NeoPhotonics to expand its tunable laser portfolio
Part 1: Tunable lasers
NeoPhotonics will become the industry's main supplier of narrow line-width tunable lasers for high-speed coherent systems once its US $17.5 million acquisition of Emcore's tunable laser business is completed. Gazettabyte spoke with Ferris Lipscomb of NeoPhotonics about Emcore's external cavity laser and the laser performance attributes needed for metro and long haul.
Key specifications and attributes of Emcore's external cavity laser and NeoPhotonics's DFB laser array. Source: NeoPhotonics.
Emcore and NeoPhotonics are leading suppliers of tunable lasers for the 100 Gigabit coherent market, according to market research firm Ovum. NeoPhotonics will gain Emcore's external cavity laser (ECL) on the completion of the deal, expected in January. The company will also gain Emcore's integrable tunable laser assembly (ITLA), micro ITLA, tunable XFP transceiver, tunable optical sub-assemblies, and 10, 40, 100 and 400 Gig integrated coherent transmitter products.
Emcore's ECL has a long history. Emcore acquired the laser when it bought Intel's optical platform division for $85 million in 2007, while Intel acquired the laser from New Focus in 2002 in a $50 million deal. Meanwhile, NeoPhotonics bought Santur's distributed feedback (DFB) tunable laser array in 2011 in a $39 million deal.
The two lasers satisfy different needs: Emcore's is suited for high-speed long distance transmission while NeoPhotonics's benefits metro and intermediate distances.
The Emcore laser uses mirrors and optics external to the gain medium to create the laser's relatively long cavity. This aids high-performance coherent systems as it results in a laser with a narrow line-width. Coherent detection uses a mixing technique borrowed from radio where an incoming signal is recovered by compared it with a local oscillator or tone. "The narrower the line-width, the more pure that tone is that you are comparing it to," says Lipscomb.
Source: NeoPhotonics
A narrower line-width also means less digital signal processing (DSP) is needed to resolve the ambiguity that results from that line-width, says Lipscomb: "And the more DSP power can be spent on either compensating fibre impairments or going further [distances], or compensating the higher-order modulation schemes which require more DSP power to disentangle."
The ECL has a narrow line-width that is specified at under 100kHz. "It is probably closer to 20kHz," says Lipscomb. One of the laser's drawbacks is that its uses a mechanical tuning mechanism that is relatively slow. It also has a lower output power of 16dBm compared to NeoPhotonics's DFB laser array that is up to 18dBm.
The metro market for 100 Gig coherent will emerge in volume towards the end of 2015 or early 2016
In contrast, NeoPhotonics' DFB laser array, suited to metro and intermediate reach applications, has a wider line-width specified at 300kHz, although 200kHz is typical. The DFB design comprises multiple lasers integrated compactly. The laser design also uses a MEMS that results in efficient coupling and the higher - 18dBm - output power. "Using the MEMS structure, you can integrate the laser with other indium phosphide or silicon photonics devices," says Lipscomb. "That is a little bit harder to do with the Emcore device."
Source: NeoPhotonics
It is the compactness and higher power of the DFB laser array that makes it suited to metro networks. The higher output power means that one laser can be used for both transmission and the local oscillator used to recover the received coherent signal. "More power can be good if you can live with the broader line-width," says Lipscomb. "It reduces overall system cost and can support higher-order modulation schemes over shorter distances."
Market opportunities
NeoPhotonics' focus is on narrow line-width lasers for coherent systems operating at 100 Gigabit and greater speeds. Lipscomb says the metro market for 100 Gig coherent will emerge in volume towards the end of 2015 or early 2016. "The distance here is less and therefore less compensation is needed and a little bit more line-width is tolerable," he says. "Also cost is an issue and a more integrated product can have potentially a lower cost."
For long haul, and especially at transmission rates of 200 and 400 Gig, the demands placed on the DSP are considerable. This is where Emcore's laser, with is narrow line-width, is most suited.
System vendors are already investigating 400 Gig and above transmission speeds. "For the high-end, line-width is going to be a critical factor," says Lipscomb. "Whatever modulation schemes there are to do the higher speeds, they are going to be the most demanding of laser performance."
For Part 2: Is the tunable laser market set for an upturn? click here
Oclaro-Opnext merger will create second largest optical component company
Oclaro has announced its plan to merge with Opnext. The deal, valued at US $177M, will result in Opnext's shareholders owning 42% of the combined company. The merger of the fifth and sixth largest optical component players, according to Ovum, will create a company with annual revenues of $800M, second only to Finisar. The deal is expected to be completed in the next 3-6 months.
Source: Gazettabyte
Other details of the merger include:
- Combining the two companies will save between $35M-45M but will take 18 months to achieve.
- Restructuring and system integration will cost $20M-$30M.
- All five of the new company's fabs will be kept. The fabs are viewed as key assets.
- The new company will continue its use of contract manufacturers in Asia. Oclaro announced a recent deal with Venture, and that included the possibility of an Oclaro-Opnext merger.
- Oclaro's CEO, Alain Couder, will become the CEO of the new company. Harry Bosco, Opnext's CEO, will join the company's board of directors, made up of six Oclaro and four Opnext members.
- In 4Q 2011, Oclaro reported three customers, each accounting for greater than 10% sales: Fujitsu, Infinera and Ciena. Opnext reported 43% of its sales to Cisco Systems and Hitachi in the same period.
