Optical System and Module Vendors Rush to Grab 100G IC expertise
Coherent-detection schemes for optical transport at 40G and 100G are like an undersea earthquake. Not only is there an immediate shift in technology, but the shift affects other technologies used in conjunction, creating a tsunami that causes changes elsewhere. The new signal processing functions are changing the supply landscape, particularly when they are placed inside the 100G optical module.
These functions include ultra-high-speed analog-to-digital conversion (ADC), digital signal processing (DSP) to subtract impairments caused by passing through physical media, and forward error correction (FEC).
We believe this tsunami is heading for the optical transponder market. Either it will bring additional value to the merchant transponder, or it will erode the basis for it.
A sizeable chunk of electronics is now deeply intertwined with the optics for transport. This is not completely unheard of: we note that direct-detection receivers even at low speeds use PIN-TIA components rather than stand-alone PIN photodiodes for similar reasons. In that case the signal is not really usable without the first-stage electronics that boost the signal level to point where it can be sent to another device. In the 100G coherent case, the received signal is also not turned into real “bits” until its has gone through a clean-up process in the chip. Thus, one could argue that the ADC/DSP and even FEC should be considered as closely linked to the receive optics even though these functions require a much bigger piece of semiconductor real estate.
We believe optics vendors should embrace the ADC/DSP/FEC function as integral to the optics. The challenge is that developing these components demands a complex skill set and requires investment. But more seriously, this path faces two opposing forces: one on the demand side and the other on the supply side.
Carriers are giving a schizophrenic message to their supply chain. On the one hand, they like optical modules based on multi-source agreements (MSAs) because interchangeable suppliers befit a competitive merchant model. On the other, they continue to choose OEM solutions based on differentiated optical performance.
The transmission challenges at 100G and beyond are increasing carriers’ interest in differentiated performance. Those OEMs that are able to invest are creating their own 100G DSP chips, reducing market demand for merchant chips and modules.
On the supply side, the chip function and implementation technology fall under the traditional purview of framer IC vendors. They can supply to module makers as well as to OEMs. But if the module makers don’t control this part of the BOM and R&D roadmap, they will cease to be optical vendors and instead become contract manufacturers or original design manufacturers (ODMs). Already-low margins could be eroded further.
Clearly the module makers will have to evolve to survive. The question is which direction they will take.
These functions include ultra-high-speed analog-to-digital conversion (ADC), digital signal processing (DSP) to subtract impairments caused by passing through physical media, and forward error correction (FEC).
We believe this tsunami is heading for the optical transponder market. Either it will bring additional value to the merchant transponder, or it will erode the basis for it.
A sizeable chunk of electronics is now deeply intertwined with the optics for transport. This is not completely unheard of: we note that direct-detection receivers even at low speeds use PIN-TIA components rather than stand-alone PIN photodiodes for similar reasons. In that case the signal is not really usable without the first-stage electronics that boost the signal level to point where it can be sent to another device. In the 100G coherent case, the received signal is also not turned into real “bits” until its has gone through a clean-up process in the chip. Thus, one could argue that the ADC/DSP and even FEC should be considered as closely linked to the receive optics even though these functions require a much bigger piece of semiconductor real estate.
We believe optics vendors should embrace the ADC/DSP/FEC function as integral to the optics. The challenge is that developing these components demands a complex skill set and requires investment. But more seriously, this path faces two opposing forces: one on the demand side and the other on the supply side.
Carriers are giving a schizophrenic message to their supply chain. On the one hand, they like optical modules based on multi-source agreements (MSAs) because interchangeable suppliers befit a competitive merchant model. On the other, they continue to choose OEM solutions based on differentiated optical performance.
The transmission challenges at 100G and beyond are increasing carriers’ interest in differentiated performance. Those OEMs that are able to invest are creating their own 100G DSP chips, reducing market demand for merchant chips and modules.
