vendors included in the report are ADVA, Ciena, Cisco, Coriant, Fujitsu, Huawei, Infinera, Nokia, and ZTE. All vendors tracked in the report shipped 200G-capable optics last year.

Other findings in the 3Q18 Coherent Port Pricing Trends Report include:

  • Prices for 100G equivalent coherent optical ports have dropped exponentially.
  • The cost of deploying new coherent bandwidth has been CapEx neutral.
  • The trend toward lower prices and converging component costs benefits vertically integrated vendors long term.

Sunday, January 6, 2019

Huawei unveils 7nm, 64-core ARM-based CPU

Huawei introduced Kunpeng 920, a 7nm ARM-based server CPU independently designed by Huawei based on ARMv8 architecture license.

The Kunpeng 920 integrates 64 cores at a frequency of 2.6 GHz. This chipset integrates 8-channel DDR4, and memory bandwidth exceeds incumbent offerings by 46%. System integration is also increased significantly through the two 100G RoCE ports. Kunpeng 920 supports PCIe 4.0 and CCIX interfaces, and provides 640 Gbps total bandwidth. In addition, the single-slot speed is twice that of the incumbent offering, effectively improving the performance of storage and various accelerators.

Huawei says its design significantly improves processor performance by optimizing branch prediction algorithms, increasing the number of OP units, and improving the memory subsystem architecture.

Huawei also introduced its TaiShan series servers powered by Kunpeng 920, including three models: one with a focus on storage, another on high density, and a third focused on balancing both requirements. The TaiShan servers are built for big data, distributed storage, and ARM-native application scenarios. The ARM architecture is best suited for these scenarios with advantages in many-core and performance per watt.

"With Kirin 980, Huawei has taken smartphones to a new level of intelligence. With products and services (e.g., Huawei Cloud) designed based on Ascend 310, Huawei enables inclusive AI for industries," William Xu noted. "Today, with Kunpeng 920, we are entering an era of diversified computing embodied by multiple cores and heterogeneity. Huawei has invested patiently and intensively in computing innovation to continuously make breakthroughs. We will work with our customers and partners to build a fully connected, intelligent world."

Huawei said it will continue to work with Intel to develop servers.

Friday, November 30, 2018

Hengtong supplies 3,000 km of submarine cable for Chile FOA

Hengtong, a supplier of various kinds of wire and cables based in Suzhou, China, delivered 3,000km of submarine optical cable for Chile FOA Project.

Hengtong said it has now manufactured and delivered over 10,000km of submarine optical cable for projects overseas.

The company is also introducing a number of new products including submarine equipment fitting stations, a stereo intelligent anchor observation system, two-stage composite cables for application in marine disaster prevention pre-warning networks, an environmental monitoring system for ports and wharfs, as well as an underwater oil and gas production and monitoring system.

Qian Jianlin, Executive President of Hengtong Group, stated that Hengtong was committed to creating a submarine industry supply chain of integrating product, engineering and operation service to promote the implementation of the "One Belt and One Road" initiative and contribute to global connections.

Huawei Marine to build subsea cable in southern Chile

Chile's Comunicación y Telefonía Rural S.A. (CTR) has retained Huawei Marine to deploy the Fiber Optic Austral (FOA) subsea cable system.

FOA, which will be the southernmost submarine cable in the world, will connect three regions in southern Chile.

Huawei Marine will provide an end-to-end submarine cable solution using its 100G universal platform to provide a seamless optical network architecture between submarine and terrestrial networks. The system has a design capacity of 16 Tbps and a length of 2,800 kilometers. It is expected to be completed by the end of 2019.

Monday, November 19, 2018

MARS subsea cable brings terabit capacity to Rodrigues Island

The MARS subsea cable has landed on Rodrigues Island, a 108-square-kilometre outer island with a population of 41,000 that forms part of the nation of Mauritius.

MARS, which is the first submarine cable system to connect the islands of Mauritius and Rodrigues, was deployed by Huawei Marine on behalf of PCCW Global. The 730km cable uses Huawei's advanced 100G WDM transmission technology for system design capacity of 16 Tbps.

