According to Fierce Network, Nokia has a resource that everyone is vying for in the field of optical communication: lasers. This may help the company secure a place in the data center network. Nokia is already a well-known manufacturer in the scale across field, with coherent optical technology at its core, serving long-distance transmission and data center interconnection use cases. But Rob Shore, the head of marketing for Nokia’s network infrastructure optical network solutions, said that the company does not only rely on related solutions. He said that Nokia has recently expanded its manufacturing facility in San Jose and is doing the same for the factory it acquired from NXP in August; Nokia has no reason not to participate in any field involving lasers.

DSP accounts for 30-40% of pluggable power consumption

The report states that lasers appear in various network elements, including amplifiers; It is worth noting that lasers also appear in optical solutions built by manufacturers to address the challenges of scale up (chip to chip) and scale out (rack to rack) in data centers. When asked if Nokia is considering entering the scale out and scale up networks, the brief answer given by the report is: Yes, at least very likely. AI is driving data center networks to improve speed and reduce power consumption, which means shifting from relying on electrical digital signal processors (DSPs) for pluggable transceivers to solutions that integrate optics into switch enclosures. Dell’Oro Group research director Frank Yang told Fierce that 30% to 40% of the power consumption in pluggable modules is consumed by DSP, so removing DSP can improve efficiency, reduce power consumption, reduce cooling requirements, and help reduce costs and improve signal integrity. The alternatives to these old DSP technologies are a new round of optical solutions, including the Near Package Optical (NPO) solution where the optical engine is placed on the same board as the processor, and the Co Package Optical (CPO) solution where the optical engine is placed on the same silicon substrate.

There is no consensus on NPO and CPO

The report points out that so far, discussions around NPO and CPO have mostly focused on scale out applications. But as chip density increases, NPO and CPO may also be applied to scale up. Yang stated that current discussions on NPO and CPO around scale up are mostly focused on large-scale multi rack applications, but overall, scale out opportunities are currently clearer than scale up. The problem facing Nokia and the entire market is that there is no consensus on who will win, NPO or CPO. Nvidia seems to be betting on CPO. Shore stated that he expects CPO to be good for early adopters, but doubts its long-term feasibility. Yang stated that one of the advantages of NPO is that, due to its packaging method, certain components can be replaced in the event of a malfunction.

Nokia still needs to decide whether to only supply external lasers to the market or build a complete NPO or CPO solution. Shore stated that Nokia has not made many announcements in this field as it is still in the technical trial stage of NPO and CPO; For Nokia, the question is which solution is most meaningful to build. He said that whether Nokia builds an NPO solution, a CPO solution, or only provides an external laser source, it will gradually become clear; The company is researching these directions, and it can be said with certainty that Nokia will enter this market. Shore also stated that overall, he believes the market is more likely to move towards NPO rather than CPO, and Nokia will participate in it in some way.

Competitive landscape

According to reports, if Nokia advances this plan, it will face fierce competition. As an external laser supplier, it will compete with Lumentum, Coherent, and at least twenty Chinese suppliers. But Shore pointed out that given the strong demand for lasers, Nokia is more likely to expand the market rather than seize market share from others; He also mentioned that large-scale cloud providers in the United States may be unwilling to purchase from Chinese suppliers. In terms of NPO, Nokia may face a group of startups such as Lumentum, Coherent, Ciena, Cisco (through its Acacia assets), and Lightmatter.