Industry scale
The motivation for the merger is to achieve industry scale, says Oclaro. "We have never been shy [of mergers and acquisitions] - we did Avanex and Bookham," says Yves LeMaitre, chief marketing officer for Oclaro. "We believe industry scale allows you to absorb certain fixed costs like fab infrastructure and the sales force." Scale also increases the absolute amount that can be invested in R&D, estimated at 12-13% of its revenues.
"It [the acquisition] is really about building a company that directly competes with Finisar," says Daryl Inniss, practice leader, components at Ovum. "It creates a stronger, vertically integrated company that starts at chips and goes all the way to the line card."
"We will be one of the most vertically integrated suppliers for 100 Gigabit coherent technology"
Mike Chan, Opnext
LightCounting believes the Oclaro-Opnext merger will be a success. Moreover, the market research firm expects further optical component M&As. Since the Oclaro-Opnext was announced, Sumitomo Electric Device Innovations has announced it will acquire Emcore's VCSEL and associated transceiver technology for $17M.
Meanwhile, Morgan Stanley Research is less positive about the merger, believing that the Opnext acquisition carries 'material risk'. It argues that the stated synergies are aggressive and that the integration of the two firms could distract Oclaro and lower its share price.
Products and technology
The deal expands Oclaro's transceiver portfolio, enhancing its offerings in telecom and strengthening its presence in datacom. It also expands the customer base: Opnext supplies Juniper, Google and H-P, new customers for Oclaro.
Common products shared by the two firms are limited, for high-end products the overlap is mainly 100 Gigabit coherent and tunable laser XFPs. LightCounting also points out that the two share some legacy SONET/SDH, WDM and Ethernet products: "Nothing that reduces competition significantly," it says in a research note.
"[With the Avanex-Bookham merger] There was a little bit of overlap in a few areas which we managed," says Oclaro's LeMaitre. "It is even easier in this case."
"We see potential, further down the road, for new very-short-reach optical interfaces"
Yves LeMaitre, Oclaro
Opnext acquired optical transmission subsystem vendor StrataLight in 2009 while Oclaro acquired Mintera in 2010. Both Oclaro and Opnext have used the expertise of the two subsystem vendors to become early market entrants of 100 Gigabit 168-pin multi-source modules.
But Oclaro makes the optical components for the modules - tunable lasers, lithium niobate modulators and integrated coherent transceivers - items that Opnext has to buy for its 100 Gig coherent module, says Ovum's Inniss: "Opnext has built decent gross margins when you consider that a lot of the optics they don't own themselves.” Oclaro's components will be used within Opnext's modules.
"We will be one of the most vertically integrated suppliers for key 100 Gigabit coherent technology moving forward," says Mike Chan, executive vice president of business development and marketing at Opnext.
Opnext stresses that it has its own programmes for integrated photonics. "We have been telling our customers that we have been working on some of these integrated photonics [for 100G coherent]," says Chan. "The StrataLight portion of Opnext also has a lot of work done, and IP created, in the coherent modem area."
Currently both companies' 100 Gigabit modules use NEL's coherent receiver DSP-ASIC. Oclaro has also made an investment in coherent chip start-up, ClariPhy. But for future coherent adaptive-rate designs, the joint company will be able to develop its own coherent chip. "We have the in-house know-how for the coherent modem chip," says Chan.
The merged company is well positioned to address client-side 100 Gigabit-ber-second (Gbps) transceivers. "Here the challenge is to achieve high density and low power [interfaces]," says Chan. Oclaro has VCSEL technology that can be used for very short reach 4x28Gbps arrays. Oclaro says it is the world's leading supplier of VCSELs for a variety of commercial applications and has now shipped over 150M units.
At OFC/NFOEC Opnext demonstrated a 1310nm LISEL (Lens-integrated Surface-Emitting distributed feedback Laser) array operating at 25-40Gbps. The surface-emitting distributed feedback (DFB) laser can also be used for the same 4x28Gbps design, says Chan. "Within the data centre 500m is the sweet-spot," says Chan. "It is not just the physical distance but the link-budget as the signal may have to go through a patch panel." The DFB can be used with multi-mode and single-mode fibre and Opnext believes it can achieve a 1km reach.
Oclaro does not rule out using its VCSEL technology to address such applications as optical engines, connecting racks and for backplanes. "We see potential, further down the road, for new very-short-reach optical interfaces into consumer, backplane, and board-to-board to really expand our addressable market," says LeMaitre
Further mergers
LightCounting argues that the 2011 floods in Thailand have added urgency to industry consolidation, with the Oclaro and Opnext merger being the first of several. Oclaro and Opnext were among the most impacted by the flood with Q4 2011 revenues being down 18% and 38%, respectively, says LightCounting.
Ovum also expects further mergers as companies strengthen their coherent and ROADM technologies.
Inniss believes ROADMs is the next area that Oclaro is likely to strengthen. Oclaro has acquired Xtellus but Ovum says the main ROADM leaders are Finisar, JDS Uniphase and CoAdna. Companies to watch include JDS Uniphase, Fujitsu Optical Components, CoAdna and Sumitomo, says Inniss.
A day after Ovum's and LightCounting's M&A comments, Sumitomo announced the acquisition of Emcore's VCSEL business unit.