Optical Transceivers for Datacom & Telecom 2020

From Technologies to Markets

Optical Transceivers for Datacom & Telecom Market and Technology Report 2020

Sample

SCOPE OF THE REPORT 7 FIBER-OPTIC COMMUNICATION NETWORK ARCHITECTURES 58

METHODOLOGIES & DEFINITIONS 8 • Typical public fiber network architecture

ACRONYM REFERENCE GUIDE 9 • Generic diagram of FOC network o Overview COMPANIES CITED IN THIS REPORT 11 o Focus on data center network ABOUT THE AUTHORS 12 o Example of Facebook data center topology IMPACT OF COVID-19 & BASIS FOR OUR SCENARIOS 13 o Focus on 5G transport network

EXECUTIVE SUMMARY 16 • Network devices for telecom and datacom

FROM TELECOMMUNICATION TO FIBER-OPTIC COMMUNICATION 44 FIBER-OPTIC COMMUNICATION APPLICATION TRENDS 65

• Historical perspective • Global network IP traffic growth • Introduction to telecommunication (TELECOM) o Macro-trends o Analysis • Introduction to data communication (DATACOM) o Drivers • Data Communication (DATACOM) vs. Telecommunication (TELECOM) • Datacom vs. Telecom • Fiber-Optic Communication (FOC) • Trends in data center o Overview o Digital transformation o Principle o Data traffic o Optical transmitter/receiver o The case of video o Optical transceiver o Network architecture o Benefits over metallic-based communication o Challenges o Classification of technologies o Mega & Colocation mega data centers o Highlights

FIBER-OPTIC COMMUNICATION APPLICATION TRENDS 65 o Key parameters o • Global IP traffic forecast Notations and terminology • Introduction • Technical challenges - Shannon Limit • Form factor – Overview o Background • Form factor – Trends o Approaching it • Suffixes for 100G OT and above - Overview o Handling it • Suffixes for 100G OT and above - Details o 5 physical properties for modulation and multiplexing o Form factors OPTICAL TRANSCEIVER MARKET FORECAST 84 • Telecom - OT type by network connection

• Total OT • Datacom - OT type by network connection o Shipments forecast by segment (2017-2025) • Mapping by application and data rate o Sales forecast by segment (2017-2025) o Segmentation - Overview o Segmentation - Multi-Mode vs. Single-Mode OT • Datacom OT o Key trends – Overview o Shipments forecast (2017-2025) o Key trends - Coherent technology/transceivers o Sales forecast (2017-2025) o Silicon Photonics (SiPh) trend - Overview o ASP forecast (2017-2025) o Silicon Photonics (SiPh) trend - Benefits • Telecom OT OPTICAL TRANSCEIVER APPLICATIONS 119 o Shipments forecast (2017-2025) o Sales forecast (2017-2025) 1/2 • Datacom trends o ASP forecast (2017-2025) o Overview o Focus on intra-rack interconnection o Focus on inter-rack interconnection OPTICAL TRANSCEIVER INTRODUCTION 97 o Focus on inter-DC interconnection • Technology and trends o Form factors - Interfaces used in datacenters vs. Data rates of OT o Introduction o Global trends - QSFP-DD & OSFP (400G & 200G) o Role of transceiver in networking o Global trends - QSFP56 & QSFP28 (200G & 100G) o Key technologies o Status of migration to higher speed