Frederick Chui, Senior Vice President, Global Data Sales and Presales of PCCW Global, emphasizes: "Despite being traditionally underserved, Africa has the fastest-growing youth population in the world and a constantly increasing appetite for connectivity across both the continent and its neighboring islands. The linking of Rodrigues to the main island of Mauritius through the MARS project will result in substantial economic benefit and demonstrates PCCW Global’ s long-standing commitment to building infrastructure in Africa to support and grow the continent's emerging digital economy.”

Thursday, September 27, 2018

Cignal AI: Compact modular optical equipment market to top $1 billion in 2018

The market for compact modular optical equipment is on track to top $1 billion in revenue this year, according to the latest Optical Applications Report from Cignal AI. the category includes equipment designed specifically for use in DCI, open & disaggregated hardware applications.

Cignal AI has raised its CY18 forecast for 200G and 400G coherent port shipments and cut its 100G coherent forecast.

“Operators are rapidly adopting second and third generation coherent technology as they seek to lower their cost per bit and achieve better performance. This has resulted in higher than expected demand for 200G and 400G speeds this year, at the expense of first-generation coherent,” said Andrew Schmitt, lead analyst for Cignal AI. “Compounding this trend is the growing adoption of 200G CFP2 DCO modules, which allows coherent technology to integrate with switches and routers more easily than earlier solutions.”

Some highlights from Cignal AI:

  • Ciena and Huawei Top Compact Modular Market Growth – In this record quarter, Ciena and Huawei were the fastest-growing vendors in the compact modular segment. Ciena benefits from its third-generation coherent technology, while Huawei was lifted by greater adoption from Chinese cloud operators. New entrant Nokia also grew share in its second quarter of serving this market.
  • Packet-OTN Market Grows with Incumbent Adoption – More incumbent network operators are using packet-OTN switching hardware to upgrade their transport networks. In North America, this segment grew 30 percent year-over-year as result of more deployments by Verizon and other large incumbents. Growth was also significant in EMEA and India, where Nokia has taken significant market share.
  • Third Generation Coherent Gaining Momentum – Even though the overall market slowed in 2Q18 as a result of ZTE’s shutdown, other vendors experienced healthy sales growth. Third generation coherent solutions are picking up steam with Ciena’s 400G offering doing well. Acacia, Huawei, Nokia, and NTT Electronics based solutions will reach the market within the next two quarters to challenge Ciena’s lead.

Sunday, September 23, 2018

ECOC 2018: Progress with the 100G Lambda MSA

The 100G Lambda Multisource Agreement (MSA) Group, which was formed in October 2017, announced the release D2.0 of three specifications based on 100 Gbps per wavelength PAM4 optical technology.

These updated 100 GbE interface specifications are designated as 100G-FR and 100G-LR for duplex single mode links over 2 km and 10 km respectively.

The MSA has also updated the 400G-FR4 specification for 400 GbE duplex single mode fiber links relying on multiplexing 4 wavelengths of 100 Gb/s PAM4 modulated optical signals. In addition, the MSA is also working on a 400G-LR4 specification for a 10 km reach at 400 GbE.


In addition, members of the 100G Lambda MSA Group announce recently conducted a private interoperability private plugfest hosted by MultiLane. Twelve companies participated.

The areas of focus for this event included testing optical interoperability for 100 GbE and 400 GbE modules and modules that support 4x 100 GbE breakout.

“The rapid convergence of stakeholders and technical agreement highlights the strong industry effort and the demand to bring this technology to market as soon as possible,” said Mark Nowell, MSA co-chair.

“The successful testing between so many members involved in the plugfest shows the rapid maturity of the various product and technology developments across the ecosystem,” said Jeffery Maki, MSA co-chair.

At ECOC, the 100G Lambda MSA Group is hosting module interoperation demonstrations in the 100G Lambda MSA booth (Booth #123)/

The 100G Lambda MSA Group member companies are: Alibaba, Applied OptoElectronics, Arista, Broadcom, Ciena, Cisco, Color Chip, Credo, Delta, Finisar, Foxconn Interconnect Technologies, Fujitsu Optical Components, HiSense, Huawei, IDT, Inphi, Intel, Juniper Networks, Kaiam, Keysight Technologies, Lumentum, Luxtera, Macom, Maxlinear, Mellanox, Microsoft, Mitsubishi Electric, MultiLane, Molex, Neophotonics, Nokia, Oclaro, Rockley Photonics, Semtech, Sicoya, Source Photonics, Sumitomo Electric, TE Connectivity and Tektronix.

