Yes, we've reached Si photonics' tipping point!

From Technologies to Market

SAMPLE

January 2018

Silicon Photonics 2018

Yes, we’ve reached Si photonics’ tipping point!

강태영

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ABOUT THE AUTHORSDr. Eric Mounier, Photonics, MEMS & Sensors Senior Analyst

With almost 20 years of experience in MEMS, Sensors and Photonics applications, markets, and technology analyses, Eric provides deep industry insight intoMEMS and Photonics’ current and future trends. He is a daily contributor to the development of MEMS and Photonics activities at Yole, with a largecollection of market and technology reports as well as multiple custom consulting projects: business strategy, identification of investments or acquisitiontargets, due diligences (buy/sell side), market and technology analysis, cost modelling, technology scouting, etc. He has contributed to more than 250marketing/technological analyses and 80 reports, helping move the MEMS and Si Photonics industry forward.

Thanks to his deep knowledge of the MEMS, Sensors and Photonics-related industries, Eric is often invited to speak at industry conferences worldwide. Hehas been interviewed and quoted by leading media throughout the world.

Previously, Eric held R&D and Marketing positions at CEA Leti in France. Eric has a Semiconductor Engineering Degree and a Ph.-D in Optoelectronics fromthe National Polytechnic Institute of Grenoble.

Jean-Louis Malinge

Jean-Louis Malinge is an accomplished business management executive with extensive experience as a General Manager and CEO in France and theUnited States. He also serves on numerous Boards of Directors. He has formulated successful strategies to position or reposition numerousbusinesses, has led numerous acquisition projects, and also managed the creation of a successful joint-venture in Asia.

Jean-Louis is currently a Venture Partner with Arch Venture Partners. He is also a Director on the boards of EGIDE Group, POET Technologies, andCailabs. He is also Managing Director ofYADAIS, a telecommunications and photonics consulting firm.

Jean-Louis was President & CEO of Kotura from 2004 - 2013, when Kotura was acquired by Mellanox. A global leader in silicon photonics, Koturadesigns, manufactures, and markets CMOS optical components that are deployed throughout the communications network.

Formerly, Jean-Louis served as Vice President - Optical Networking Products for Corning, Inc. His other prior experience includes serving asTechnology Director with Amphenol and Thompson CSF in France.

Jean-Louis’ academic credentials include an Executive M.B.A. from MIT Sloan School in Boston, Massachusetts. He also holds an Engineering degreefrom the Institut National des Sciences Appliquées in Rennes, France.

©2018 | www.yole.fr | Silicon Photonics 2018 | Sample

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A*Star, Amazon, Amicra, Amkor, AMS Technologies, Aurrion, Axalume, Ayar Labs, Broadcom, BSAC, Cadence, Caliopa, Ciena,

Cypress, Dell, Facebook, FhG IZM, Ficontec, Georgia Tech University, GlobalFoundries, Google, HP, Huawei, IBM, IMEC, IMT,

Infinera, Inphi, Intel, Juniper Networks, Leti, Luxtera, MACOM, Mentor Graphics, Microsoft, MIT, Molex, Multiphoton Optics,

Novati, NTT, Oclaro, Optocap, Petra, PhoxTrot, Ranovus, Rockley Photonics, Seagate, Sicoya, Silex, Skorpios, Soitec,

STMicroelectronics, Teramount, Towerjazz, Tyco, Tyndall University, VLC Photonics, Yahoo, and many more.

COMPANIES CITED

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TABLE OF CONTENTS

About the Authors … 4

Glossary … 5

Companies Cited in this Report … 6

Report Objectives … 7

Comparison with 2016 Report … 8

Yole methodology … 8

Executive Summary … 12

Introduction to Si Photonics … 30

Market forecast for Si Photonics … 39

Units … 40

Value … 42

Wafers … 47

Applications … 50

Data Centers … 56

Telecom … 80

Other applications … 89

Supply Chain … 95

Manufacturing … 114

Light sources … 119

Packaging … 129

Examples of processes … 133

Conclusions … 150

Appendix … 155

Si photonics building blocks … 156

Yole Développement presentation … 179


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Introduction, Definition &

Methodology

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GLOSSARY• AOC:Active Optical Cable

