NeoPhotonics secures PIC specialist Santur
NeoPhotonics has completed the acquisition of Santur, the tunable laser and photonic integration specialist, boosting the company's annual turnover to a quarter of a billion dollars.
Source: Gazettabyte
The acquisition helps NeoPhotonics become a stronger, vertically integrated transponder supplier. In particular, it broadens NeoPhotonics’ 40 and 100 Gigabit-per-second (Gbps) component portfolio, turns the company into a leading provider of tunable lasers and enhances its photonic integration expertise.
“Our business over a number of years has grown as the importance of photonic integrated circuits and the products deriving from them have grown,” says Tim Jenks, CEO of NeoPhotonics. “We believe it is a critical part of the network architecture today and going forward.”
Some US $39.2M in cash has been paid for Santur, and could be up to $7.5M more depending on Santur’s products' market performance over the next year.
NeoPhotonics has largely focussed on telecom but Jenks admits it is broadening its offerings. “Certainly a very significant portion of fibre-optic components are consumed in data and storage, and while historically that has not been a significant part of NeoPhotonics, it is a large and important market overall,” says Jenks.
"It [optical components] portends the future of the technology industry"
Tim Jenks, NeoPhotonics
The company will continue to address telecom but will add products to additional segments, including datacom. In July, the company announced its first CFP module supporting the 40 Gigabit Ethernet (GbE) 40GBASE-LR4 standard. Santur also supplies 40Gbps and 100Gbps 10km transceivers, in QSFP and CFP form factors, respectively.
Santur made its name as a tunable laser supplier and is estimated to have a 50% market share, according to Ovum. More recently it has developed arrays of 10Gbps transmitters. Such photonic integrated circuits (PICs) are used for the 10x10 multi-source agreement (MSA).
The acquisition complements NeoPhotonics’ 40Gbps and 100Gbps integrated indium-phosphide receiver components, enabling the company to provide the various optical components needed for 40 and 100Gbps modules. Santur also has narrow line-width tunable laser technology used at the coherent transmitter and receiver. But Jenks confirms that the company has not announced a transmitter at 28Gbps using this narrow line-width laser.
10x10 MSA
Santur has been a key player in the 10x10 MSA, developed as a low cost competitor to the IEEE 100 Gigabit Ethernet (GbE) 10km 100GBASE-LR4 and 40km -ER4 standards.
Large content service providers such as Google want cheaper 100GbE interfaces and the 10x10 MSA module, built using 10x10Gbps electrical and optical interfaces, is approximately half the cost of the IEEE interfaces.
"There is an opportunity with the 10x10 MSA," says Jenks. "The 10x10 does not require the gearbox IC, it is therefore lower cost and lower power, and fulfills a need that a 4x25Gig, with a rather immature technology and a requirement for a gearbox IC, does not."
In August the 10x10 MSA announced further specifications: a 10km version of the 10x10 MSA as well as two 40km-reach WDM interfaces: a 4x10x10Gbps and an 8x10x10Gbps. "There are end users that want to use these," says Jenks.
“The ability for a system vendor to lead is a challenging task. For a system vendor to lead and simultaneous lead in developing their componentry is a daunting task.”
Acquisitions
NeoPhotonics has made several acquisitions over the years, including four in 2006 (see chart). But Santur's revenues - some $50m - are larger than the aggregated revenues of all the previous acquisitions.
"I think of acquisitions as being inorganic for maybe two years and after that they are all organic," says Jenks. The acquisitions have helped NeoPhotonics broaden its technologies, strengthen the company's know-how and acquire customers and relationships.
“If someone says what did you do with this product from that company, they are asking the wrong question,” says Jenks. “By the law of averages, some [acquisitions] do better, some do worse but overall it has been quite successful.”
System vendors and vertical integration
Jenks says he is aware of system vendors taking steps to develop components and technology in-house but he does not believe this will change the primary role of the component vendors.
"Equipment vendors are building some things in-house for a near-term cost advantage, better insights into cost of production or better insights in how the technology can go,” says Jenks. “All reasons to have some form of vertical integration.”
But in technology leadership, no one company has a monopoly of talent. As such vertical integration is a double-edged sword, he says, a company can become quite expert but it can also isolate itself from what the rest of the world is doing.
“The ability for a system vendor to lead is a challenging task,” says Jenks. “For a system vendor to lead, and simultaneous lead in developing their componentry, is a daunting task.”
The world is flat
Jenks, whose background is in mechanical and nuclear engineering, highlights two aspects that strike him about the optical component industry.