Wednesday, September 5, 2018

South Atlantic Inter Link subsea completed from Cameroon to Brazil

Construction of the South Atlantic Inter Link (SAIL) subsea cable between Cameroon and Brazil has been completed.

The 6,000 km subsea cable was installed by Huawei Marine Networks. It follows a direct path from Kribi (Cameroon) to Fortaleza (Brazil). The system features a 4 fiber pair configuration supporting 100G wavelengths for a total capacity of 32 Tbps.

The SAIL consortium is a joint investment by China Unicom (with its wholly-owned subsidiary, China Unicom do Brasil Telecomunicacoes Ltda) and CAMTEL.

Wednesday, August 22, 2018

Interview with Finisar's Michael Hurlston

This year, Finisar marks its 30th anniversary in the optical components and subsystems business. I recently sat down with Michael Hurlston, who took over as CEO in January following the retirement of founder Jerry Rawls. Hurlston previously served as a Senior Vice President and General Manager of the Mobile Connectivity Products/Wireless Communications and Connectivity Division at Broadcom. 

Finisar has more than 1,000 US patents and over 13,000 employees worldwide, with its HQ in Sunnyvale, California and additional product development and manufacturing facilities located in California, Pennsylvania and Texas (USA), Australia, China, Germany, Malaysia, Singapore and Sweden. Its portfolion spans optical transceivers, active optical cables, optical engines, communication and sensing components, wavelength management devices, RF-over-Fiber transmitters, and optical instrumentation.

Jim Carroll: Tell me about Finisar, the 30th anniversary, and the company’s strategic direction, especially in regard to the hyperscalers. How has the vision of the company changed over time? 

Michael Hurlston: Finisar is one of the longest and most successful companies in optical communications and with an incredible history. For any company to survive for 30 years is a remarkable achievement, especially for one that has a huge manufacturing component,  such an important part of our story. The credit belongs to our founding CEO, Jerry Rawls, who guided the company for all of those 30 years. It was an incredible run for both the company and for Jerry. Now that he has stepped down, I've come in at a true inflection point in the history of optics. Your question about the hyperscalers is right on target because they are driving a lot more of the decision making in optics than ever before. The major network equipment OEMs, like Cisco or Nokia, are still very influential in setting the course of the industry, but clearly, the hyperscalers are becoming more influential. And each of the hyperscalers has a different way to build data centers, both inside the building and between nearby and distant data centers.  They think about these things very differently. Each of the big ones has a different way they employ optics. In addition, a lot of these guys are buying optics directly. They are moving to a disaggregated model, where instead of procuring attached optics from companies like Cisco, Juniper or Arista for their network switches and routers, it is now a separate decision. They are buying optics from companies like us, and buying  switches and routers from companies like Cisco and Juniper. It is a very complicated landscape and one that brings opportunity for us.

Jim Carroll: You’ve recently taken on the CEO position at Finisar. What attracted you to this company?

Michael Hurlston: It is an unbelievable opportunity for somebody in their first role as CEO to come in to a company like Finisar with a such a great history and a number one market share. Usually, first time CEOs are doing ‘fixer uppers’, the difficult task of trying to save a distressed asset. The opposite is true here. Jerry built quite a legacy in terms of employees that make this company what it is.

This is a great opportunity for me. To be truthful, I didn't know much about optics. My professional focus for the past 15 years has been around mobile phones. So as we look at this mobile opportunity and other consumer opportunities, I understand that quite a bit.  Secondly, I know how to build successful partnerships. In this new world of optics and data networking, we have to think differently about vertical integration, where it makes sense, and where we should adapt.  I may be driving people crazy with all my questions about why we do things this way. Probably 95% of the time the answer is that we have been doing things the right way. But 5% of the time, we may conclude that the old way of doing things is no longer optimal in this current landscape.

Jim Carroll: What is the company's core expertise? Its key differentiator?

