Nov. 14, 2019

Optical engines co-packaged with switching ASIC are likely to offer an alternative to pluggable optical transceivers in mega datacenters. The pluggables were first introduced two decades ago for connections in enterprise networks and became the ubiquitous solution for optical connectivity across a variety of applications. Over 1 billion units of pluggable transceivers were shipped in the last 10 years, including more than 500 million for the fiber to the home or to the building (FTTx) market and more than 10 million for connections inside mega datacenters, operated by Amazon, Facebook, Google, Microsoft and other cloud companies. However, the industry is starting to look for an alternative to the pluggables with an objective to reduce power consumption of next generation Ethernet switches.

Facebook and Microsoft recently launched the Co-Packaged Optics (CPO) Collaboration. The goal of CPO is “the adoption of common design elements that will provide guidance for suppliers in the design and manufacturing of co-packaged optics.” Leading switch ASIC vendors, including Broadcom and Cisco, are also investing in development of these new solutions. There are a lot of technical challenges, but if everything goes well, consumption of pluggable transceivers by the Top 5 Cloud companies will start to decline in 2027-2028, as shown in the Figure.

Figure: Shipments of Ethernet transceivers and opto-chiplets to Top 5 Cloud companies (includes products with data rate of 100GbE and above with reach of 100m and 500m only).

ARPA-E chart

This forecast was developed for a study commissioned by ARPA-E ENLITENED program, which funds development on next generation optical connectivity and switching technologies. The main goal of this program it to reduce power consumption of datacenter switches by a factor of ten.

IBM is among a few companies selected for Phase 2 ARPA-E funding this year. IBM was the first one to co-package optical engines with switching ASICs, as part of a DARPA funded supercomputer project in 2004-2008. It might have been a bit ahead of its time, like several other projects funded by DARPA, including computer networks that evolved into the Internet. It might be the right time now and IBM is developing very low power co-packeged optics based on VCSEL arrays for the ENLITENED project, including double wavelength VCSELs for Phase 2 of the program. Other teams funded by ARPA-E are planning to use silicon photonics technology.

The promise of co-packaged optics is to eliminate power to drive several inches of copper traces connecting a switching ASIC in the middle of a PCB board to optical transceivers plugged at the board edge or faceplate. Co-packaging involves simpler SerDes interfaces that not only consume less power but reduce latency.

Development of new technologies for opto-chiplets has to overcome many engineering challenges. Our forecast assumes that all these challenges can be resolved ahead of the early demand for these products in 2023-2024, but it is in the hands of engineers to make it happen.

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 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.

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