Silicon Photonics Sets a New Record in 2016
LightCounting releases a report titled “Integrated Optical Devices: Is Silicon Photonics a Disruptive Technology?”
Many in the industry have predicted that Silicon Photonics (SiP) will enable inexpensive, massively produced optical connectivity, radically changing the optical components and modules industry. Our analysis suggests this will not happen in the next 3-5 years, but SiP technology may prove to be disruptive over the next decade. Integration of SiP-based optical connectivity with electronic ASICs, optical switching and possibly new quantum computing devices could open a wide new frontier for innovation.
Sales of SiP-based optical transceivers exceeded $600 million in 2016, doubling from the previous year. This new technology had its greatest success in 40GbE/100GbE and 100G DWDM markets, as Acacia and Luxtera continued to ramp production volumes and Intel entered the market. Progress made by SiP accelerated innovation in the more established InP and GaAs manufacturing platforms. Competition between these technologies will be fierce in the next 5 years. There is not a single SiP-based product that does not have an alternative made using InP and GaAs optics.
Contrary to expectations for an abrupt market disruption, our analysis suggests that SiP technology will gradually gain market share and sales of these products will exceed $2 billion by 2022, accounting for more than 20% of the global optical transceiver market. The contribution of SiP to the optical transceiver market in terms of number of units shipped will remain below 2.5% of the total even by 2022. The majority of these products will be high-end devices, operating at 100G or above and priced accordingly.
This seems to contradict the expectations of many industry experts that SiP will enable inexpensive, massively produced optical connectivity and displace established InP and GaAs platforms. However, if the main advantage of SiP is integration, this technology is most suitable for complex high-end devices that require a lot of integration, defined as large scale (LS) integration in this report. The majority of discrete, 2x and 4x integrated products (which combine 2 or 4 optical functions into a single transmitter or receiver) will continue to rely on InP and GaAs technologies for the next decade or two.
If SiP technology can offer new functionality, that can not be achieved with InP or GaAs, it will prove to be truly disruptive. Integrating optical connectivity with ASIC chips may enable new functionality. Adding SiP-based optical switching or quantum computing to the mix makes it even more interesting, but there may also be something else, that we are not aware of yet.
Forecasting technological disruptions is probably just as hard as predicting earthquakes. Being prepared seems to be the only practical solution. Even a distant possibility of a disruption justified $270 million investment into SiP technology made by Cisco in 2012, which was then followed by several other equipment vendors. Optical integration start-ups continue to raise funding and all established component and module suppliers have SiP technology on their roadmap. The chances for success of these efforts are real and no vendor can afford to ignore the possibility of a disruption.
For more information on the report, please go to http://www.LightCounting.com/Silicon.cfm
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LightCounting is a leading optical communications market research company, offering semiannual market updates, forecasts, and state-of-the-industry reports based on its analysis of primary research with dozens of leading module, component, and system vendors as well as service providers and other users. LightCounting is the optical communications market’s first choice source for the accurate, detailed, and relevant information necessary for doing business in today’s highly competitive environment. For more information, visit: www.LightCounting.com or follow us on Twitter at @LightCounting.