Shakeout likely in 10-Gbit laser transceiver modules

Shakeout likely in 10-Gbit laser transceiver modules
Los Angeles - Optical-component suppliers are bracing for a shakeout in 10-Gbit laser transceiver modules, where too many suppliers still chase markets capable of supporting only a handful.

In all four small-form-factor module standards for parallel links--Xenpak, Xpak, X2 and an emerging longer-reach serial standard, XFP--the concern is that business does not warrant the number of existing players, even if a company chooses a particular niche to pursue.

As a result, Infineon Technologies Inc. has decided to look for a partner or acquirer for its fiber-optics communication products business. Picolight Inc., a Colorado-based supplier of VCSEL-based transceiver modules and components, is tightening links to Sumitomo Corp. to increase market presence. Intel Corp. is biding its time with the larger 300-pin multisource-agreement (MSA) form factor in its tunable-laser business, waiting for the module turmoil to shake out. Emcore Corp. pointedly is addressing specialized midsize markets to avoid getting caught in the high-volume line card stampede.

The largest players, JDS Uniphase Corp. and Agilent Technologies Inc., still are casting their nets wide with a variety of package options for 10-Gbit modules. But even the market leaders are nervously eyeing the newest Asia-based players, which will be able to achieve manufacturing-cost advantages that will be difficult for U.S.-based players to meet. Fiberxon Inc., for example, which maintains the majority of its engineering and all its manufacturing in China, showed an impressive array of transceiver modules at the Optical Fiber Communication Conference & Exhibition here last month.

Thomas Fawcett, marketing manager for Agilent's fiber-optic products, said the company had an eye on new players when it consolidated all III-V and vertical-cavity surface-emitting laser (VCSEL) manufacturing in Singapore, "with a focus on driving low cost and high volume." Agilent had its bases covered at OFC, showing new 10-Gbit modules in Xenpak, X2, XFP and 300-pin MSA packages. Fawcett said he expects only three or four competitors to offer a comparable breadth of products.

That was a factor leading Infineon to look for an exit strategy. "The corporate decision to carve out fiber-optic products was a straightforward one," said Shantanu Mitra, director of Infineon's fiber-optic products. "There are way too many module vendors chasing too little business," Mitra said.

Individual pursuits

JDS Uniphase will focus on integrating active and passive devices in realms outside of traditional data transceivers, said Stan Lumish, chief technology officer for communications, "since the data communications market is coming close to making the transceiver a low-margin com-

modity." While not shying away from small-form-factor modules, JDS Uniphase sees value in offering laser components in TOSA and ROSA optical-subassembly packages, which can be integrated inside modules manufactured by others.

Emcore, which became a full-fledged supplier by combining its own VCSEL line with specialty transceivers acquired from Ortel Corp., has decided to focus on special-purpose niches, such as the LX4 and CX4 markets for parallel Ethernet applications. Emcore showed the first 10GBase-CX4 Xenpak module for short-range interconnect at OFC. Al Yuen, vice president of sales and marketing for fiber optics at Emcore, said that special supercomputing and server-cluster markets using CX-4 as Infiniband translation may be a market amounting to tens of thousands of units per year. Still, "we can differentiate ourselves with products here," he said, "far more easily than chasing every 10-Gbit module standard for line cards."

Intel, for its part, brought its first tunable-laser products in 300-pin MSAs to OFC, combining the thermally tunable architectures acquired from New Focus Communications with the advanced fab capabilities it has set up in Newark, Calif. Craig Thompson, director of marketing for telecom optical transceivers at Intel, said that while there is a push to integrate from 300-pin MSA to small modules, Intel is willing to take the time to demonstrate good tunable performance before entering the rough-and-tumble small-module world.

Thompson said that tunable lasers are not as subject to price gouging as single-frequency VCSEL, distributed-feedback or Fabry-Perot devices, since the primary use of tunability for reconfiguring wavelengths is still in its infancy. Tunables will avoid the worst of the 10G package commoditization, Thompson said, since the integration path will move from integrated laser and modulator to a special small-form-factor butterfly integrated laser/modulator and, finally, directly to a TOSA optical-subassembly package.

VCSELs were supposed to show absolute cost advantages over Fabry-Perot lasers, and have emerged as a favorite in 850-nanometer enterprise applications. The case for VCSELs has proven tougher to make in 1,310-nm markets for longer-reach devices, since oversupply in traditional lasers has led to price gouging.

Picolight turned to a mutual-sourcing pact with Sumitomo to gain wider market presence for its VCSELs. Vice president of marketing Warner Andrews said that offering a full line of products with multiple frequencies, multiple speeds and different radii in major small-form-factor packages was necessary for viability.

Picolight now has the Accelar multimode-fiber 850-nm product line, the Extensus longer-reach single-mode fiber modules and the Magnus parallel-optic product line. It also launched a subsidiary in 2003, Picolight OEngines, to offer laser and detector components outside any module or MSA package.

Asian model

Fiberxon may provide an indicator of where the industry is going. The company was founded in December 2000 in the United States, but located all manufacturing and most engineering in China. Jack Lu, vice president of marketing and sales, said Fiberxon got its feet wet in GBIC and SFP packages in 2001-02, linking up with key OEMs such as UTStarcomm Inc.

Fiberxon now is prepared to launch XFP modules worldwide and has filed for close to 20 patents in realms such as EMI control and heat dissipation, to make sure that its products are not seen as simply low-cost Asian knockoffs. Nevertheless, the company has worked out a complex mix of in-house manufacturing and outsourced contract manufacturing in China, using special remote-monitoring software to directly manage contract suppliers.

"We will be demonstrating our cost and speed advantages," Lu said. "Still, we recognize that global capacity right now is far beyond demand."