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Optical Transceivers for Datacom & Telecom Market 2021 - From Technologies to Markets - i ...
From Technologies to Markets

Optical Transceivers
  for Datacom &
 Telecom Market
        2021
  Market and Technology
      Report 2021

                                                 Sample
                                                   © 2021
Optical Transceivers for Datacom & Telecom Market 2021 - From Technologies to Markets - i ...
TABLE OF CONTENTS
   Part 1/5
   SCOPE OF THE REPORT                                                7    FIBER-OPTIC COMMUNICATION NETWORK ARCHITECTURES                                                    56
   WHAT WE GOT RIGHT AND WRONG                                        8    •   Generic diagram of FOC network
   METHODOLOGIES & DEFINITIONS                                        9             o   Overview

   ACRONYM s                                                          10            o   Focus on 5G transport network
                                                                                    o   Focus on data center network
   COMPANIES CITED IN THIS REPORT                                     12
                                                                                    o   Example of Facebook data center topology
   ABOUT THE AUTHORS                                                  13
                                                                           •   Network Devices for Telecom and Datacom
   IMPACT OF COVID-19                                                 14
   EXECUTIVE SUMMARY                                                  17
                                                                           FIBER-OPTIC COMMUNICATION APPLICATION TRENDS                                                       62

                                                                           •   Macro-trends
   FROM TELECOMMUNICATION TO FIBER-OPTIC COMMUNICATION                42
                                                                                    o   Global network IP traffic growth
   •   Historical perspective                                                       o   Global interconnection bandwidth
   •   Introduction to telecommunication (TELECOM)                                  o   Growth rate for industries across regions
   •   Introduction to data communication (DATACOM)                                 o   Drivers

   •   Data Communication (DATACOM) vs. Telecommunication (TELECOM)        •   Datacom vs. Telecom

   •   Fiber-Optic Communication (FOC)                                     •   Trends in data center
             o Overview                                                             o   Data traffic
             o Principle                                                            o   The case of video
             o Optical transmitter/receiver                                         o   Network architecture
             o Optical transceiver                                                  o   Challenges
             o Benefits over metallic-based communication
                                                                                    o   Highlights
             o Classification of technologies

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Optical Transceivers for Datacom & Telecom Market 2021 - From Technologies to Markets - i ...
TABLE OF CONTENTS
   Part 2/5
   FIBER-OPTIC COMMUNICATION APPLICATION TRENDS                              62                 o   Key parameters
   • Global IP traffic forecast                                                                 o   Notations & Terminology
   • Technical challenges - Shannon Limit                                                               •    Introduction
          o Background                                                                                  •    Form factor – Overview
          o Handling it                                                                                 •    Form factor – 10G-300G
   OPTICAL TRANSCEIVER MARKET FORECAST                                       79                         •    Form factor – 400G-1.6T
   • Optical transceiver revenue growth forecast by segment (2020 vs. 2026)                             •    Form factor – Trends
   • OT revenue growth forecast by Datacom applications (2020 vs. 2026)                                 •    PMDs for 100G OT and above - Overview
   • OT revenue growth forecast by Telecom applications (2020 vs. 2026)                                 •    PMDs for 100G OT and above - Details
   • TOTAL OT                                                                                   o   Form factors
          o Shipment forecast by segment (2017-2026)                                                    •    TELECOM - OT type by network connection
          o Revenue forecast by segment (2017-2026)                                                     •    DATACOM - OT type by network connection
   • DATACOM OT                                                                                         •    Mapping by application | data rate | reach
          o Shipment forecast (2017-2026)                                                       o   Segmentation
          o Revenue forecast (2017-2026)                                                                •    Overview
          o ASP forecast (2017-2026)                                                                    •    Multi-Mode vs. Single-Mode OT
          o Penetration rate of optical transceiver modules split by data rates                          •   MM and SM vs. Coherent technology
          o 100GbE module broken down by transmission reach                                  o Key trends – Evolution from FPP to CPO
          o DATACOM OT – Multi-mode vs. Single mode                                          o Key trends – Advanced photonic integration
   • TELECOM OT                                                                        OPTICAL TRANSCEIVER APPLICATIONS                                                                   124
          o Shipments forecast (2017-2026)                                             • DATACOM trends
          o Revenue forecast (2017-2026)                                                     o Preview
          o ASP forecast (2017-2026)                                                         o Focus on intra-rack interconnection
   • Conclusion                                                                              o Focus on inter-rack interconnection
   OPTICAL TRANSCEIVER INTRODUCTION                                               99         o Focus on inter-DC interconnection
   • Technology & Trends                                                                     o Form factors - Interfaces used in data centers vs. Data rates of OT
          o Introduction                                                                     o Global trends - QSFP-DD & OSFP (400G & 200G)
          o Role of transceiver in networking                                                o Global trends - QSFP56 & QSFP28 (200G & 100G)
          o Key technologies                                                                 o Status of migration to higher speed