Michael Hurlston: We do two things extremely well.  Number one, we're one of the very few companies that have our own component set. If you look at the landscape of optical networking, particularly for transceivers, there are two classes of company: one that actually assembles the transceiver and puts together all the components, wraps it up, tests it and then ships it to the end customer; and, two, companies that actually make components that go inside the transceiver, which are really the heartbeat of what the transceiver does. We're the one company that actually does both. We make the components and we have great strength in lasers, in particular. We manufacture all different kinds of devices, including lasers for coherent optics, long range optics, multi mode and VCSELs (vertical-cavity surface-emitting lasers), etc.  We manufacture the whole landscape of lasers, which is a big core competency. We actually make our own ICs as well, along with key drivers, laser drivers, and re timers. . We also have the second piece, which is assembly and test and when you put these two pieces together, you see that Finisar is very different from the vast majority of our competition.

Jim Carroll:  Every generation in silicon is increasingly difficult. In the optics field, of course, there are even more technical challenges as you move ahead. Can the industry keep up the pace in moving to 400G and beyond?

Michael Hurlston: Yes, I think that you're raising a great point.. Optics are becoming like semiconductors and more specialized over time. We’ve just talked a  bit about the specialization in assembling modules and then making components, but even within the making of components, you've got different tiers of suppliers. In core optics, there are several paths opening up for manufacturing transceivers because the market is fragmenting. The hyperscalers are each taking different approaches as well. What you find is that companies who are specializing and concentrating on specific customers or parts of the market tend to do better. We’ve seen competitors focus, for example, on coherent optics. We’ve also seen competitors focus on one or two of the hyperscalers, and they've done well. What Finisar needs is to focus on is our role as a total supplier, which we’ve been very successful at in the past and which is really about vertical integration. Also, focusing on a few key areas of the market where we see the most opportunity, instead of trying to serve every need, which has been a characteristic of our past.

Jim Carroll:  What is the high-end target for Finisar?

Michael Hurlston: We see increasing opportunities for our components in both core optical networking and mobile. For our module transceivers, we will focus more on the high end -- 100G, 400G and beyond – and perhaps do less of what we've done before.Regarding mobile, there is a big opportunity in  upgrading the metro transport networks.  Over the years, we’ve made millions of VCSELs for core optical networking, and this will continue. However, there is another huge opportunity related to the use of our VCSELs in handsets for facial recognition.  In fact, we’re ramping up a new 700k square foot manufacturing facility  in Sherman, Texas to pursue this opportunity. As you and other members of the media have reported, we are building this facility with the support of a major customer who is already using facial recognition in smartphones.

Jim Carroll: Are there other applications that you anticipate for VCSEL technology?

Michael Hurlston: Sure, there are a number of really compelling possibilities, and we wouldn’t have begun construction of a factory this size if we didn't see multiple opportunities. Gaming is a clear winner.  Imagine if you could do really great gesture recognition. The same thing goes for virtual reality. We're also seeing applications in automotive. Think about advanced sensors in the cabin that are able to detect a driver falling asleep, or not paying attention to the road and an accident is about to happen. There could be applications in vehicle-to-vehicle communications, LiDAR, and other means of detecting objects like approaching vehicles using visual technology. Cool stuff.

Jim Carroll: Let’s jump back to data centers. We’ve talked a little about hyperscalers and their unique network designs. It looks like the industry is just on the cusp of making the next jump to 400G? How do you see that technology coming along, especially compared to the 100G transition?

Michael Hurlston: 400G is coming and people are thinking about it and preparing in different ways. Our view is that we'll probably see the first shipments of 400G at the end of 2019 and going into 2020. I think the transition will be similar to 100G, where we had some slowness in the beginning, perhaps slower than people anticipated. But then suddenly, there was a tidal wave of deployments as most of the hyperscalers converted from 40G to 100G.  I think this 400G transition is going to be very much along the same lines, where a slow ramp suddenly turns into a dramatic transition. But I'm not sure it's going to be 2019 or 2020 when that uptick will occur. More likely, you'll see the beginning of the curve in late 2019, and more of the meat of the curve in 2021 or 2022.

Jim Carroll: Tell us about the enabling technologies that have to come into play for 400G to really have legs. I mean, when you push 400G into a tiny little device, you've got the heat problem, you’ve got the difficulty of very tight fiber alignments. Don’t these impact the manufacturability of 400G devices, the yield?

