LightTrends Newsletter

Co-Packaged Optics (CPO) is the Icing on the Silicon Photonics Cake

May 2021

LightCounting releases a new edition of the May 2021 Integrated Optical Devices Report

Many in the industry have predicted that silicon photonics (SiP) will enable inexpensive, mass-produced optical connectivity, radically changing the optical components and modules industry. Forecasting the timing of such transitions is very challenging. Just like with many other radical changes, nothing seems to happen for a while until suddenly the change is here for everyone to see. We are at such an inflection point now in the adoption of SiP by the optical communications industry now.

The figure below shows our latest forecast for optical transceivers, AOCs, EOMs and CPO, illustrating the growing share of SiP-based products, starting with 2016. It does not show the prior 7-8 years of very slow adoption of this technology by the market, but you can see that the growth rate accelerated starting in 2018. It took more than 10 years for SiP to gain 25% market share, but we expect that it will surpass 50% by 2026. This forecast includes co-packaged optics (CPO) which will account for $0.8 billion in sales over the next 5 years. It is just a few percent of the almost $30 billion in sales of SiP-based products in 2021-2026, but it adds icing to the cake.

Global market for optical transceivers, AOCs, EOMs and CPO by technology

Why has the rate of adoption increased in 2018? First, Intel entered the market for 100GbE CWDM4 transceivers with SiP-based products and gained market share. Second, growth in Acacia's business slowed down in early 2018, but Huawei and ZTE started shipping coherent DWDM modules based on SiP. In our June 2020 report, we excluded modules make by equipment suppliers from our analysis, but since Acacia now is part of Cisco, we reversed this policy and it increased our estimates for sales of SiP products for the last 2-3 years.

 

We expect that SiP will continue to gain market share in 2021-2026. The customers want it and suppliers are ready to deliver. It took almost a decade for a majority of the customers to warm up to SiP technology and recognize the limitations of InP and GaAs optics in terms of speed, reliability and integration with CMOS electronics. Ease of integration with CMOS electronics is the key. It is obvious for the co-packaged optics, but it is an advantage for pluggable transceivers with PAM4 or coherent DSPs as well.

Acacia's latest high-speed coherent DWDM transceivers combine a SiP-based Photonic Integrated Circuit (PIC) with a CMOS-based DSP into a single 3D-stacked assembly, which also includes a modulator driver and TIA chips. The chips are interconnected by vertical copper pillars, to reduce the power losses on the RF connectors and increase speed.

When Broadcom announced its first switching ASICs to be equipped with co-packaged optics (named 'Humbolt' and 'Bailly') in January 2021, it also showed 800G pluggable transceivers based on PICs integrated with DSPs. It may take a while for the co-packaged optics to penetrate the market, but pluggable transceivers can take advantage of SiP PICs integrated with CMOS DSPs now.

New higher speed products, new suppliers and foundries, as well as optics co-packaged with switching ASICs - suggest that we are at the inflection point for SiP adoption. Broadcom's announcement from January 2021 was the last confirmation of the fact that SiP is changing the industry as we know it.

More information on the report is available at: www. LightCounting.com/products/IODMay2021

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