On the supply side, the chip function and implementation technology fall under the traditional purview of framer IC vendors. They can supply to module makers as well as to OEMs. But if the module makers don’t control this part of the BOM and R&D roadmap, they will cease to be optical vendors and instead become contract manufacturers or original design manufacturers (ODMs). Already-low margins could be eroded further.
Clearly the module makers will have to evolve to survive. The question is which direction they will take.
Executive summary
In a nutshell
Ovum view
Recommendations for players
Changing landscape for critical technology supply
Multiple semiconductor segments vie for optical module chip market
Will the DSP come from OEM, module, or IC vendors?
Multiple skill sets required
Bigger system OEMs control time-to-market with in-house IC
OEM was first off the block
OEMs more likely to do IC than OC
OEMs have higher-layer issues that demand resources
Optical module vendors have the most incentive to control the DSP
Module vendors have relied on optical expertise to date
Performance of optical module less reliant on optics specifications
DSP replaces dispersion compensation optics
DSP in conjunction with modulation schemes lowers speed and other requirements on active components
Future wavelength management specifications more demanding
Optical module vendors defending their value; but detailed design interaction between optical channel and IC favors OEMs
Density challenge now creates market timing issue for module vendors
Merchant IP vendors hold the keys
Coherent alone is smaller market than ASSP IC suppliers like
Captive supply at two levels of value chain reduces long-term ASSP opportunity
Broader trend to replace analog with digital
Company briefs
AppliedMicro: PHY FEC IC vendor
100G products
Related products
Company background
Avalon Microelectronics: OTN FEC IP vendor
100G products
Related products
Company background
Cortina: PHY FEC IC vendor
100G products
Mobius: ADC specialist
100G products
Company background
Multiphy: optical DSP start-up
100G products
Company background
Opnext: optical module vendor
100G products
Related products
Company background
Fujitsu Microelectronics Europe: mixed-signal IC vendor
100G products
Related products
Company background
Viasat: FEC and DSP IP vendor
100G products
Company background
Vitesse: PHY FEC IC vendor
100G products
Related products
Company background
In a nutshell
Ovum view
Recommendations for players
Changing landscape for critical technology supply
Multiple semiconductor segments vie for optical module chip market
Will the DSP come from OEM, module, or IC vendors?
Multiple skill sets required
Bigger system OEMs control time-to-market with in-house IC
OEM was first off the block
OEMs more likely to do IC than OC
OEMs have higher-layer issues that demand resources
Optical module vendors have the most incentive to control the DSP
Module vendors have relied on optical expertise to date
Performance of optical module less reliant on optics specifications
DSP replaces dispersion compensation optics
DSP in conjunction with modulation schemes lowers speed and other requirements on active components
Future wavelength management specifications more demanding
Optical module vendors defending their value; but detailed design interaction between optical channel and IC favors OEMs
Density challenge now creates market timing issue for module vendors
Merchant IP vendors hold the keys
Coherent alone is smaller market than ASSP IC suppliers like
Captive supply at two levels of value chain reduces long-term ASSP opportunity
Broader trend to replace analog with digital
Company briefs
AppliedMicro: PHY FEC IC vendor
100G products
Related products
Company background
Avalon Microelectronics: OTN FEC IP vendor
100G products
Related products
Company background
Cortina: PHY FEC IC vendor
100G products
Mobius: ADC specialist
100G products
Company background
Multiphy: optical DSP start-up
100G products
Company background
Opnext: optical module vendor
100G products
Related products
Company background
Fujitsu Microelectronics Europe: mixed-signal IC vendor
100G products
Related products
Company background
Viasat: FEC and DSP IP vendor
100G products
Company background
Vitesse: PHY FEC IC vendor
100G products
Related products
Company background
LIST OF FIGURES
Figure 1: Forward error correction and digital signal processing block diagram for 100G transport
Figure 1: Forward error correction and digital signal processing block diagram for 100G transport