Michael Hurlston: You've asked a valid question about the degree of difficulty in terms of manufacturing. What we’ve seen is that Chinese module manufacturing competitors have become very adept at 100G. At 400G, the challenge is much tougher. The optical alignments are going to become very difficult as the number of lasers goes up -- let's say, from four to eight, or in some instances, from two to eight.  Depending on what technology you're talking about, it becomes very challenging to couple the light into the fiber.. Finisar has the ability to differentiate because we’ve developed our own tools for optical alignment and as such, we are able to align optical sub-assemblies  properly with the fiber. We think we can deliver differentiation in that manufacturing process for 400G. One of the approaches here is silicon photonics, which has been talked about for quite some time and is one of our areas of R&D. I think we'll begin employing that more frequently in our future 400G products.

Jim Carroll: What do you think about on-board optics? Is it further out?

Michael Hurlston: Yes, I agree with what you just said, it is interesting but further out, at least in our view. I'm not sure we see it at the 400G node, but perhaps at 800G or terabit-class speeds. What's interesting here is that the interface now, between an optical transceiver package and a back plane, is going to cause loss. It's going to cause optical signal noise ratio issues, and a lot of other undesired effects. So people are talking about co- packaging, or bringing the optics right next to a switch or to a processor chip and, and eliminating some of the losses that happen in high frequency applications. We're looking at that challenge as well. I think the whole industry is. However, I don't think on-board optics happens at this transition, probably the next one.

Jim Carroll: To lead the optical components market you must be an R&D centered business. How important are industry partnerships to you? Where are your strategic alliances moving forward?

Michael Hurlston: This question really gets to the heart of our transition from the Finisar of the past 30 years to our vision for the future, which is really much around alliances and partnerships. Historically, we’ve believed in a heavy level of vertical integration, where almost everything in a Finisar optical transceiver came from Finisar. That has been an unbelievably good strategy for getting us to this point. But because of the way the market is changing, because of this diversity of opportunity, and because of specialization, we now must think carefully about where to invest in R&D and where to pursue partnerships.  It is a challenge to change any company’s culture, especially when it has been successful with one way of thinking. We are now looking for opportunities to partner-- whether that be in manufacturing, whether that be in supplying components, whether that be buying lasers outside, or whether it be in selling lasers to some of our competitors, as some of our competitors have begun to do -- all of these are new to Finisar, and I think we're going to be well served by shifting gradually to a less vertically integrated strategy and moving toward one more willing to partner. I know that we've hired some of the best R&D engineers on the planet; we're not number one by accident. But I think in certain instances, the dependency on everything happening in-house because of vertical integration, where our components have to line up with our manufacturing strategy – this can be a challenge.

Jim Carroll:  US-China trade tensions have been a concern this year. What are your thoughts?

Michael Hurlston: China is a very important market for us and a reasonable portion of our business. However, we don't have as much exposure as some of our competitors. One aspect of the Chinese market that is worth talking more about is wireless infrastructure and the coming 5G upgrade cycle. China definitely seems to be taking a lead here. We've got to figure out how to properly partner both with the telecom operators in China as well as the infrastructure suppliers, especially Huawei, ZTE, and Fiberhome.

Jim Carroll: A lot of consolidation is happening among optical vendors. Is getting bigger the best way to compete?

Michael Hurlston: The topic of industry consolidation comes up again and again.  I come from the semiconductor world and for the past five years, mergers & acquisitions has been the name of the game.  It became the new normal. We’ve seen huge companies doing roll ups -- and my former company (Broadcom) being one of the best at it.

I think the situation in this sector is much different because there is a fissure between the transceiver suppliers, the assemblers of goods, and the component companies.  Generally speaking, I think it's much more difficult to consolidate the optics industry than the semiconductor industry. With that said, there was a second part to your question, which was, is bigger better? Of course! I do think that that's true and getting our market valuation up is certainly task number one for me.  I seek to do that through organic moves and making sure we're driving our stock price up. But inorganically, we will look at things that could give us some more bulk.

Thursday, July 5, 2018

U.S. provides a temporary lift on exports to ZTE

The U.S. Department of Commerce's Bureau of Industry and Security (BIS) agreed to temporarily lift export restrictions to ZTE that were imposed on the company on 15-April-2018.

