The Unchartered Territory: Innovation and Optical Networks 2.0

Lightcounting Releases a research note on huawei analyst summit held in April 2019



Innovation 2.0

Huawei’s 16th annual analyst summit, held in Shenzhen last week, was designed to impress and it definitely delivered. It was hard not to be impressed by a record number of 750 attendees, security screening at the entrance to the venue for keynote presentations by top management, and more importantly by the company’s very ambitious plans for the future.

Huawei’s ambitions extend far beyond dominating the global market for telecom networking equipment, challenging Apple and Samsung in the market for smartphones or Cisco in enterprise networks. The new goal is to become the global leader in technological innovation and bring new disruptive technologies to the market. The company’s Innovation 2.0 strategy prioritizes vision-driven innovation rather than customer-driven.

Security concerns

A question on the security of networking infrastructure came up during the Q&A session after the keynote presentations and Ken Hu, Huawei’s rotating Chairman, handled it very well. He stated that the security of communications infrastructure is a complex technical challenge that requires a coordinated, systematic approach for finding a solution. He pointed to the danger of making these concerns into a political issue and making decisions based of feelings rather than facts.

During his keynote presentation, Mr. Hu commented that new standards for network security have to be developed and verification mechanisms have to be agreed on by all vendors. He pointed out that Huawei and the European Union are taking a lead in this process and he expects that other vendors and countries will join.


5G is coming sooner than expected

Huawei reported a 20% increase in revenues for 2018, but their carrier business segment sales declined by 1.3% last year. The company expects this segment to return to growth in 2019, driven by new investments in 5G infrastructure.

Hr. Hu commented that Huawei is involved in the construction of forty 5G networks as of April 2019. Six of those networks are in the Asia Pacific region, ten are in the Middle East, and 23 are in Europe.

5G deployments will have a direct impact of demand for optical transceivers in 2019 and China Mobile will be the primary user of them. Many of these modules will be manufactured by Huawei. LightCounting’s latest forecast for 25G and 50G wireless fronthaul and midhaul transceiver sales of merchant suppliers, will be released in the end of April as part of Optical Communications Market Forecast Report.

Optical networking 2.0

Huawei’s strategy for optical networking includes continuing improvements in fiber bandwidth utilization, optimizing product performance while reducing power consumption and transitioning from reactive to predictive network operation and management. AI is expected to play a critical role in network management in the future, but current capabilities include relatively basic functions, such as latency maps and fault diagnostics.

Huawei’s latest oDSP technology (OptiXtreme) supports 200G DWDM CFP modules, using G6 chips, and 600G DWDM modules, equipped with H6 chips. Next generation G7 and H7 oDSP chips (based on 7nm technology) will be available in H2 2019 and H1 2020, respectively. The first one will enable lower power consumption pluggable modules and the second one will be used for data rates up to 800G per wavelength, as shown in Figure.

Figure: Evolution of oDSP technology at Huawei

Improvements in fiber bandwidth utilization include transition to higher data rates, enabled by new optimized digital signal processing (oDSP) chips and offering more DWDM channels by extending the operating spectral range to a 50% wider “Super C” band. Network operation across the Super C band is enabled by internally made EDFA amplifiers and widely tunable lasers, which helps to add 50% more spectrum in to current fiber comparing with traditional C band.

The increasing number of optical components and modules manufactured by Huawei internally is not good news for merchant suppliers of these products. LightCounting accounted for this trend in forecasts for DWDM transponders and the forthcoming Market Forecast Report ¬†will address the impact of Huawei’s internal capabilities on the global market for tunable lasers and WSS modules as well.

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