Nokia will become the latest systems vendor to bolster its silicon photonics expertise with the acquisition of Elenion Technologies.
The deal for Elenion, a privately-held company, is expected to be completed this quarter, subject to regulatory approval. No fee has been disclosed.
Kyle Hollasch
“If you look at the vertically-integrated [systems] vendors, they captured the lion’s share of the optical coherent marketplace,” says Kyle Hollasch, director of optical networking product marketing at Nokia. “But the coherent marketplace is shifting to pluggables and it is shifting to more integration; we can’t afford to be left behind.”
Elenion Technologies
Elenion started in mid-2014, with a focus of using silicon as a platform for photonics. “We consider ourselves more of a semiconductor company than an optics company,” says Larry Schwerin, CEO of Elenion.
Elenion makes photonic engines and chipsets and is not an optical module company. “We then use the embedded ecosystem to offer up solutions,” says Schwerin. “That is how we approach the marketplace.”
The company has developed a process design kit (PDK) for photonics and has built a library of circuits that it uses for its designs and custom solutions for customers.
A PDK is a semiconductor industry concept that allows circuit designers to develop complex integrated circuits without worrying about the underlying transistor physics. Adhering to the PDK ensures the circuit design is manufacturable at a chip fabrication plant (fab).
But developing a PDK for optics is tricky. How the PDK is designed and developed must be carefully thought through, as has the manufacturing process, says Elenion.
Larry Schwerin
“We got started on a process and developed a library,” says Larry Schwerin, CEO of Elenion. “And we modelled ourselves on the hyperscale innovation cycle, priding ourselves that we could get down to less than three years for new products to come out.”
The “embedded ecosystem” Elenion refers to involves close relationships with companies such as Jabil to benefit from semiconductor assembly test and packaging techniques. Other partnerships include Molex and webscale player, Alibaba.
Elenion initially focussed on coherent optics, providing its CSTAR coherent device that supports 100- and 200-gigabit transmissions to Jabil for a CFP2-DCO pluggable module. Other customers also use the design, mostly for CFP2-DCO modules.
The company has now developed a third-generation coherent design, dubbed CSTAR ZR, for 400ZR optics. The optical engine can operate up to 600 gigabits-per-second (Gbps), says Elenion.
Elenion’s work with the cloud arm of Alibaba covers 400-gigabit DR4 client-side optics as well as an 800-gigabit design.
Alibaba Cloud has said the joint technology development with Elenion and Hisense Broadband covers all the production stages: the design, packaging and testing of the silicon photonics chip followed by the design, packaging, assembly and testing of the resulting optical module.
Bringing optics in-house
With the acquisition of Elenion, Nokia becomes the latest systems vendors to buy a silicon photonics specialist.
Cisco Systems acquired Lightwire in 2012 that enabled it to launch the CPAK, a 100-gigabit optical module, a year ahead of its rivals. Cisco went on another silicon photonics shopping spree more recently with the acquisition of Luxtera in 2019, and it is the process of acquiring leading merchant coherent player, Acacia Communications.
In 2013 Huawei bought the Belgium silicon photonics start-up, Caliopa, while Mellanox Technologies acquired silicon photonics firm, Kotura, although subsequently, it disbanded its silicon photonics arm.
Ciena bought the silicon-photonics arm of Teraxion in 2016 and, in the same year, Juniper bought silicon photonics start-up, Aurrion Technologies.
Markets
Nokia highlights several markets - 5G, cloud and data centres - where optics is undergoing rapid change and where the system vendor’s designs will benefit from Elenion’s expertise.
“5G is a pretty obvious one; a significant portion of our optical business over the last two years has been mobile front-haul,” says Nokia’s Hollasch. “And that is only going to become more significant with 5G.”
Front-haul is optics-dependent and requires new pluggable form factors supporting lower data rates such as 25Gbps and 100Gbps. “This is the new frontier for coherent,” says Hollasch.
Nokia is not looking to be an optical module provider, at least for now. “That one we are treading cautiously,” says Hollasch. “We, ourselves, are quite a massive customer [of optics] which gives us some built-in scale straight away but our go-to-market [strategy] is still to be determined.”
Not being a module provider, adds Schwerin, means that Nokia doesn’t have to come out with modules to capitalise on what Elenion has been doing.
Nokia says both silicon photonics and indium phosphide will play a role for its coherent optical designs. Nokia also has its own coherent digital signal processors (DSPs).
“There is an increasingly widening application space for silicon photonics,” says Hollasch. “Initially, silicon photonics was looked at for the data centre and then strictly for metro [networks]; I don’t think that is the case anymore.”
Why sell?
Schwerin says the company was pragmatic when it came to being sold. Elenion wasn’t looking to be acquired and the idea of a deal came from Nokia. But once the dialogue started, the deal took shape.
“The industry is in a tumultuous state and from a standpoint of scenario planning, there are multiple dynamics afoot,” says Schwerin.
As the company has grown and started working with larger players including webscales, their requirements have become more demanding.
“As you get more into bigs, they require big,” says Schwerin. “They want supply assurance, and network indemnification clauses come into play.” The need to innovate is also constant and that means continual investment.
“When you weigh it all up, this deal makes sense,” he says.
Schwerin laughs when asked what he plans to do next: “I know what my wife wants me to do.
“I will be going with this organisation for a short while at least,” he says. “You have to make sure things go well in the absorption process involving big companies and little companies.”