In a statement dated 02-July-2018, the BIS grants temporary authorization to engage in transactions with ZTE until 01-August-2018.

In June, at the urging of President Trump, BIS announced a deal with ZTE to lift the export restrictions in exchange for ZTE agreeing to pay a $1 billion fine and place an additional $400 million in suspended penalty money in escrow. ZTE has also replaced its entire board of directors and senior leadership team.

The ban on exports of U.S. technology to ZTE remains a hot topic in Washington. The U.S. Senate included a continued ban on exports to ZTE in a spending authorization bill for the U.S. Department of Defense. The U.S. House of Representative did not in its version of the legislation. The bills must now be reconciled before being sent to the President.

U.S. Senate's Defense Legislation hits ZTE

The U.S. Senate voted 85 to 10 to approve a $716 billion defense spending authorization bill that includes a provision extending the restriction on the export of U.S. technologies to ZTE. The provision is a rebuke to President Trump's decision to lift the ban against exports to ZTE. The Senate version of the defense spending authorization bill must be reconciled with the House version, which prohibits the federal government from purchasing ZTE products,...

ZTE resumes trading, seeks loan from Chinese banks

For the first time since April 16th, shares of ZTE resumed trading on the Hong Kong Stock Exchange. The shares were valued significantly lower than the previously listed price. ZTE also announced its intention to seek a 30 billion yuan ($4.9 billion) line of credit from Bank of China and a separate $6 billion credit line from China Development Bank. ZTE also informed the market that it has agreed to the settlement with the U.S. Department of Commerce...

U.S. reaches deal to save ZTE

The U.S. Department of Commerce announced a deal to allow the export of U.S. components and technology to ZTE, enabling the company to resume operations. Under the deal,  ZTE must pay $1 billion and place an additional $400 million in escrow. ZTE also agreed to certain provisions allowing monitoring of its compliance with U.S. export control laws. “Today, BIS (Bureau of Industry and Security) is imposing the largest penalty it has ever levied...

FWD: The death of ZTE

Zhongxing Telecommunication Equipment Corporation (ZTE), one of the world's largest suppliers of network infrastructure products, informed the Hong Kong Stock Exchange that "the major operating activities of the Company have ceased". 

If the notice means what we think it means, then ZTE is dead.

It took only 3 weeks from the day that the U.S. Commerce Department' Bureau of Industry and Security (BIS) issued its order prohibiting companies or individuals from participating in any way in an export transaction with ZTE for this multinational giant based in Shenzhen to collapse. I'm not sure there has been any other corporate collapse in the networking sector of this magnitude and in this accelerated time frame. The nearest comparison would be the collapse of Nortel in 2009, but that took years to occur rather than just weeks.

ZTE's website has already started to disappear. Many product, technology and news archive pages are now gone.

The most proximate reason for the death of the company is that without new deliveries of chipsets and optical components from U.S. vendors, the manufacturing lines for ZTE must have already come to a halt, leaving the company unable to ship products. Just-in-time manufacturing probably means that the company has insufficient inventory to sustain operations during a protracted appeal or legal fight with the U.S. Department of Commerce. More importantly, if the market has lost confidence, the sharks smell blood, and normal operations become impossible.

There will be a scramble amongst investors, creditors, employees, competitors, suppliers, and customers to secure whatever value remains in the organisation. There should be plenty.

Salvaging the good bits

First, there is a huge installed base of ZTE equipment worldwide in carrier networks, in data centres, in enterprise IT centres, and in home networks. The value of this equipment could be in the tens of billions if we take a cumulative count of sales over the last four years. These networks, which belong to the customers and their lenders, will need to be supported.  There is ongoing business here for someone.

ZTE holds the No.1 or No. 2 markets share position on many of the core infrastructure projects of the big three carriers in China -- China Mobile, China Telecom, and China Unicom.

All of ZTE's product segments were growing. Here are the 2017 annual growth rates:

  • Carrier networks  8.3%
  • Gov't and corporate  10.4%
  • Consumer 5.2%

Outside of China, ZTE has many current sales contracts and open purchase orders for new equipment, with good prospects of upcoming fibre broadband, 4G, 4G, and core network projects. 

ZTE has a very extensive telecom equipment portfolio, covering every sector of wireless networks, core networks, access & bearer networks, services and terminals. 