• APD:Avalanche Photo Diode

• CFP: C Form-Factor Pluggable

• COBO: Consortium for On-Board Optics

• CWDM: Coarse Wavelength DeMultiplexer

• DC: Data Center

• DML: Directly Modulated Laser

• DWDM: Dense Wavelength DeMultiplexer

• EEL: Edge-Emitting Laser

• EIC: Electrical IC

• EML: Electro-absorption Modulator Laser

• HPC: High-Performance Computer

• IC: Integrated Circuit

• Lidar: Light Detection And Ranging

• MEMS: Micro Electro Mechanical Systems

• MMF: Multi-Mode Fibre

• MSA: Multi Suppliers Agreement

• OEO: Optical Electrical Optical

• OIC: Optical IC

• OOO: Optical Optical Optical

• OXC: Optical Cross-Connect

• PAM: Pulse Amplitude Modulation

• PIC: Photonic Integrated Circuit

• PSM4: Parallel Single-Mode 4-lane

• QSFP: Quad (4-channel) Small Form-factor Pluggable

• ROSA: Receiver Optical Sub-Assembly

• SEL: Surface-Emitting Laser

• SFP: Small Form-Factor Pluggable

• SiPh: Silicon Photonics

• SMF: Single-Mode Fiber

• SOI: Silicon-on-Insulator

• TIA:Transimpedance Amplifier

• TOSA:Transmitter Optical Sub-Assembly

• VC:Venture Capitalist

• VCSEL:Vertical Cavity Surface-Emitting Lasers

• VOA:Variable Optical Attenuator

• WBG:Wide Band Gap

• WDM:Wavelength DeMultiplexer


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OBJECTIVES OF THE REPORT

• This report’s objectives are as follows:

• Examine the current status and future challenges for data centers

• Explain why Si photonics is the answer to future DC needs and other possibleapplications

• Offer an Si photonics 2016 - 2025 market forecast in $USM, units, and wafers

• Provide updated market share numbers for SiPh players

• Give a description of the industrial supply chain, with player status

• Present Si photonics’ technical challenges


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COMPARISON WITH THE 2016 REPORT

What we got right, what we got wrong

• What we got right:• We had the right title:“We have reached the tipping point for Si Photonics!”

• 2017 was the first year when a significant volume of SiPh transceivers was shipped

• The Si photonics market is still small compared to the total photonics IC market

• Si photonics still attracts much global interest via active R&D programs

• Data centers are the main market attraction, but other markets are interesting too

• More and more players are looking at this technology, and companies not currently involved in photonics (IC foundries, materials suppliers)are investigating possible opportunities

• What we got wrong:• We were too optimistic regarding market launches of new Si photonics products

• We revamped our forecast model to account for new challenges

• We were overly optimistic regarding WDM Si photonics and embedded optics in DC

• Data centers will provide the main market traction for Si photonics. Other markets could be interesting (i.e. sensing applications), but theyare more long-term.


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METHODOLOGIES & DEFINITIONS

Yole’s market forecast model is based on the following elementary structured blocks:

Yole’s analysisframework


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REPORT METHODOLOGY (1/2)

Market segmentation methodology

Market forecast methodology


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REPORT METHODOLOGY (2/2)

Technology analysis methodologyInformation collection


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SI PHOTONICS - APPLICATIONS

Low volumes

DATA CENTRES

(In row/Inter/Intra)

>100M units

$0.10 to $5

<1M units

$100 to $5000

AUTOMOTIVE

(low latency for

autonomous cars)

>10M units

$1 to $50

AERONAUTICS

(in-flight entertainment)

High volumes

>1M units

$10 to $500

DEFENSE

MEDICAL

HIGH-PERFORMANCE

COMPUTING

SI PHOTONICS

TELECOM (Metro)


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SILICON PHOTONICS APPLICATIONS - EXAMPLES OF PLAYERS’ POSITIONING

Aeronautics/

aerospaceSensorsAutonomous cars

High

performance

computing (HPC)

Telecom

(FTTH,

metropolitan)Data Centres

Commercial

productsCommercial

products

Commercial

products

Medical


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SI PHOTONICS VS. LEGACY OPTICAL TRANSCEIVER FORECAST, IN VALUE

The Si photonicstransceivermarket isgrowing

faster thanthe total optical

transceivermarket


2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 CAGR

Optical transceivers $5 048 $5 642 $6 144 $6 779 $7 414 $8 009 $8 973 $9 776 $10 572 $11 334 9,4%

