Demanding cloud datacenter customers push suppliers to their limits
LightCounting releases High-Speed Ethernet Optics Report
It is still an exciting time for the industry, but the race to higher speed optical transceivers is starting to feel like a marathon. Shipments of 100GbE devices reached close to 2.9 million units in 2017 and are projected to exceed 5 million in 2018. Yet, it does not feel like a party for suppliers. Vendors are scrambling to maintain decent profitability as pricing declined faster than expected last year. Some of the 100GbE demand disappeared as buyers had placed duplicate orders. Development of 400GbE products requires a lot of investment, but customers are unlikely to purchase these products until the pricing is “right.”
Figure below shows correlation between introduction of first switching silicon and early shipments of Ethernet optical transceivers with 2 km reach – popular in datacenters. The figure includes our forecast for 400GbE, shown as a solid green line. The dashed green line shows a very unlikely scenario that 400GbE shipments will retrace early shipments of 40GbE (with a 6 year delay).
Our projections for 400GbE shipments follow a simple argument that it will retrace shipments of 100GbE for datacenter applications, which picked up in 2016 - two years after the first 32x100G Broadcom Tomahawk switching silicon was sampled. With the 32x400G Tomahawk3 ASIC sampling in December 2017, first volume shipments of 400GbE will start in December 2019, making a real difference in 2020.
An alternative argument is that 40GbE started shipping two years after 64x10G switches were introduced, so 400GbE has to start shipping in 2018, two years after release of 64x100G Tomahawk2. This is very unlikely because of complexity of 400GbE optics and the new silicon required. Production of 40GbE optics was mostly co-packaging of mature serial 10GbE technology elements. 100GbE optics today use 4x25G optics, and serial (single wavelength) 100G optics are just starting to become viable. This also will be the first time that PAM4 optics and electronics will be used, which is another hurdle for suppliers of optics, electronics and even test equipment.
Live demos of 400GbE optical transceivers were shown at OFC in March 2018, but many of these demos were put together a day or two before the show, since the first PAM4 chips did not function well and the second version was not available until the last minute. It will take a year to debug PAM4 chips and switching silicon and move it to volume production, even if the optics were ready now. The customers seem to understand they will need to wait.
One of the changes in this forecast update is a reduced forecast for 200GbE, which was originally expected to offer an early alternative to 400GbE, tracing the dashed green line in the Figure. Support for QSFP56 modules from equipment manufacturers has declined sharply in the past six months, despite remaining interest from enterprise customers. Google remains the only customer for 2x200GbE OSFPs that we know of. However, Google has not commented on our latest forecast, but suppliers are starting to lose enthusiasm about the potential opportunity for these products.
High-Speed Ethernet Optics Report analyzes the impact of growing data traffic and the changing architecture of data centers on the market forecast for Ethernet optical transceivers with a focus on the high-speed modules used in data centers. It leverages extensive historical data on shipments of Ethernet modules combined with extensive market analyst research to make projections for sales of these products in 2018-2023. The report offers a comprehensive forecast for more than 50 product categories, including 10GbE, 25GbE, 40GbE, 50GbE, 100GbE, 200GbE and 400GbE transceivers, sorted by reach and form factors. It provides a summary of technical challenges faced by high-speed transceiver suppliers, including a review of the latest products and technologies introduced by leading suppliers.
The report is based on confidential sales information and on detailed analysis of publicly available data released by leading component and equipment manufacturers along with considerable input from industry experts.
Table of contents and sample database of the report is available at: https://www.lightcounting.com/Ethernet.cfm LightCounting clients who have pre-ordered the report can log into https://www.LightCounting.com/Login.cfm to access the report.
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
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.