ZTE has been listed on the Shenzhen Stock Exchange since 1997 and on the Hong Kong Exchange since 2004. Trading has been suspended since April 16 and so there is no way to know quite yet if the shares are now worthless. The company's balance sheet at the end of 2017 showed RMB 31.647 billion in current assets, and the company's most recent statement said it was conserving cash.

ZTE has abundant in-house and contracted production facilities capable of manufacturing large volume of smartphones, customer premise equipment, and carrier infrastructure products. 

ZTE has many current and next-generation product designs using the latest silicon from U.S., Japanese, Korean, Taiwanese and other international suppliers. The product designs could be sold to other equipment suppliers.

ZTE has a considerable patent portfolio. ZTE claims to amongst the most prolific corporate patent filers in recent years. As of 30-June-2017, ZTE Group 68,000 patents, including 29,000 granted global patents.

As of mid-2017, the company was operating 20 R&D centres in China, the United States, Sweden, France, Japan and Canada, as well as more than 10 joint innovation centres established in association with leading carriers.

There is a talented pool of 74,773 employees (including 58,940 as employees of the parent company), with an average age of 33. Many of these employees have deep subject matter expertise, the vast majority of whom had nothing to do with the business decisions that got ZTE into trouble. 

ZTE was gearing up for a big play in 5G

At this year's  Mobile World Congress in Barcelona, ZTE captured the “Best Technology Innovation for 5G" award for its end-to-end vision encompassing the radio access network, the core network, bearer platforms, custom 5G silicon and CPE terminals. As with other suppliers, many of these are “works in progress” rather than commercially deployable solutions right now.

ZTE's has pushed hard on Massive MIMO, the antenna technology which has been shown to improve spectral efficiency up to 8 times.

It has been pioneering a multi-user shared access (MUSA) technology to effectively increase the number of connections served, and thereby enable support for scenarios involving mass connectivity with low power consumption. This could be extremely useful in very crowded areas, such as subway systems, when everyone is using their smartphone. The MUSA technology works by allowing high overload and eliminating scheduling operations, thereby increasing the number of connections by between 3- and 6-fold. It uses advanced spread spectrum sequence and SIC technology to simplify terminal implementation and help reduce energy consumption.

In the network core, ZTE is ready to commercialize end-to-end 5G network slicing. Its Cloud ServCore platform implements lightweight micro-service components to enable the network slices to operate independently and with easy scalability. This will allow IoT applications, for instance, to scale smoothly and without impacting other network slices.

ZTE is also readying a 5G Flexhaul bearer solution based on next-gen FlexE technology. Part of this vision to achieve a unified bearer network for 3G / 4G / 5G traffic. ZTE says its 5G Flexhaul achieves end-to-end protection switching time of less than 1ms, as well as single node forwarding latency of less than 0.5μs.

ZTE was a $20 billion company on the rise

Prior to receiving the death sentence for sanctions violations and lying to the U.S. government during a probationary period, ZTE was profitable and on a $20 billion per year sales run rate.

For Q1 2018, the company reported revenue of RMB 28.879 billion (US$5.548 billion), up 12% over the same period in 2017. Net profit after extraordinary items attributable to holders of ordinary shares of the listed company amounted to RMB 1.368 billion (US$216 million). For the full year 2017, ZTE reported operating revenue of RMB 108.82 billion, 7.49% higher than a year earlier,  

Net profit for 2017 was reported at RMB 4.55 billion, an increase of 293%. Net cash flow from operating activities for 2017 was approximately RMB 6.78 billion, about 28.88% year-on-year growth. This was a quite a recovery from 2016, when revenues grew just 4% and profits were lower. With booming handset sales in China, India and other developing markets, along with good prospects for 5G, things were looking pretty good for ZTE, until its troubles with the long-running exports violation case came to a head.

Big fine in 2017

ZTE's 2017 results were impacted by troubles with the U.S. government. In March 2017, ZTE made penalty payments of over US$1.19 billion to the U.S. government-- this too for the case involving the shipment of U.S.-origin technology to Iran during the period of economic sanctions. ZTE plead guilty in the case and paid the fine. It also agreed to a number of other conditions, which were not fulfilled, according to the U.S. Commerce Department, or which ZTE subsequently lied about. 