SiPh transceivers $202 $260 $492 $681 $973 $1 420 $1 627 $2 141 $2 825 $3 729 38,3%

$0

$2 000

$4 000

$6 000

$8 000

$10 000

$12 000

$14 000

$16 000

Mill

ion

US$

SiPh vs. optical transceiver market, in US$M

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SI PHOTONICS CHIP FORECAST, IN VALUE (40G, 100G, 200/400G)

A $560M market by 2025 for SiPh dies

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 CAGR

200G/400G Si photonics dies US$M $0 $0 $1 $3 $10 $21 $27 $39 $64 $84 95,9%

100G Si photonics dies US$M $29 $38 $71 $98 $135 $192 $217 $283 $360 $475 31,2%

40G Si photonics dies US$M $2 $1 $2 $1 $1 $0 $0 $0 $0 $0 0,0%

$0

$100

$200

$300

$400

$500

$600M

illio

n U

S$

Si photonics die forecast, in US$M


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DATA CENTERS - ARCHITECTURE AND DATA RATE

SPIN (commutation)

CORE

LEAF (servers &

storage)

TOP OF RACK

INTRA RACK: 10G, moving to 25G

Direct attach cable (DAC) in copper

3 - 5m

Lowest-priced link

INTER RACK: 40G, moving to 100G

Multimode fiber

< 100m: active optical cable (AOC) with VCSELs

100 - 200m: SR4

Lowest-priced optical link

LONG SPAN/INTER BUILDINGS: 40G - 100G & beyond

(200G, 400G)

Single-mode fiber

PSM4 or WDM4

500m - 10km

For distance > 500m

with data rate > 100G

(not accessible to

VCSEL), Si photonics

makes sense

DAC: copper cables

AOC: transceivers with integrated fibers

Optical transceivers (transmitter-receiver) with detachable connectors

SiPh will first be used for inter-DC. As data rate grows to 100G (outside VCSEL

capabilities), SiPh will then move to inter-rack.


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ECOSYSTEMS AND STAKEHOLDERS

Si Photonics’ value chain in motion

Differentiation and competitive

advantages come with new positioning in

the supply chain. Hyperscale is

driving R&D for future optical

DC.

HYPERSCALE

SYSTEM VENDORS

CHIP

COMPANIESOPTICS

COMPANIES

FOUNDRIES

DESIGN

PACKAGING

VENDORS

OPTICS FABS

MANUFACTURERS

CHIP VENDORS

MATERIALS (epiwafers,

SOI, tools)

AXALUME


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2016 MARKET SHARE

2016 market share (units) 2016 market share ($M)

The high price of a coherent module from Acacia explains

the difference in market share (units vs. $M)

Main focus is

INTRA DC

interconnects

@1310nm

• In units, Luxtera is number one and is likely to hold market share for 100G transceivers - all technologies included. We

estimate this share to be 5 - 10%.

• As of October 2017, Luxtera has shipped more than 800K transceivers

• STMicroelectronics is today’s leading chip manufacturer


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SI PHOTONICS - FUTURE TRENDS (2/2)

Inter-ChipIntra/Inter

Data CentersFTTH/Metro Long-haul

SiPh current

market: main

drivers are high

data rate/low cost

for distances

beyond VCSEL’s

reach

With a zero-change CMOS

process development, SiPh

could access inter-chip

optical communication

huge volume

SiPh could be interesting for

telecom, as FTTH and Metro

specs could converge.

For long-haul, volumes are not

large enough for SiPh to be

cost-effective.

Main SiPh data/telecom applications


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SILICON PHOTONICS LANDSCAPE

In Japan, extra effort

is made for

inter/intra-chip

comunication


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EXAMPLE OF SUPPLY CHAIN ANALYZED IN THE REPORT

WAFERS FOUNDRY EXTERNAL SUPPLIERS ASSEMBLY VENDOR / PRODUCTS CUSTOMER

Epi-wafers

R&D (2017)?

? ?

2012 acquisition

($271M)

?

OPTICAL TRANSCEIVER

PHOTONIC INTERPOSER

OPTICAL TRANSCEIVER

OPTICAL TRANSCEIVER

Subcontractor in

Thailand for

module

assembly

?

Albuquerque


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Documents

Yes, we've reached Si photonics' tipping point!