Dec. 4, 2018

LightCounting releases Next Generation Access Optics Report

Deployments of 5G and the growing popularity of mobile devices present a major challenge to wireline access. Figure 1.1 shows just how dramatic the shift to mobile networks has been, with mobile traffic growing at rates 20-25 points higher than overall Internet traffic. And the data from China is even more dramatic, showing tremendous traffic growth in 2015-2018, following deployment of LTE, and spurred by video streaming to phones, hugely popular Massively Multiplayer Online Games (known as ‘esports’ in China), and the widespread use of mobile payments, taxi reservations/tracking, etc.

We expect that the growth rate of mobile data traffic in China will start to moderate, but it will take a long time for it to conform to Cisco’ estimates for the global average. It is unclear how Cisco’s VNI report accounts for such a high growth rate in China or whether it even takes China into account. We certainly do and our latest report increases projections for sales of wireless fronthaul optics for deployments in China.

Figure 1- Estimated network traffic growth rates

FTTx

Source: Cisco, Ericsson, LightCounting, MIIT 

On a global basis as of October 2018, 715 commercial LTE networks have been deployed in 200 countries, according to the Global Mobile Suppliers Association (GSMA). Based on this, one could conclude that the ‘LTE party’ for equipment vendors is in its waning hours. However, capacity additions are made for several years after an operator reports “100% LTE coverage”, via the addition of LTE-Advanced (consisting of Carrier Aggregation, 4×4 or higher MIMO, and 256QAM modulation in the downlink).  By October 2018, only 270 of the 715 LTE operators had deployed some form of LTE-A, and of those only 47 had installed all three advanced LTE technologies, according to the GSMA. Upgrades to LTE-A will continue to drive deployment of additional fronthaul links, in addition to growing 5G deployment. 

LightCounting’s forecast assumes that high-volume commercial deployment of 5G will begin in 2020. This is consistent with Ericsson’s recent forecast that 5G subscriptions will exceed 100 million for the first time in 2021, in both the North American and Asia Pacific regions. Deployment of fronthaul networks to support 5G will have to take place in advance of that ramp and it is already starting.

Revised 5G fronthaul network architectures at China Mobile and other operators resulted in several changes to our forecast for sales of optical transceivers employed in wireless fronthaul.  The forecast now includes 2x25G DSFP and 100G modules, which will be used for aggregation of 25G signals.

The most significant change to the FTTx market is that China Mobile, China Telecom, and China Unicom are scaling down plans for deployments of 10G-PON for residential services in the next few years. Their initial interest in 10G-PON is mainly in support of small businesses, not residential customers. The latter are well served by GPON in most cases, although there will no doubt be some deployment of 10G-PON to provide gigabit residential services to high-end consumer segments (luxury housing developments, gamers etc.). We expect a more general deployment of 10G-PON for residential customers (in the XG-PON asymmetric version) to begin ramping later in the forecast period (2021-2023).

LightCounting's Next Generation Access Optics report offers a review of future optical access networks, including architectures, service provider deployment strategies and trends, component requirements, and the products needed. Tutorials on mobile fronthaul, FTTx, and cable TV networks are included as well. A detailed Excel spreadsheet accompanies the report, providing a five-year forecast of fronthaul and FTTx optics shipments, prices, and revenues, broken down by speeds, reaches, and “colors”.

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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