OPTICAL TRANSCEIVER APPLICATIONS 119 OPTICAL TRANSCEIVER TECHNOLOGY 155

• Telecom trends • Introduction - Key parameters in fiber-optic communication o Focus on Metro Core / Metro Access interconnection o Introduction o Focus on 5G and Wireless Optical Transmission interconnection o Overview of parameters o Global trends - SFP28/QSFP28/QSFP56 o Optical wavelength bands o Global trends – CFP/CFP2/CFP4 o Bandwidth & reach/distance o Global trends – CFP-DCO and ACO (coherent vs. direct detect) o Single Mode Fiber (SMF) and Multi-Mode Fiber (MMF) - Description o Status of migration to higher speed o Single Mode Fiber (SMF) and Multi-Mode Fiber (MMF) - Modal Distortion o Dispersion OPTICAL TRANSCEIVER TRENDS 136 o Modulation - Analog vs. Digital signals • 400G and beyond o Modulation - Pulsed code modulation o Trends heading to 400G o Modulation - Intensity modulation vs. Coherent modulation o Drivers & Benefits o Modulation - Pulsed code modulation - RZ and NRZ o Key applications o Modulation - Pulsed code modulation - PAM4 o New interface types and form factors to be deployed o Modulation - Toward higher data rates o Datacom - 400G applications o Parallelization o Datacom - 400G compatibility with legacy systems o Multiplexing - Overview o Telecom - 400G applications o Multiplexing - TDM & WDM o Telecom - Pluggable coherent ZR/ZR+ o Multiplexing - Configuration of digital coherent optical transceiver circuit • Introduction o Multiplexing - Fixed grid vs. Flexible grid • Use cases o Forward error correction • Coherent optical transmission o Highlights - Advances of optical transmission technologies in recent years • Form factors o Conclusion • Cost effective architecture • Technology outcomes • Toward silicon photonics

OPTICAL TRANSCEIVER TECHNOLOGY 155 o Comparison of EEL (DFB & FP) and VCSEL o • Evolution along silicon switching Technology platform/type vs. Reach distance o Uses case example - 100G data center o Overview - Situation in data centers o Integration with InP optical modulator (for coherent emission) o PAM4 technology impact on switch chip technology o o Trends Trend of silicon photonics o Communication vs. Computing technology • Photodiode o Disruptive improvements in silicon switches o Device types overview o Photodetection principle • Fiber-optic communication scaling o Comparison of photodetectors o Background of network traffic o o Technology scaling differences Wavelength and material choice o Integration with InP based mixers (for coherent detection) o Single-wavelength optical transceivers and coherent transceivers o Client / Ethernet transceivers • Toward Photonic Integrated Circuits (PIC)? o Fiber capacities of commercial WDM systems o Outlook OPTICAL TRANSCEIVER INDUSTRY 221 • Conclusion • Introduction o Possible future speeds - Datacom and telecom o Future - What shape will 800G ethernet take? • Mapping of key players (at transceiver level) o Inside a DC • Market shares o Paving the way (Telecom) o 2017-2019 evolution - Datacom and telecom o 2017-2019 evolution - Datacom OPTICAL TRANSCEIVER KEY COMPONENTS 202 o 2017-2019 evolution - Telecom

• Introduction • 2017-2019 revenue growth/decline for OT suppliers

• Laser diode • 2020 revenues trends o 2 main types - EEL and VCSEL • Technology platform - Indium Phosphide (InP) vs. Silicon Photonics (SiPh) o Wavelength and material choice

OPTICAL TRANSCEIVER INDUSTRY 220 • Focus on China o • Recent Mergers & Acquisitions (M&A) Historical perspective o Recent trends o Overview o InP platform - II-VI acquired Finisar • Global trends o InP - Lumentum acquired Oclaro • Trend with the 400G era o InP - Others o 400G for DCI and coherent technology o Silicon photonics - Acquisitions of Cisco o Transition aspects – Overview o Silicon photonics - Others o Transition aspects - Focus on PAM-4 • Supply chain o Transition aspects - Focus on 400GbE ecosystem o Overview o Getting ready for the future o InP platform - The different models in DATACOM o Pluggable coherent 400ZR+ - Market opportunities o InP platform - The different models in TELECOM o Pluggable coherent 400ZR+ - Players positioning o SiPh platform

• Strategy APPENDIX 270 o Positioning and level of integration of key OT players • Glossary o Disaggregation vs. Vertical integration o Product portfolio of key suppliers • OSI Model

• Competition • Fiber-optic communication network evolution

o Key competitive factors • Fibre channel o Small players vs. Large players • Infinband • Cost aspects - Multi-mode vs. Single-mode transceivers 1/2

• Silicon photonic o Transceivers suppliers o Manufacturing aspects

In scope Out of scope

Optical Optical Communication Communication

Datacom Datacom

Optical Optical Fibers, Transceivers Connectors, • Technology Equipments, • Industry Yours needs are Services • Market out of the report’ scope? Telecom Telecom Contact us for a custom:

Preexisting information

Market Volume (in Munits) ASP (in $) Revenue (in $M)

Information Aggregation

Acacia Communication, Accelink, Adtran, ADVA, Alibaba, Amazon Web services, Apple, Applied optoelectronics Inc (AOI), Arista, ATOP, AZ by CyrusOne, Baidu , Broadcom, ChampionONE, Ciena (Cyan), Cisco, ColorChip, Dell, E.C.I. Networks, Ekinops, Emcore, Eoptolink, Facebook, Fiberhome, Finisar (now II-VI), Foxconn Interconnect Technology (FOIT), Fujitsu Networks, Fujitsu Optical components, Gigalight, Google, HG Genuine Optics, Hisense Broadband, Huawei, Huawei, HUBER+SUHNER Cube Optics AG, IBM+Softlayer cloud services , II-VI, Infinera (Coriant, Transmode), InnoLight, Inphi, Intel, IPG Photonics (Menara Network), J.P. Morgan, Juniper Networks, Lumentum, Macom, Mellanox, Microsoft, NEC, NeoPhotonics, Nokia (Alcatel Lucent), NTT Electronics, Oclaro, OE Solutions, Oplink (MOLEX), Padtec, Rackspace , Ranovus, Renesas (Integrated Device Technology), Rockley Photonics, Sicoya, Skorpios technologies, Source Photonics, ST, Sumitomo, Tencent, Verizon , Xtera, Yahoo, ZTE and more…

Martin Vallo Dr Martin Vallo is a Technology & Market Analyst specializing in solid-state lighting technologies, within the Photonics, Sensing & Display division at Yole Développement (Yole). With 9 years’ experience in semiconductor technology, Martin is currently involved in the development of technology & market reports as well as the production of custom consulting projects at Yole. Prior to his work at Yole, Dr Vallo worked at CEA (Grenoble, France), with a mission focused on the epitaxial growth of InGaN/GaN core-shell nanowire LEDs by MOCVD and their characterization for highly flexible photonic devices. Martin graduated from Academy of Sciences, Institute of Electrical Engineering (Slovakia) with an engineering degree in III-nitride semiconductors. Contact: [email protected]

Pars Mukish Pars Mukish holds a master’s degree in Materials Science and Polymers from ITECH in France and a master’s degree in Innovation and Technology Management from EM Lyon, also in France. He works at Yole Développement, the ‘More than Moore’ market research and strategy consulting company, as senior market and technology analyst in the fields of LED, OLED, lighting technologies, and compound semiconductors, He performs technical, economic, and marketing analyses. In 2015, Pars was named business unit manager for emerging sapphire, LED/OLED, and display/lighting activities. Previously, he worked as marketing analyst and techno-economic analyst at CEA, a French research center for several years. Contact: [email protected]

Dr. Eric Mounier With more than 20 years of experience in MEMS, sensors and photonics applications, markets, and technology analyses, Eric provides deep industry insight into MEMS and photonics current and future trends. He is a daily contributor to the development of MEMS and photonics activities at Yole, with a large collection of market and technology reports as well as multiple custom consulting projects: business strategy, identification of investments or acquisition targets, due diligences (buy/sell side), market and technology analysis, cost modelling, technology scouting, etc. Eric has contributed to more than 250 marketing/technological analyses and 80 reports, helping move the MEMS and Si photonics industry forward. Thanks to his extensive knowledge of the MEMS, sensors, and photonics-related industries, Eric is often invited to speak at industry conferences worldwide. Moreover, he has been interviewed and quoted by leading media throughout the world. Prior to working at Yole, Eric held R&D and Marketing positions at CEA Leti in France. Eric has a Semiconductor Engineering degree and a Ph.-D in Optoelectronics from the National Polytechnic Institute of Grenoble. Contact: [email protected] Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020 10 Impact of COVID-19 & Basis for our scenarios ECONOMIC OUTLOOK Initial statements

