20 May 2005
Electronics and photonics must converge to ensure the survival of the optical communications industry.
For the optical communications industry to prosper in the long-term, electronics and photonics must converge and result in a new breed of telecom devices that is cheaper to manufacture in much larger volumes. That's the verdict of a comprehensive four-year study released by the Massachusetts Institute of Technology (MIT) this week.
Having evaluated the current state of the optical components industry, the report believes the market is on the cusp on an upturn. "The industry stands at the threshold of a major expansion that will restructure its business processes and sustain its profitability for the next three decades."
At the height of the telecoms boom in 2000, MIT's Microphotonics Center Industry Consortium commissioned the communication technology roadmap (CTR) to evaluate the vast array of technologies found in the telecommunications industry.
According to the report, the future of optical components technology will be determined by electronic-photonic convergence and short-reach (< 1km) interconnections. Needless to say, this path requires significant technological development.
"The next technological frontier is the coupling of communication-based optical devices with the I/O of electronic processors," says the CTR. "That frontier will require average sales prices that are factors of 100 to 1000 lower than current communication-based optical devices, while exhibiting similar levels of performance."
The study looked in detail at three material technologies: silicon, III-V materials and organics. Involving more than 40 companies and universities, the roadmap's conclusion was that III-V materials have typically led in terms of performance; silicon has followed with its trend towards high-volume low-cost manufacturing; and organics have greatest potential for supporting hybrid integration and packaging.
"These roles are not expected to change, but the importance of high volume manufacturing will become the dominant issue," says the CTR. "The key challenges for a cost-effective, planar technology are large-scale substrates and component integration capability."
All this comes at a price however. Despite massive restructuring over the past few years, the CTR says that too many suppliers are still vying for a share of the component market. According to the report, the root cause of the problem is that economies of scale for manufacturing photonic components are only reached at the 10,000 to 100,000's of units.
"The number of suppliers continues to be very large, reducing the opportunity for any one company to reach effective economies of scale," says the report. "The number of specifications that must be supported reduce the possibilities of meeting the economies of scale."
The solution, according to the CTR, is for the industry to follow one of two paths. Option one is to move to an outsourced manufacturing model, since the available revenue to individual firms will not support manufacturing facilities. Option two is yet further large-scale consolidation of the current supply base.