One is that telecoms is ubiquitous and because optical components go into telecoms, optical components is a global industry. "The world is very flat in optical components,” he says.
Second, the hurdles to undertake experiments in optical components is lower than the significant capital investment needed for nuclear engineering, for example. "Colleges and universities turn out graduates in physics and electrical engineering that are well trained and need a lighter physical plant,” says Jenks. This aspect of the education promotes a globally diverse and a rather 'flat' industry.
“When I go to a trade show in China, Europe or the US, I'm running into colleagues from the industry that I know from each country we do business, and that is a lot of countries,” he says.
All this, for Jenks, makes optical components a fascinating industry, one that is on the leading edge of technology and also industrial trend.
"It [optical components] portends the future of the technology industry: flatter and flatter with more global players and more global competition," says Jenks. “At the moment it is novel in optical components but in a few years' time it won't be unique to optical components.”
NeoPhotonics at a glance
The company segments its revenues into the areas of speed and agility (10-100Gbps products, planar lightwave circuits - ROADMs, arrayed waveguide gratings), access (FTTh, cable TV, wireless backhaul) and SDH and slow-speed DWDM, products designed 3-5 years ago.
Historically these three segments' revenues have been equal but this year the access business has been larger, accounting for 40% of revenues due to China's huge FTTx rollout.
Huawei is NeoPhotonics' largest customer. “They have been as much as half our revenue," says Jenks. And depending on the quarter, Ciena and Alcatel-Lucent have been reported as 10% customers.
Google and the optical component industry
According to a report by Pauline Rigby, Google wants something in between two existing IEEE interface standards. The 100GBase-SR10, which has 10 parallel channels and a 125m span, has too short a reach for Google.
“What is good for an 800-pound gorilla is not necessarily good for the industry. It [Google] should have been at the table when the IEEE was working on the standard."
Daryl Inniss, practice leader, components, Ovum
The second interface, the 100GBase-LR4, uses four channels that are multiplexed onto a single fibre and has a 10km reach. The issue here is that Google doesn’t need a 10km reach and while a single fibre is better than the multi-mode fibre based SR10, the interface is costly with its “gearbox” IC that translates between 10 lanes of 10Gbps and four lanes each at 25Gbps. Both IEEE interfaces are also implemented using a CFP form factor which is bulky.
What Google wants
Google wants optical component vendors to develop a new 100 Gigabit Ethernet multi-source agreement (MSA) that is based on a single-mode interface with a 2km reach, reports Rigby. Such a design would use a ten-channel laser array whose output is multiplexed onto a fibre, a similar laser array-multiplexer arrangement that has already been developed by Santur. Using such a part, the new interface could be developed quickly and cheaply, says Google.
The proposed interface clearly has merits and Google, an important force with an appetite for optics, makes some valid points. But the industry is developing 4x25Gbps interfaces and while such interfaces may be challenging, no-one doubts they will come.
Google’s next moves
Google has a history of being contrarian if it believes it best serves its business. The way the internet giant designs data centres is one example, using massive numbers of cheap servers arranged in a fault-tolerant architecture.
But there is only so much it can do in-house and developing a new optical interface will require help from optical component players.
Google has the financial muscle to hire an optical component firm to engineer and manufacture a custom interface. A recent example of such a partnership is IBM's work with Avago Technologies to develop board-level optics – or an optical engine – for use within IBM’s POWER7 supercomputer systems.
According to Karen Liu, vice president, components and video technologies at market research firm Ovum, once such an interface is developed, Google could allow others to buy it to help reduce its price. “Remember the Lucent form factor which became a de facto standard but wasn’t originally intended to be?” says Liu. “This approach could work.”
Taking a longer term view, Google could also invest in optical component start-ups. The return may take years and as the experience of the last decade has shown, optical components is a risky business. But Google could encourage a supply of novel, leading-edge technologies over the next decade.
The optical component industry is right to push back with regard Google’s request for a new 100 Gigabit Ethernet MSA, as Finisar has done. While Google may be an important player that can drive interface requirements, many players have helped frame the IEEE 100Gbps Ethernet standards work. In the last decade the optical industry has also seen other giant firms try to drive the industry only to eventually exit.
“The industry needs to move on,” says Daryl Inniss, practice leader, components at Ovum. “What is good for an 800-pound gorilla is not necessarily good for the industry.” Inniss also suggests a simple and effective way Google could have influenced the 100 Gigabit Ethernet MSA work: “It [Google] should have been at the table when the IEEE was working on the standard."