• The COVID-19 has deep implications for the telecom infrastructure supply chain. The disease is affecting China and is spreading within Asia and into Europe and North America – the most important markets wherein the datacom and telecom technologies have been heavily deployed. • End users spending on IT infrastructure (server and enterprise storage systems) will decline in 2020 • Interesting situation is in optical networking market. Demand for networking and cloud services is huge today. Due to sanitary confinement people work and communicate from home as well as take advantage of digital entertainment connected to the internet. Telecom networks and data centers will continue to operate while most of the manufacturing and travelling businesses are shutting down. Network and datacenter operators will try to maintain high bandwidth for storage and streaming services and continuously working on enhancing network capacity. • Demand for optics by Chinese data-center operators (Alibaba, Baidu, Bytedance, Tencent, …) is very strong with the Chinese government support for deployment 5G and cloud data centers. That means the future scenario for optical communication sector doesn't have to end badly if manufacturing of optical systems and module restart in 3 months and Chinese consumers will continue subscribing cloud services this year. • In conclusion, we assume different negative impact on telecommunication infrastructure systems. Elements of the impact include changing demand expectations from the buyers, supply chain shortages and logistical delays, short-term component price increases, and a suppressed economic and social climate. Even though a demand for bandwidth is high, the optical communication industry will be negatively impacted in sales due to less investing to the legacy infrastructure instead of higher investing to the new ecosystems.

Server and Enterprise Storage Systems • Middle case / Best case • How long this recession will last is also unclear now. • The current probable scenario server market revenues will decline 4-6% year over year • The enterprise storage systems market is expected to decline 5-7% year over year • The both servers and storage systems return to growth in the second half of the year Optical networking systems and modules for datacom and telecom • Middle case / Best case • How long this recession will last is also unclear now. Difficult to predict the economic situation in the next 3-6 months. • The downturn in optical networking and transceiver sales should be short time. We expect that it will be followed by a very strong recovery, given the new urgency for adding bandwidth across the networking infrastructure. • The optical transceivers market is expected to decline >10% in Q1 and <8% in Q2 due to slow restart manufacturing in China. • Demand continues to be solid, we expect that unfulfilled Q1 and Q2 demand will be shipped in subsequent quarters.

Datacom $12.1B Telecom CAGR 20%

2025 $17.7B $4B 2019 $5.6B $7.7B CAGR 7%

$3.7B

• Data communication refers to the transmission of information between two or more points mostly using fiber glass as a communication channel and some specific form (set of 0’s and 1’s) understandable to that channel. In this report data communication are linked with the datacenters and typical transmission distance is up to 100km (DCI). • Data communication system ensure: • Delivery: The system must deliver data to the correct destination. Data must be received by the intended device or user. • Accuracy: The system must deliver data accurately. Data that have been altered in transmission and left uncorrected are unusable. • Timeliness: The system should transfer data within time. Data becomes useless if it is delivered late. In case of video, audio and voice data, timely delivery means that data is delivered as it is produced.This type of delivery is called real-time transmission.

• Telecommunication is the transmission of signals over a distance for the purpose of communication. In modern times, this process almost always involves the use of electromagnetic waves or optical fibers by transmitters and receivers. • Telecommunication term defines any assisted transmission. It could be telephone, telegraph, radio,TV, even smoke signals. • Telecommunication system consists of three elements: • A transmitter that takes information and converts it to a signal; • A transmission medium that carries the signal; • A receiver that receives the signal and converts it back into usable information.

Data CommunicationVs.Telecommunication • They are both a form of communication; data communication is a subset of Telecommunication • Telecommunication sends data between two links by means of electromagnetic. (Like satellite), while data communication means send data by telecommunication, it consists of codes of 0’s and 1’s. • In computer means, data communication is digital data and telecommunication is equipped to send digital data to receiver. • Telecommunication is any communication over a distance. Data communication usually implies digital, and often excludes voice services.

