Oct. 2, 2018

LightCounting updates its High-Speed Ethernet Optics Report.

It is an exciting time for the industry: shipments of 100GbE devices reached close to 2.9 million units in 2017 and are on target to exceed 5 million in 2018. Yet, it does not feel like a party for suppliers. Vendors are scrambling to maintain decent profitability, as prices continued to fall sharply in 2018. Some of the 100GbE demand disappeared as buyers had placed duplicate orders or had problems with inventory buildup. Development of 400GbE products requires a lot of investment, but customers are unlikely to purchase these products until the pricing is “right”.

All options are on the table for the next round of datacenter upgrades: continue with 100GbE, switch to 200GbE, 2x200GbE, 400GbE with breakouts and even real 400GbE. Not only it is a marathon for suppliers, but the route of the race seems to be continuously changing as well.

Figure E-1 shows the correlation between introduction of the first switching silicon and early shipments of Ethernet optical transceivers with a 2 km reach – popular in datacenters. The figure includes our forecast for 200GbE, 2x200GbE and 400GbE, reflecting the diverging plans of the top hyperscale operators. Early shipments of these products will collectively retrace shipments of 100GbE, 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 200/2x200/400GbE will start near the end of 2019, making a real difference in 2020-2021. Most of the volume will be 200GbE and 2x200GbE with true 400GbE (2km reach) used only at the higher levels of switching.


Shipments of 100GbE (2 km reach) CWDM4 and DR1 modules will continue to grow even in 2023 (off the chart in Figure E-1). These transceivers will enable the highest 128 port radix when deployed with a Tomahawk 3 based switch – an important advantage for hyperscale operators.

Each of the top four hyperscale operators [AWS, Facebook, Microsoft, and Google] has distinctly different plans and timings for their next data rate. Many have concerns about the readiness of 400G modules and associated technologies.

The ramp of 400GbE modules will begin with 400G-DR4 (not included in Figure E-1), but these won't actually be supporting 400GbE fat pipes. Instead, the DR4 (PSM4) interface will be broken out four ways into 100G-DR modules. We foresee a period of high-density 100G using this scheme before all of the big four move to higher speeds. Most significantly, it appears to be an open secret that Facebook will deploy 200GbE before moving on to 400GbE. Google is starting to deploy 2x200GbE modules, as planned.

100GbE transceivers today use 4x25G optics, and serial (single wavelength) 100G optics are just starting to become viable. These 100G single Lambda devices will be the first time that PAM4 optics and electronics are used, which is yet another hurdle for suppliers of optics, electronics and even test equipment. Analog or DSP retimers/gearboxes are needed to convert 8x50G PAM4 at the module interface into 50G or 100G PAM4 optical lanes on the fibers.

Live demos of 400GbE optical transceivers were shown at OFC in March 2018 and more were shown at ECOC last week. These are still very early experiments but nevertheless impressive. Spokesman Mark Nowell of Cisco told LightCounting “Being all new modules, the host interface is usually where we’d expect problems and we saw teething issues. Most were fixed for the public demo at ECOC. We had full packets flowing through Arista & Cisco switches and lots of modules.” This is encouraging but one should not assume that a ramp of 400G or even 200G is just around the corner. The customers seem to understand they will need to wait and so they have made their plans accordingly.

LightCounting’s 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, 2x200GbE 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.

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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