UNIC silicon modulator
This is the silicon photonic start-up’s first announced modulator. The design has been developed in conjunction with Sun Microsystems as part of the DAPRA Ultraperformance Nanophotonic Intrachip Communications (UNIC) programme.
An image of the modulator and a cross-section diagram of the ring waveguide. Source: Kotura
Why is it important?
Optical components use a range of specialist, expensive materials. Silicon is one material that could transform the economics for optics. But for this to happen, the main optical functions – light generation, transmission and detection – need to be supported in silicon. To date, all the required functions except the laser itself - waveguides, modulators and photo-detectors - have been mastered and implemented in silicon.
However, the use of silicon photonics in commercial products has till now been limited. For example, Luxtera makes active optical cable that uses silicon photonics-based transceivers while Kotura has been producing silicon photonics-based VOAs for several years. Its VOA is used within reconfigurable optical add/drop multiplexers (ROADMs) and as a dimmer switch to protect optical receivers from network transients.
Kotura is also supplying its silicon-based Echelle gratings product for 40 and 100 Gigabit Ethernet (GbE) transceiver designs that require the multiplexing and demultiplexing of 4 and 10 wavelengths. The company’s gratings are also being used in Santur’s 100Gbit/s (10x10Gbit/s) transceiver design.
Kotura is in volume production of its VOAs and sampling its Ethernet gratings products, says Arlon Martin, vice-president of marketing and sales at Kotura: “The biggest interest is in 40 Gigabit Ethernet.” Given the small size of the gratings, Kotura is also seeing interest from vendors developing 40GbE transceivers in smaller form factors than the CFP module, such as the QSFP.
This will enable 1Tbit/s data rates over a single fibre to connect high-speed multi-core processor computing elements.
Arlon Martin of Kotura.
But the true potential for silicon photonics, one that promises huge volumes, is very short reach optical interconnects for use in high performance computing and within data centres. Having a low power silicon modulator means it can be integrated with other circuitry in CMOS rather than as a discrete design. Such an integrated approach ensures interconnect reliability.
Method used
There are several ways to modulate a laser. Direct modulation uses electronics to switch the laser on and off at the required rate to imprint the data onto the light. An electro-absorption modulated laser, in contrast, adds an element in front of an always-on laser that either passes or absorbs the light. Kotura’s modulator uses a third approach based on a micro-ring resonator and an adjacent waveguide.
The dimension of the ring – its circumference – dictates when optical resonance occurs. And by carefully matching the power coupling of the micro-ring and waveguide to that of the ring loss, signal attenuation– the light-off condition – is improved. The wavelength at which resonance occurs can be changed by playing with the optical properties of the ring waveguide.
Kotura and Sun have demonstrated the silicon modulator working at up to 11GHz, requiring a peak-to-peak voltage of 2V only. The modulator’s insertion loss is also an attractive 2dB though its working spectrum width is only 0.1nm.
“Our power number – 0.5mW at 10GHz - does not include the driver. But if you want to integrate a number of these on one chip, the low power consumption would enable this,” says Martin. Kotura claims the power consumption achieved is the lowest yet reported.
What next?
The modulator is one of the milestones of the DARPA UNIC programme now into the second of its five-year duration. “This [modulator] is prototype work, not a product,” says Martin, adding that Kotura has not fixed a date as to when the modulator will be commercially used.
As for how the device will ultimately be used, Kotura talks of interfaces operating between 100Gbit/s and 1 Tbit/s. Kotura is already working on an independent programme with CyOptics - the NIST Advanced Technology Programme - developing up to 1Tbit/s links using wavelength division multiplexing (WDM). Such designs use separate laser arrays - each laser at a specific wavelength – as well as gratings and photo-detectors.
In the future inexpensive light sources could generate up to 80 separate modulated lightpaths, Martin says. This will enable 1Tbit/s data rates over a single fibre to connect high-speed multi-core processor computing elements.
Is the idea similar to a broadband light source as proposed for WDM-PON? The UNIC partners have yet to reveal the programme’s detail. “Potentially on the right path,” is all Martin would say.
References:
[1] “Low Vpp, ultralow-energy, compact, high-speed silicon electro-optic modulator.” To read Kotura’s technical paper, click here.
[2] "PHOTONICS APPLIED: INTEGRATED PHOTONICS: Can optical integration solve the computational bottleneck?" OptoIQ, March 1, 2009, click here.