Telecom networks WDM systems

LONG-HAUL • High performance • Fiber constrained Long-haul networks SONET/SDH 5G

METRO FTTx • Space and power Datacom networks constrained • Pay as you grow model

LAN

EDGE • Shorter product life cycles Source: NTT * • Cost and power sensitive *5G network and Wireless access network is not part of datacom network

• Each year, Global device and connection growth various new (Market share 2018 → 2023) 2023 devices with Other (2% → 4%) increased Tablets (4%→3%) capabilities and PCs (7%→4%) 1.1B intelligence are TVs (including game consoles) (13%→11%) introduced and Non-Smartphones (14%→5%) adopted in the Smartphones (27%→23%) 1.6B The trend is market. 0.8B accelerating the Machine-to-Machine (M2M) (33%→50%) increase in the • The average 2018 average number number of 3.2B devices and 0.4B of devices and connections per 1.2B connections per capita will grow 0.7B 14.7B household and from 2.4 in 2018 per capita. to 3.6 by 2023 2.7B 1.4B 6.7B 2.4B 4.8B ~29.3B 6.1B CAGR 10% ~18.4B (Source: Cisco Annual Internet Report)

Digital optical communication Telecom Datacom

Metro access Metro core Long haul Datacenters <100 km 100 – 800 km >800 km The driver applications of Wireless - 5G the fiber-optic network are • New era of connectedness is increasingly universal lagerly digital • The capacity of the digital communications networks must increase exponentially applications • More than 20 billion connected devices and machine learning and artificial and services. intelligence will continue to accelerate this trend

The rapid rise of internet traffic that is going through Deployment of modern communications has rapidly expanded from being the mega data centers operated domain of telecom service providers to deployments by enterprises and by hyperscalers. service “mega” data center enterprises.

The OT market is expected to grow from 183 Munits in 2020 to 211 Munits in 2025, mostly driven by Ethernet optical modules.

CAGR2020-2025 = +6%.

• Although the total shipments in 2020 can decrease up to 15% in the worst scenario, the total revenue is expected to moderately increase. It is a result of much more expensive optical modules above 100G of data rate. However the operation costs - price for transmission of 1G/s is rapidly decreasing.

• The Datacom market growth will be driven by adoption of expensive higher data rate optical modules which migrate from core/spine networks down The OT market to inter-rack connections. for Datacom is expected to grow from $4.2B in 2020 to $12.1B in 2025.

CAGR2020-2025 = 24%.

Chip Optical Sub-Assembly Transceiver

Bill of materials

Components

Scheme

Technologies

Details of Chip components - laser and photodiode are available in the chapter Optical Transceiver Components Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020 21 OPTICAL TRANSCEIVER INTRODUCTION – TECHNOLOGY & TRENDS Form factors - Mapping by application and data rate

Datacom Telecom <10 km 10-120 km 100 – 800 km > 800 km

LAN/ METRO METRO METRO LONG-HAUL Intra DC Access/Inter Access/5G Core 10G-25G 40G 100G 200G 400G DC

SFP XFP SFP+ SFP28 QSFP28 – QSFP56 – QSFP-DD SR/DR/FR/ QSFP+ SR/DR/FR OSFP – SR/DR/FR QSFP CWDM/PSM QSFP28– QSFP56 – QSFP-DD LR/ER/LWDM LR/ER OSFP – LR/ZR

CFP2-LR/ER CFP4-LR/ER CFP8-LR 5”x7” 4”x5” CFP2-ACO OSFP/QSFP-DD module module CFP2-DCO ZR/ZR+ CFP-DCO Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020 22 OPTICAL TRANSCEIVER INTRODUCTION – TECHNOLOGY & TRENDS Key trends - Coherent technology/transceivers

Multi mode transceiver Single mode transceiver Coherent transceiver

Short reach (hyperscale DC, Long reach (hyperscale DC) Long reach (Telecom) Application enterprise, storage) Laser VCSEL xxx xxx source 850 nm The coherent technology is Modulation xxx NRZ, PAM4 xxx consider as a most advanced Reach 3 m – 100 m xxx > 10 km but also most expensive technology today.

Advantage/ Disadvantage

The MM, SM and coherent transceivers have been driven by scaling of various electrical and optical technologies.

