25G Laser Shortage

August, 2014

We have been told that there is going to be a worldwide shortage of 25G lasers in the coming two years, supposedly due to not enough capacity having been planned by the industry as a whole.  We hadn’t heard anything like this before.  Do you guys know if this is true, and if so, why it happened? A couple of our contacts indicate that supply is down because of unexpected demand by a few data center operators as well as a greater need for customized optics, and that 25G lasers have inherently lower manufacturing yields than is the case, say with 10G devices. Specifically, the 25G DMLs are in short supply, not the EML devices. However, the EMLs are very expensive, especially for short-distance applications. There is also apprehension that expanding production will create a long-term overcapacity situation, once the market gets back to normal levels. In the meantime, it has become a...

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New M&A Types of Players In Optics

November, 2014

In recent weeks, there has been a flurry of acquisition activity with three optical component companies being purchased by non-traditional kinds of acquirers, particularly players in the short distance, communications market including data centers. These buyers, such as Huber+Suhner and its takeover of Cube Optics, are definitely concerned about an adequate supply of componentry being available. Evidently, even big enterprises with large data centers have the same types of worries as they are also investing in optical device development, as pointed out in a previous blog article. M/A-COM bought BinOptics at the premium price of $230 million (probably four to five times revenue) to ensure adequate access to laser semiconductors. The bottleneck created by Avago Technologies' pickup of CyOptics last year was a significant catalyst. In the past, JDSU and Finisar had a major role in such M&A...

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No Blowback from Neophotonics Pickup

January, 2015

Before the closing of its deal for Emcore’s narrow linewidth tunable laser product line this month, it had been difficult to find any criticism given that Neophotonics bought Santur several years ago. Apparently, there had been some rumblings of a culture clash amongst the personnel with the prior marriage. In fairness, despite a company doing as much due diligence as possible in advance of a purchase, there is no way to really look under the hood until after sale. In addition, the price for Emcore’s devices was only $1.5 million in cash with the rest of the $17.5 million in debt. Emcore’s former solutions appear to be unique with their external cavity lasers, which provide a very narrow linewidth at the 100G data rate. However, at least one major system vendor has indicated its willingness to put up with a certain number of errors in the software, and that it is good enough just...

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Surviving in a 10G World

February, 2015

Given that the lion’s share of the discussion in telecom forums is about vaporware, it is not surprising that a lot people in the industry would probably be amazed to hear that R&D spending on 10G devices is still happening. While the really compelling drama within suppliers is occurring with mature or even declining market situations, including on 1G and on VCSELs, in which substantial revenue is on the line, the obsession on analyzing the accounts of the various futuristic, sexier solutions can sound repetitive, and at the end of the day, they have a tendency to be quite boring. In contrast, the struggle for 10G transport equipment vendors to survive is a captivating narrative involving a data rate, which will remain a mainstay in public and enterprise networks for a very long time -- in which there is still an overabundance of participants (partially because financing going back to...

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Bullish on 850nm VCSELs; Avago Selling VCSEL Components

March, 2015

As we will demonstrate on an OFC 2015 panel, the data center VCSEL market will remain healthy for an extremely long time, especially in terms of steady revenues. The most shocking change is based on recent evidence that Avago Technologies is selling VCSEL components, possibly including as far down the food chain as bare die, to at least one interconnect solutions provider and at the request of a minimum of one very large enterprise. In even reading between the lines of a small portion of the transcript of the latest quarterly report from the vendor, it indicates a move in this direction: "...[W]hen you start talking about 25[G], you’re talking about having to drive short-reach or even longer reach native 25, which makes it very tough to produce laser, VCSELs, laser, so to speak, that does 25 gigabit. We are one of the few guys who can do it. And we happily sold it to guys who do 100...

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