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For many years, the Holy Grail of the optical components market has been silicon photonics. Compared with the process of producing tens of millions of silicon chips, manufacturing optical component modules could be viewed as a boutique operation. Discrete optical components, lasers, modulators, and lensed need to be placed, aligned, and fixed into a hermetically sealed package, and these high-precision activities have led to a boutique cost structure. The promise of silicon photonics has been manufacturing on a massive, silicon-chip-style scale, reaping silicon-chip-like economics with a similar speed of manufacture and testing.

Silicon photonics is not a new concept; Intel has been researching and perfecting the technology for more than a decade. The fundamental challenge has always been generating light of off silicon that can propagate over meaningful distances. What is new is the ramping up of production capabilities, the capturing of marquee lead customers, and the beginnings of deployment at scale.

Ovum projects that the data center intra-connect market – consisting of optics to connect the leaf and spine architectures inside data centers – will exceed $5bn in 2023. According to Intel, the largest data center sites can consume up to 1 million 100G transceivers per data center. Intel's current silicon photonics solutions include 100G PSM4 and CWDM4. This market has now hit its stride, with a number of major players in the market. Intel has captured two leading customers – Facebook and Microsoft – and continues to ramp up production capabilities to address this market, citing the ability to produce up to 1 million 100G units per year. The near-term 100G opportunity will continue to grow as the major ICPs continue to add data center sites. The market is also broadening, with an emerging new tier of ICPs developing scale and with enterprises upgrading their internal data center capabilities.

The 100G intra-data-center market is not the only market in Intel's sights: Intel intends to leverage its silicon photonics platform and address more markets over the next years, and it has announced an intention to target the developing 5G MFH MBH markets with 25G and 100G solutions. Silicon photonics will be added to its mobile edge compute platforms, combining decades of CPU logic expertise with its newly honed expertise in silicon photonics.

The next major opportunity in the data center realm is the transition to 400G, a market that will consist of greenfield and replacement opportunities as it develops. The large ICPs are planning to upgrade their entire data center infrastructure: servers, storage, switches, and optics. The ICPs will replace all 100G optics with 400G optics.

Further possibilities for silicon photonics technology include

  • upgrading logic chipsets from electrical I/O to optical I/O;

  • using metro and long-haul WDM solutions;

  • updating today's bulky LIDAR to smaller-form-factor solutions.

The ICPs continue to sponsor technology innovation. A new technology needs to demonstrate performance in the field over time. To achieve a profitable technology, Intel must manufacture at a high yield. If Intel can ship its 1 millionth 100G silicon-photonics-enabled unit, it will have earned the title of optic market disrupter.

Straight Talk is a weekly briefing from the desk of the Chief Research Officer. To receive this newsletter by email, please contact us.

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