Talking markets: Oclaro on 100 gigabits and beyond

Oclaro’s chief commercial officer, Adam Carter, discusses the 100-gigabit market, optical module trends, silicon photonics, and why this is a good time to be an optical component maker.

Oclaro has started its first quarter 2017 fiscal results as it ended fiscal year 2016 with another record quarter. The company reported revenues of $136 million in the quarter ending in September, 8 percent sequential growth and the company's fifth consecutive quarter of 7 percent or greater revenue growth.

Adam CarterA large part of Oclaro’s growth was due to strong demand for 100 gigabits across the company’s optical module and component portfolio.

The company has been supplying 100-gigabit client-side optics using the CFP, CFP2 and CFP4 pluggable form factors for a while. “What we saw in June was the first real production ramp of our CFP2-ACO [coherent] module,” says Adam Carter, chief commercial officer at Oclaro. “We have transferred all that manufacturing over to Asia now.”

The CFP2-ACO is being used predominantly for data centre interconnect applications. But Oclaro has also seen first orders from system vendors that are supplying US communications service provider Verizon for its metro buildout.

The company is also seeing strong demand for components from China. “The China market for 100 gigabits has really grown in the last year and we expect it to be pretty stable going forward,” says Carter. LightCounting Market Research in its latest optical market forecast report highlights the importance of China’s 100-gigabit market. China’s massive deployments of FTTx and wireless front haul optics fuelled growth in 2011 to 2015, says LightCounting, but this year it is demand for 100-gigabit dense wavelength-division multiplexing and 100 Gigabit Ethernet optics that is increasing China’s share of the global market.

The China market for 100 gigabits has really grown in the last year and we expect it to be pretty stable going forward 

QSFP28 modules

Oclaro is also providing 100-gigabit QSFP28 pluggables for the data centre, in particular, the 100-gigabit PSM4 parallel single-mode module and the 100-gigabit CWDM4 based on wavelength-division multiplexing technology.

2016 was expected to be the year these 100-gigabit optical modules for the data centre would take off.  “It has not contributed a huge amount to date but it will start kicking in now,” says Carter. “We always signalled that it would pick up around June.”

One reason why it has taken time for the market for the 100-gigabit QSFP28 modules to take off is the investment needed to ramp manufacturing capacity to meet the demand. “The sheer volume of these modules that will be needed for one of these new big data centres is vast,” says Carter. “Everyone uses similar [manufacturing] equipment and goes to the same suppliers, so bringing in extra capacity has long lead times as well.”

Once a large-scale data centre is fully equipped and powered, it generates instant profit for an Internet content provider. “This is very rapid adoption; the instant monetisation of capital expenditure,” says Carter. “This is a very different scenario from where we were five to ten years ago with the telecom service providers."

Data centre servers and their increasing interface speed to leaf switches are what will drive module rates beyond 100 gigabits, says Carter. Ten Gigabit Ethernet links will be followed by 25 and 50 Gigabit Ethernet. “The lifecycle you have seen at the lower speeds [1 Gigabit and 10 Gigabit] is definitely being shrunk,” says Carter.

Such new speeds will spur 400-gigabit links between the data centre's leaf and spine switches, and between the spine switches. “Two hundred Gigabit Ethernet may be an intermediate step but I’m not sure if that is going to be a big volume or a niche for first movers,” says Carter. 

400 gigabit CFP8

Oclaro showed a prototype 400-gigabit module in a CFP8 module at the recent ECOC show in September.  The demonstrator is an 8-by-50 gigabit design using 25 gigabaud optics and PAM-4 modulation. The module implements the 400Gbase-LR8 10km standard using eight 1310nm distributed feedback lasers, each with an integrated electro-absorption modulator. The design also uses two 4-wide photo-detector arrays.

“We are using the four lasers we use for the CWDM4 100-gigabit design and we can show we have the other four [wavelength] lasers as well,” says Carter.

Carter says IP core routers will be the main application for the 400Gbase-LR8 module. The company is not yet saying when the 400-gigabit CFP8 module will be generally available. 

We can definitely see the CFP2-ACO could support 400 gigabits and above

Coherent

Oclaro is already working with equipment customers to increase the line-side interface density on the front panel of their equipment. 

The Optical Internetworking Forum (OIF) has already started work on the CFP8-ACO that will be able to support up to four wavelengths, each supporting up to 400 gigabits. But Carter says Oclaro is working with customers to see how the line-side capacity of the CFP2-ACO can be advanced. “We can definitely see the CFP2-ACO could support 400 gigabits and above,” says Carter. “We are working with customers as to what that looks like and what the schedule will be.”

And there are two other pluggable form factors smaller than the CFP2: the CFP4 and the QSFP28. “Will you get 400 gigabits in a QSFP28? Time will tell, although there is still more work to be done around the technology building blocks,” says Carter. 

Vendors are seeking the highest aggregate front panel density, he says: “The higher aggregate bandwidth we are hearing about is 2 terabits but there is a need to potentially going to 3.2 and 4.8 terabits.”

Silicon photonics

Oclaro says it continues to watch closely silicon photonics and to question whether it is a technology that can be brought in-house. But issues remain. “This industry has always used different technologies and everything still needs light to work which means the basic III-V [compound semiconductor] lasers,” says Carter.

“Producing silicon photonics chips versus producing packaged products that meet various industry standards and specifications are still pretty challenging to do in high volume,” says Carter.  And integration can be done using either silicon photonics or indium phosphide.  “My feeling is that the technologies will co-exist,” says Carter.