• Smaller photonic components: • Lower power consumption: Size matters when we talk about device integration into Data centers are extremely power-hungry and will sub-systems. As an example, for sensing applications, optical consume a significant fraction of the world electricity if no technology has the highest sensitivity but lacks of technology shift occurs. Photonic proposes lower energy- miniaturization because most of the time hybrid dies need consumption solutions that could be turned into reduced to be assembled together and long optical path is required heat dissipation, lower environmental footprint and lower (thus the optical module is often bulky). So, photonic offers operating costs. In a previous Yole report (2015 Data the best combination of high accuracy and long lifetime and Centers), we shown Si photonics interconnects could further integration opens the way to portable systems for reduce power consumption by 5-10%. consumer applications.

• Leverage semiconductor industry: Manufacturing PICs is taking benefit from the batch manufacturing of the IC industry thus lowering cost down.

• High data rates: • Lower $/Gbps: Here again, data rates are increasing in data centers as we In 2015, Facebook specified a 100G transceiver using are heading to 400Gb/s. Direct Attach Cable with Copper single-mode fiber it believes it can drive to a cost of $1/GB. is limited to 30m and 10Gb for intra data center This $1/Gb limit has been one of the cost target of the last interconnects. For longer distance and data rate, InP and Si years for the optical transceivers community. To hit the photonics are used. For example, Infinera ICE5, announced • Better reliability: lower costs, the tech giant relaxed distance requirements only 24 months after ICE4, delivers a significant leap in to 500m down from 2km and eased specs on operating capacity per wavelength, from 200G to 600G, and offers Compared to legacy optics with temperature and product lifetime. Today, with an average improvements in fiber capacity, reach and power efficiency hybrid integration. selling price of $200 for a 100Gb transceiver, we are at to address the most demanding high-scale applications. $2/Gb. Si photonics can leverage the benefits from the IC manufacturing industry to lower the costs down.

2015 2016 2017 2018 2019 2020 2021 Future

Within the data center racks 10G Being deployed Due to the 25G Starting to Volume ramp 100G ongoing large be deployed Starting to Volume ramp increases in be deployed bandwidth Between data center racks demand, Data Center 40G connections are Being deployed 100G Starting to Volume ramp 400G expected to move be deployed Source: Finisar from 25G/100G Starting to Volume ramp to 100G/400G be deployed Data Center Interconnect & WAN 10G DWDM withTunable laser • Rapid evolution of DSPs for optical Being deployed 100G/200G Coherent communication technologies shorten Starting to Volume ramp life cycle of the single mode and the be deployed 400GE & Coherent multimode optics used in the data Starting to Volume ramp centers. be deployed Starting to be deployed 800G

CFP8 QSFP-DD and OSFP New form • 1st generetion 400G form • 2nd generetion 400G form factors factor factor standards are • Applications: metro core emerging for routers and DWDM client all types of interfaces • Slightly smaller than CFP2 interconnecti • Support ons • CDAUI-16 16x25G NRZ • CDAUI-8 8x50 PAM4

DCO/ACO → 400G ZR → 800G ZR

industry efforts to deliver a viable coherent solution

With rising Past Today (ZR) Future (800G) data demand, data center • Coherent modules operators are significantly larger than their intensity seeking a low • Advances in CMOS modulated power, small • Integrated optics form-factor counterparts • Coherent digital solution to • Need for powerful signal processor cover edge- digital signal (DSP) designs DCI distances. processors and the • DSP coding and use of discrete equalization optical components. algorithms • Targeted long-haul applications

These modules will provide the necessary bandwidth increases for the regional or metro networks for the mega-DC operators such as Google, Microsoft, Amazon, Facebook, and many others.

Optical wavelength bands Bandwidth Reach/Distance SMF/MMF

This chapter will provide the reader with a rudimentary understanding of inevitable fiber optic communication parameters and Dispersion Modulation Multiplexing Parallelization their impact on today’s trends.

Now 2025

Top cloud 100G/200G/ 800G/1.6T data centers 400G

Rest cloud Heading 100G 800G toward higher data centers speeds the Large 100G/400G 800G/1.6T range of form enterprises factors should be reduced to Rest of 100G maintain enterprises 400G compatibility. Services Provides 100G/400G 1.6T (Telecom)

Source: Ethernet Alliance

• New coherent pluggable modules QSFP-DD, OSFP and CFP2-DCO will drive a paradigm shift in how DCI is deployed by cloud and telecom service providers, enabling high-density IP over DWDM on switch and router platforms that also have the performance required for metro and long-haul networks.