Huawei as the beneficiary? 

ZTE generates about 40% of its revenue abroad. 

We can surmise that many of the large carrier projects that ZTE currently has underway internationally will have been funded by the Bank of China,  the China Development Bank (CDB), or other government-backed, export/import financial institutions. These carrier customers are facing the prospect of suspended or canceled projects. This presents an opportunity for other network vendors to step in and capture the business. 

However, the customer would need to secure another funding source. Huawei is the most likely to be the ZTE replacement, especially if the Bank of China or CDB were to transfer project loans on their behalf. Ericsson, Nokia, Samsung and others also have an opening to entice these ZTE carrier customers with their offerings.

But what if Huawei is next?

However,  it is conceivable that the Trump administration will ratchet up the pressure on Huawei, for instance by extending all of parts of the ZTE export ban to them, or by persuading other governments to block Huawei as has been done in the U.S.. Many analysts expected that the ZTE ban was a bargaining chip in the recent, first round of trade negotiations between the U.S. and China. There was, and perhaps continues to be, hope that the order would be rescinded after the trade talks. This did not happen. Perhaps the trade tensions will get worse, with Huawei coming under pressure next.

With this possibility at hand, some large carriers in countries such as Japan, Germany or Singapore, may rethink their future plans with Chinese equipment vendors in general on critical projects so as not to face supply disruptions like we now see with ZTE. In Germany, Deutsche Telekom recently announced a 5G pilot deployment in Berlin using Huawei equipment. In the U.S., T-Mobile is prohibited from using Huawei as a supplier. With T-Mobile now seeking to merge with Sprint, U.S. regulators conceivably could require the German parent company to remove all Huawei gear from all of its networks as a condition for approving the merger. 

In other countries, there will be other geopolitical considerations. In Russia, ZTE has just clinched a 70% share of the first stage of  Rostelecom's the access network modernization project. ZTE's Multi-Service Access Network (MSAN) product delivers VDSL. Rostelcom is currently testing G.vectoring and for deployment in a second stage of its upgrade project. Rostelecom, of course, is Russia's leading broadband and pay-TV provider with over 12.7 million fixed-line broadband subscribers and over 9.7 million pay-TV subscribers, over 4.7 million of which are subscribed to its IPTV service. Given the need for Rostelcom to complete this network upgrade successfully, on-time and on budget, they will look for other suppliers.. but probably not from the U.S.

In India, ZTE is now a major supplier of low-cost smartphones and optical transmission gear. In October 2017, ZTE announced a 100G WDM Backbone Network Project and metro area network (MAN) construction contract with Idea Cellular, the third largest mobile operator in India with 189 million subscribers. With this deal, ZTE’s OTN optical transport platform captured a 95% share in the metro optical backbones that carry Idea Cellular’s traffic. ZTE has previously disclosed major contracts with Bharti Airtel as well. This success comes despite some protectionist voices in India warning against Chinese suppliers for critical network infrastructure.

Other recent contract wins include the Ooredoo Group, which serves 164 million customers across the Middle East, and South Africa based MTN. For Ooredoo Group, ZTE was expected to supply end-to-end networks, applications, and terminals in preparation for a 5G launch. MTN was also looking at deploying ZTE’s 5G NR radio access, 5G virtualized network slicing, carrier DevOps and container-based vEPC, and 5G Flexhaul bearer network.

The ZTE effect on suppliers

For those companies who were supplying chipsets, optical components, memories, display technologies, protocol stacks, etc. to ZTE, there will be a waiting game to see who takes up the slack. We can presume that the size and growth of the market will remain the same before and after this incident. If ZTE doesn't supply that core router, someone else will. 

What comes next?

The ZTE statement about ceasing normal activities holds out a glimmer of hope that the U.S. government might hear an appeal and grant a reprieve. Last week, U.S. trade negotiators visited China. Obviously, no deal occurred or ZTE would not have made its statement. 

Whatever comes next, it better happen quickly because sales contracts and talented employees will not stick around to what eventually emerges. The best people and ideas will move on to competitors or new ventures.

The most likely outcome is that ZTE individual business units are sold off, spun out, or otherwise reorganised into new corporate entities. In other words, the same cast of characters with the same products but operating under a new name.

See also