Optical transceiver suppliers are having a tough profit, but there are still many companies that are entering this business. The transceiver market is made up of a variety of products that seem to offer different values to different types of suppliers: high-volume mature products are attractive to contract manufacturers and other suppliers willing to operate with modest profits; high-performance new products are Companies with strong R&D teams and chip design and manufacturing expertise offer opportunities; finding a balance between high volume and good profit seems to be the preferred strategy for all suppliers.
On the first day of OFC 2019, CIG announced the acquisition of Oclaro’s optical transceiver business from Lumentum. Jabil has demonstrated 100G DCO and ACO modules and may also plan to involve more in the future. Foxconn Interconnect Technologies acquired Avago’s transceiver business several years ago, and the company is now ready to regain its leadership in high-performance Ethernet modules.
Optical network equipment vendors that can achieve high profits in the software business also plan to enter the quagmire of the optical transceiver market. Juniper Networks announced the use of Aurrion’s silicon photonics technology acquired in 2016 to manufacture 100GbE and 400GbE modules internally. Ciena, Huawei and Infinera announced plans to introduce the 400ZR module before the launch of OFC, and at the show highlighted its growing investment in optical technology.
There are also new funds in the field of optics. Source Photonics announced a $100 million investment to open a new laser fab in mainland China and upgrade its plant in Taiwan to meet the needs of optical transceivers for data center and mobile forward applications. Hengtong Optoelectronics has invested an additional US$30 million in its partner silicon photonics engine developer Rockley Photonics to develop the 400G DR4 market.
2*2=4, but 4*100GbE and 2*200GbE are not equal to 400GbE
The live demonstration of the 400G module is scattered throughout the OFC showroom. There are also many network devices with 400G QSFP-DD or OSFP ports. More important interoperability demonstrations mean that PAM4 optical modules up to 100Gb/s per Lambda will be commercially available. The Ethernet Alliance conducted a large and complex interoperability demonstration that included a real-time 400GbE network spanning six booths.
All of this may indicate that a true 400GbE deployment is ready, but it is not. Finisar’s Chris Cole said there is a difference between the 400GbE port on the switch and the optical 400GbE port or transceiver plugged into the switch. For example, Broadcom’s Tomahawk 3 switch chip is designed to support 32 400GbE ports and can be used with 128 100GbE, 64 200GbE, 32 2x200GbE or 32 4x100GbE optical transceivers. However, these are not true 400GbE optical ports with 400GbE MAC. They are actually higher density 100GbE or 200GbE optical ports that are packaged together in a single module.
When Arista and Cisco predict that there will be millions of 400GbE port requirements in 2019-2020, optical transceiver vendors need to understand that they are not talking about 400GbE optics. Most 400GbE switch ports will actually support 100GbE or 200GbE interfaces for a while. Google is currently the only customer to use 2x200GbE optics. Amazon plans to deploy 4x100GbE optics in 2019 in a Break-out configuration, but these fiber connections will not carry 400GbE traffic.
The 400GbE SR4.2 FR4 and LR4 optical transceivers currently supporting the use of 400GbE MAC are only used to test 400GbE core routers and switches. The total shipments of these products are expected to reach 1 million units in 2022-2023 – three years later than the 400GbE ports on the switch. This is very important for optical transceiver manufacturers.