Inside DC DCI (Metro Access) DCI (Metro Core) DCI (Long Haul) PSM4, LR4, PAM4 (100G, QSFP-DD) QPSK/8QAM/16QAM QPSK/8QAM CWDM4 Coherent Coherent Coherent

100G 100G/200G/400G/600G 100G/200G/400G 100G/200G/300G The idea concept CWDM DWDM DWDM DWDM Future is to use the same 5 m 2 km 10 km 100 km 800 km 10 000 km • Development of an industry-wide ecosystem 100G/200G/400G Distance that supports pluggability and a new era of pluggable digital Past coherent optics interoperability for 400G. 1. Coherent DSP ASICs have been designed for dedicated (DCO) module transport boxes. The power consumption and package • The ecosystem based on ZR will enable telecom across all size had not been sufficiently optimized for QSFP- DD and cloud providers to not only deploy solutions distances. or OSFP. These boxes add cost and dissipate power. for DCI edge applications up to 120km but also 2. Lack of Interoperability across generations of coherent use the same 100/200/300/400G solutions across solutions for 100G and 200G. the entire DCI infrastructure.

3. Lack of a clear application space, as the conventional Inside DC DCI (Any distance) coherent technology had been deployed in many forms across various distances and optical fibre span DR4, FR4, QPSK/8QAM/16QAM (400G ZR/ZR+) configurations. Coherent 400G Pluggable DCO/100G/200G/400G CWDM DWDM

5 m 2 km 10 km 100 km 800 km 10 000 km Distance Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020 30 OPTICAL TRANSCEIVER KEY COMPONENTS Laser diode - Comparison of EEL (DFB & FP) and VCSEL

Transmission Speed DFB FP VCSEL xx xx xx xx xx Mbps Mbps Gbps Gbps Gbps ++ + – 850 nm LED Different laser xx m PAROLI* AlGaAs/AlAs Multi Mode 850 nm VCSEL Multi Mode diode InGaAsP/InP InGaAsP/InGaP InGaAsN/GaAs Multi Mode Multiple technologies xx m Fibers are present in – + ++ optical xx km communication – – ++ 1.3 µm Fabry-Pérot 1.55 µm sector DFB Single Mode 1.3 µm DFB Single Mode depending on ++ – + xx km transmission Single Mode Externally Modulated distance and Distance Transmission speed. ++ ++ – xx km

*PAROLI = Parallel optical link

2017 2018 2019

Telecom Telecom Telecom (revenue) (revenue) (revenue) XX% XX% XX% Datacom Datacom Datacom (revenue) (revenue) (revenue) XX% XX% XX%

• Event though much higher ASP of telecom optical transceivers (coherent technology or outdoor graded), revenues from datacom dominated recent years due to deployment of high volume ethernet transceivers and AOCs for cloud builders, large enterprise and HPC centers • Splitting market into datacom and telecom is becoming more blurred as metro networks which were typical telecom before are more attractive for interconnections of data centers. If the coherent technology will go down in cost and thus become feasible to be implemented in data centers we won’t be able to distinguish technologies addressing datacom and telecom markets.This segmentation can disappear.

2017 2018 2019

Total Total Total 2017: 2018: 2019: $x.xxB $x.xxB $x.xxB

x% x%

Indium Phosphide – InP Silicon Photonics – SiPh

The InP platform and Silicon Photonics will coexist in the future.

