LightTrends

 

Growth in the Ethernet Market is Vital for Success of Silicon Photonics

 

LightCounting publishes a research note on changes in the forecast for Silicon Photonics products

 

 

LightCounting updated projections for sales of Ethernet and DWDM transceivers in our April 2017 forecast report. This research note summarizes how these changes impact forecast for products based on Silicon Photonics (SiP) technology. Refreshed database with detailed forecast for SiP products is now available along with our report on Integrated Optical Devices, published in January 2017.

While the expected share of SiP products in the total market, shown in the Figure below, has not changed significantly, the product mix is different, however, and the success of Silicon Photonics will be more dependent on Ethernet transceivers and less on DWDM modules.

Figure: Global Sales of Optical Transceivers by Technology


Source: LightCounting Market Research

Our projection for sales of Active Optical Cables (AOCs) and Embedded Optical Modules (EOMs) have not changed since we published our AOC-EOM Report in December 2016. Demand for AOCs in early 2017 is consistent with our forecast, but the EOM market was very slow in Q1 2017. We expect that Intel will start shipping SiP-based EOMs in 2018 to support its latest supercomputer project.

EOMs and co-packaged optics/ASICs were big topics at OFC 2017. Several such discussions were standing-room-only in very large rooms, with no shortage of differing opinions. Ayar Labs announced its first product – SiP-based EOMs that will be placed right next to complex ASICs, connecting it with network interface cards. The first chip will support 3.2 terabits of capacity. The advantage of SiP-based solutions is the ability to operate at high temperatures, which is critical for EOM applications. These developments support our long term forecast for SiP-based EOMs, despite current weakness in this market.

While SiP technology has proven it can compete in terms of technical performance, it is still an open question if it can put the optical components industry onto a different trajectory, towards sustainable profitability. The success of Acacia suggests that the answer may be yes, however, Acacia’s products are not really high volume and low cost. Acacia’s leadership in DSP technology is probably the main reason for its success and SiP may be just the icing on the cake. Luxtera remains a privately held company and does not disclose its financials, but we believe the company did well in 2016, and it is probably gaining share in the PSM4 segment now, judging from the Q1 2017 earnings report of Applied Optoelectronics. Interest to SiP technology from private equity firms suggests that Luxtera is still looking for more funding. We will have to wait and see.

Our upcoming State of the Industry Report will discuss the profitability of optical communications industry supply chain and recent changes in the market landscape. This report will be published on May 25th.

LightCounting subscribers can access the full version of the research note at: https://www.lightcounting.com/login.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.