LightTrends

 

Silicon Photonics' Share of Market Increases and Startup Funding Continues

 

LightCounting Releases the 2019 Edition of Integrated Optical Devices Forecast and Report 

 

The potential of photonic integration has captivated the optical communications industry for the last two decades, and it’s clear that integrated optical devices, especially those made using Silicon Photonics (SiP), are starting to win a significant share of the market. Sales of SiP-based products started to ramp in 2014 and in 2018 reached nearly $1 billion – 18% higher than in 2017. The sales are especially impressive considering that SiP products only account for one percent of transceiver shipments on a unit basis globally.

The successful development of products using silicon photonics (SiP) integration technology led to several mergers and high-value acquisitions in 2012-2018, and the majority of photonic integration startups funded over the last five years are also working on SiP technology. Apart from InnoLight, all optical components startups that made a successful exit employed SiP technology. These success stories will continue to attract investments to this area. Although 2019 is still young, Ayar Labs, Dust Photonics, Effect Photonics, Elenion, Ranovus, Rockley Photonics, and Roshmere have completed funding rounds in 2018-2019.

 It is worth noting that all high value acquisitions to date were made by switch and router vendors: Cisco, Juniper and Mellanox. This is because high-end switches and routers use a lot of high-speed optics: 100G today, 200G/400G in a year or two. It is very likely that 0.8-1.6 Tbps interfaces will become a reality in 5-10 years from now. Switches and routers are likely to be first network elements requiring these high data rate modules. The optics accounts for an increasingly large share of the total cost of switches and routers and is often a key design factor for next generation products. Having SiP technology in house could provide  an edge to equipment manufacturers in terms of lowering costs and time to market.

This was one of the reasons why Cisco purchased LightWire in 2012. Cisco needed more compact and power efficient 100G transceivers than CFPs for their new core router product and they were not sure if module vendors could produce next generation CFP2 and CFP4 transceivers in time for launching the router. Developing CPAK (comparable to CFP2) modules internally was Cisco’s insurance policy back in 2012-2013. Luxtera is their insurance policy for the future.

Longer-term benefits from having SiP technology in house include a potential integration of optical connectivity with processor or switching ASICs. Reducing power consumption of mega datacenters by a factor of 100 is the right objective for SiP technology.

Given the current momentum in commercial product success and startup funding, LightCounting expects sales of SiP-based integrated optics will increase significantly over the next five years, from around $1 billion in 2019 to more than $5 billion in 2024, with Ethernet devices accounting for most of the growth.


Figure: Projected sales of SiP-based integrated optics by segment


Source: LightCounting

Despite these gains in the market and investment funding, and the rosy forecast for growing sales, however, SiP is still a relative newcomer and it’s an open question whether SiP-based products will further replace those made from more mature indium phosphide (InP) and gallium arsenide (GaAs) materials, which have dominated the market over the last decade and already enable a variety of integrated products.

LightCounting’s recent report titled Integrated Optical Devices addresses the above issues in greater detail, as well as several others. The report also includes profiles of 14 suppliers of integrated optical devices, as well as forecast breaking down the optical transceiver market by integration technology (SiP, InP, and GaAs) and by level of integration (2X, 4X, and large scale), and by market segment (WDM, Ethernet, AOC-EOM, wireless, FTTX, and FibreChannel).  More information is available at https://www.lightcounting.com/Silicon.cfm.


About LightCounting Market Research 
LightCounting -- The name alone is what sets us apart and defines us as a company. We are a leading optical communications market research company, offering semi-annual market updates, forecasts, and state-of-the-industry reports based on analysis of primary research with dozens of leading optics component, module, and system vendors, as well as service providers and cloud companies. LightCounting is the optical communications market's source for accurate, detailed and relevant information necessary for doing business in today's highly competitive environment. Register to receive our monthly newsletter: LightCounting.com or connect with us on LinkedIn and Twitter.

Interested in meeting with LightCounting at these upcoming industry events? Email us today to schedule a meeting with our team. View our recently published reports and 2019 Research Roadmap.

About LightCounting Market Research 
LightCounting -- The name alone is what sets us apart and defines us as a company. We are a leading optical communications market research company, offering semi-annual market updates, forecasts, and state-of-the-industry reports based on analysis of primary research with dozens of leading optics component, module, and system vendors, as well as service providers and cloud companies. LightCounting is the optical communications market's source for accurate, detailed and relevant information necessary for doing business in today's highly competitive environment. Register to receive our monthly newsletter: LightCounting.com or connect with us on LinkedIn and Twitter.

Interested in meeting with LightCounting at these upcoming industry events? Email us today to schedule a meeting with our team. View our recently published reports and 2019 Research Roadmap.