Hyperscalers, Cloud builders, Enterprises, HPC centers • In recent years we saw the strategical (Customers) investment of the market leaders to strengthen their positions. • In spite of consolidations the market is still very fragmented. Many companies compete and there is no Optical modules vendors single or small group of companies (Suppliers) which dominate the market. Future: Disaggregated Vertically supply chain integrated • We expect aggregate merger and acquisitions activity to be related to: • Technology expertise • High volume production and low cost to meet mainly hyperscalers expectations • Strengthening the position in the region – China or USA

DATACOM TELECOM Fibre SONET/ CWDM/ 5G & Bidi High Speed Ethernet Infiniband AOCs Coherent channel SDH DWDM Wireless Access Components II-VI (+Finisar) Different Lumentum (Oclaro) strategies is Foxconn Interconnect Technology (FIT) also projected HG Genuine Optics into the Accelink product Sumitomo portfolio and InnoLight segment Source Photonics interest. Cisco (Acacia) Fujitsu Optical components MOLEX (Oplink) NeoPhotonics Macom HUBER+SUHNER Cube Optics AG NTT Electronics In portfolio Not in portfolio

2017/2018 2019/2020 • Completing 400GbE ecosystem from different suppliers should guarantee a competitive 100GbE 400GbE 400GbE supply chain for 400GbE module makers trying to ramp production at the end of 2019 $250 – $400 $3,500 – $10,000 < $3,000 • Integrating retimers into the optical transceiver modules is an intermediate Broadcom and step to SiPh Inphi are two I. PAM-4 large and trusted In the past Today suppliers of 400GbE PAM-4 silicon – both trying to offer customers a differentiated solution.

DSP (TROSA) Optical module Level of integration - - QSFP-DD/CFP2-DCO Vertically integrated Ciena, Infinera, Acacia, and Inphi are planning - - QSFP-DD - a fully vertically Yes - - - integrated strategy to cover the broadest Yes - - - possible market reach Plenty of - - - Vertically integrated companies are - - QSFP-DD - As component developers repurpose investing Yes - - - $500M in their designs to - - QSFP-DD - address adjacent total to bring markets, more and 400ZR to the No - - - more companies are market. Yes - - Component manufacturer beginning to endorse some form of 400ZR - - - Telecom modules manufacturer in their future - - - Vertically integrated roadmaps. - - QSFP-DD - Yes ------

Optical Transceivers for Datacom & Telecom | Sample | www.yole.fr | ©2020 38 YOLE GROUP OF COMPANIES RELATED REPORTS Yole Développement Silicon Photonics 2020 VCSELs – Market and Edge Emitting Lasers: Market Technology Trends 2019 and Technology Trends 2019

Contact our Sales Team for more information GaAs Wafer and Epiwafer Market: InP Wafer and Epiwafer Market RF, Photonics, LED, Display and PV – Photonic and RF Applications Applications 2020

Intel Silicon Photonic 100G Intel Silicon Photonic 100G Contact our CWDM4 QFSP28 Transceiver PSM4 QFSP28 Transceiver Sales Team for more information

REPORTS, MONITORS & TRACKS Western US & Canada India and RoA Japan Steve Laferriere - [email protected] Takashi Onozawa - [email protected] Miho Ohtake - [email protected] + 1 310 600 8267 +81 80 4371 4887 +81 34 4059 204 Eastern US & Canada Greater China Japan and Singapore Chris Youman - [email protected] Mavis Wang - [email protected] Itsuyo Oshiba - [email protected] +1 919 607 9839 +886 979 336 809 +86 136 6156 6824 +81 80 3577 3042 Europe and RoW Korea Japan Lizzie Levenez - [email protected] Peter Ok - [email protected] Toru Hosaka – [email protected] +49 15 123 544 182 +82 10 4089 0233 +81 90 1775 3866 Benelux, UK & Spain Marine Wybranietz - [email protected] +49 69 96 21 76 78

FINANCIAL SERVICES CUSTOM PROJECT SERVICES GENERAL › Jean-Christophe Eloy - [email protected] › Jérome Azémar, Yole Développement - › Camille Veyrier, Marketing & Communication +33 4 72 83 01 80 [email protected] - +33 6 27 68 69 33 [email protected] - +33 472 83 01 01 › Sandrine Leroy, Public Relations › Ivan Donaldson - [email protected] › Julie Coulon, System Plus Consulting - [email protected] - +33 4 72 83 01 89 +1 208 850 3914 [email protected] - +33 2 72 17 89 85 › General inquiries: [email protected] - +33 4 72 83 01 80