May 10, 2018

LightCounting updates its Report on Integrated Optical Devices

The potential impact of photonic integration on the optical communications market has captivated the imagination of the industry for the last two decades. Successes by vendors developing integrated products using Silicon photonics (SiP) led to several mergers and high-value acquisitions in 2012-2016.

Sales of SiP-based products started to ramp in 2014-2016 and reached close to $800 million in 2017 – up 22% from 2016. However, sales of optical transceivers based on integrated InP optics increased even faster - up 34% in 2017, exceeding $2.7 billion. Sales of optical transceivers and AOCs based on GaAs VCSEL arrays were up by 18% in 2017 to about $550 million, not including products for 3D sensing applications (e.g. the iPhone X), which cheered up VCSEL suppliers last year.

Sales of optical transceivers based on integrated optics exceeded $4 billion in 2017. In contrast, sales of products manufactured using discrete lasers and detectors declined to about $2 billion from $3 billion in 2016, as illustrated in the figure below.

LT_051018.png

This rapid transition is directly related to increasing sales of 100 Gbps products, which rely heavily on integrated optical technologies. Whether it is a coherent DWDM module or a client-side 4x25G QSFP28 transceiver, integrated optics is a key technology enabling these products to meet price and performance requirements. The trend is clear: more complex, higher data rate products require more integration. Demand for higher density of optical ports, lower cost and power consumption elevates optical integration to a must-have technology.

The question is whether SiP can replace more mature Indium Phosphide (InP) and Gallium Arsenide (GaAs) technologies, which have dominated the market over the last decade and already enable a variety of integrated products. Can SiP technology reduce manufacturing cost of optics or redefine business models of suppliers? Can it enable new functionality or reduce power consumption of optical connectivity by more than a factor of 10? These and many other questions are addressed in the study.

LightCounting’s updated report offers an in-depth analysis of the impact made by integration on the market for optical transceivers and related components in 2010-2017. It also presents a forecast for shipments and sales of discrete and integrated products based on InP, GaAs and SiP technologies for 2018-2023. The forecast is broken down by Ethernet, WDM, Active Optical Cables (AOCs) and Embedded Optical Modules (EOMs), and several other market segments. Products are sorted by data rate, reach and form factor into more than 150 categories.

More information on the report is available at: https://www.lightcounting.com/Silicon.cfm

3D Sensing for Self-Driving Cars Reaches the Peak of Inflated Expectations

LightCounting releases a new report addressing illumination in smartphones and automotive lidarIn 2019, the market for VCSEL (vertical cavity surface-emitting laser) illumination in smartphones will exceed $1.0 billion – now nearly triple the size of the market for communications VCSELs. That’s quite remarkable for a market that didn’t exist three years ago.3D sensing in smartphones felt like an overnight sensation, but the technology foundations were laid down years ago with Microsoft’s Kinect – a motion-sensing peripheral for gamers released in 2010 but discontinued in 2017 after lackluster sales. Lumentum supplied lasers to the Kinect almost a decade before the iPhone opportunity emerged; the company was ready to profit from the iPhone X opportunity when Apple decided to launch 3D sensing for facial recognition in September 2017.

Figure: 3D depth-sensing meets the Gartner Hype Cycle

3D Sensing

Source: Gartner with edits by LightCounting

If all technologies follow the Gartner Hype Cycle, shown in the Figure above, then 3D sensing in smartphones is now moving up the slope of enlightenment. Android brands raced to add 3D sensing to their flagship phones in 2018 – the Xiaomi Mi8 Explorer and Oppo Find X phones were first – although these only sold in single digit million quantities. Huawei also brought out new phones with 3D sensing, but the ongoing U.S. export ban on the Chinese company must be hurting the company’s traction outside China. Apple continues to dominate the market as all new iPhones released by Apple since 2017 have included 3D sensing on the front of the phone. Apple is expected to introduce 3D sensing for ‘world-facing’ applications in 2020, which adds another laser chip to every phone.

Last year illumination for lidars were not included in our market forecast since LightCounting considered it unlikely that lidar would penetrate the consumer market to any great extent over the forecast period. All indicators now point to a market for lidar illumination ramping up in 2022 and beyond. Optical components firms are now shipping prototypes and samples of VCSELs, edge emitters and coherent lasers to customers developing next-generation lidar systems – many of them building on their expertise in illumination for optical communications and smartphones.

As was the case with smartphones, the foundations for lidar technology were laid down much earlier – in this case with the DARPA Challenge 2007, where the winning vehicle used a 64-laser lidar system from Velodyne Acoustics (now Velodyne Lidar). Lidar is considered by the majority of the industry to be an essential part of the sensor suite required for autonomous driving, helping the vehicle to navigate through the environment and detect obstacles in its path. The first commercial deployments have begun. In Germany, lidar on the Audi A8 enables the car to drive itself for limited periods under specific conditions. In Phoenix, Arizona, you can hail a ride in a Waymo robotaxi.

Investor enthusiasm for lidar is undeniable with nearly half a billion dollars invested in lidar start-ups in 2019 according to our analysis of publicly available investment data. Notable deals include $60 million for U.S. company Ouster in March, Israel’s Innoviz Technologies Series C round of $132 million in the same month, and $100 million for U.S.-based Luminar Technologies in July. Interestingly, these examples illustrate the variety of lidar approaches: each company is building a different type of lidar based on a different wavelength: 850nm for Ouster, 905nm for Innoviz and 1550nm in the case of Luminar. There’s an open technology battle and they can’t all be winners.

The automotive lidar market seems to be close to the peak of ‘inflated expectations’. It’s easy to understand why. The automotive industry is enormous, with nearly 100 million vehicles (including trucks) produced annually. Players like Baidu, GM Cruise and Waymo are backed by deep corporate pockets, and new entrants like Aurora and Pony.ai are attracting hundreds of millions in investment. Intel’s $15.3 billion purchase of Mobileye in 2017 was also directed at autonomous driving. Sensor company AMS is in a $4.8 billion battle to acquire German semiconductor lighting firm Osram with its eye firmly on lidar.

However, signs indicate that the descent into the trough of disillusionment could have already begun. Waymo has yet to roll out its robotaxi services more widely – and this summer admitted that its vehicles needed more testing in the rain. GM Cruise has delayed launch of commercial services for self-driving cars beyond 2019 and is reluctant to commit to a new timescale, with its CEO Dan Ammann observing that safety is paramount; automotive is not an industry where you can “move fast and break things” he said. A casualty of the slow pace was optical phased array lidar developer Oryx Vision, which closed its doors in August and started to hand money back to investors.

While lidar is being deployed commercially today, prices are not conducive to mass production, and there are open questions around regulation, safety, ethics and consumer acceptance. Do local laws prohibit self-driving cars? Will they really be safer than humans? Who is responsible for a crash? LightCounting remains skeptical about the pace of adoption of autonomous vehicles, but will be watching the market closely and with optimism.

More information on the report is available at: https://www.lightcounting.com/Sensing.cfm.


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