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Optical Transceivers for Datacom & Telecom Market 2021 - From Technologies to Markets - i ...
TABLE OF CONTENTS
   Part 3/5
   OPTICAL TRANSCEIVER APPLICATIONS                                          133   •   Faceplate Pluggable Optics – What next?                                          167
   •   TELECOM trends                                                                       o Pluggable optics evolution
           o Focus on Metro Core / Metro Access interconnection                                      • Moving from copper to the optics
           o Focus on 5G and Wireless Optical Transmission interconnection                           • Packaging vs. Power dissipation vs. BW density
           o Global trends - SFP28/QSFP28/QSFP56                                                     • Optical Interconnect Packaging
           o Global trends – CFP/CFP2/CFP4                                                  o Beyond 800G
           o Global trends – CFP-DCO and -ACO (coherent vs. direct detect)                  o Challenges: Power
           o Status of migration to higher speed                                            o Challenges: Power – How to minimizing
                                                                                            o Faceplate-pluggable model (FPP)
   OPTICAL TRANSCEIVER TRENDS                                                147                     • Preview
   •   400G and beyond                                                                               • Advantages
           o Trends heading to 400G                                                                  • Roadmap
           o Drivers & Benefits                                                             o Co-Packaged Optics (CPO)
           o Key applications                                                                        • Preview
           o New interface types and form factors to be deployed                                     • Evolution from FPP to CPO
           o DATACOM - 400G applications                                                             • Beyond pluggable optics - Cross-sections co-packaging approaches
           o DATACOM - 400G compatibility with legacy systems                               o Optics evolution – Roadmap
           o DATACOM - Pluggable coherent ZR/ZR+                                            o Roadmap – switch ASIC / Optical module / Faceplate density - Comparison
                   • Introduction                                                  •   Switch ASIC trends                                                                            181
                   • Use cases                                                              o Switch ASIC evolution
                   • Coherent optical transmission                                                  • Overview
                   • Form factors                                                                   • Roadmap
                   • Cost effective architecture                                                    • Growth over time
                   • Technology outcomes                                                            • Future
                   • Toward Silicon Photonics                                               o PAM4 technology impact on switch chip technology
           o TELECOM - 400G applications

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Optical Transceivers for Datacom & Telecom Market 2021 - From Technologies to Markets - i ...
TABLE OF CONTENTS
   Part 4/5
   Optical Transceiver Technology –                                                                o    Wavelength and material choice
   Key Parameters in Fiber-Optic Communication                                      187
   •   Optical wavelength bands                                                                    o    Integration with InP based mixers (for coherent detection)
   •   Bandwidth & Distance                                                               Key parts of optical transceiver: 400G QSFP-DD DR4                                                  215
   •   Modulation
                                                                                          •   Preview
   •   Intensity modulation vs. Coherent modulation
                                                                                          •   TOSA
   •   Pulsed Code Modulation - PAM4
   •   Toward higher throughput                                                           •   TOSA – InP Lasers
   •   Parallelization                                                                    •   TOSA – Fiber optic coupler
   •   Multiplexing - TDM & WDM                                                           •   Laser driver
   Key components                                                                   195   •   ROSA

   •   Introduction                                                                       •   Electronic Board
                                                                                          •   Cost estimate
   •   Laser diode
             o     in datacom & telecom                                                   Key parts of optical transceiver: 100G QSFP28 CWDM                                                  228
             o     EELs vs. VCSELs – Attributes and parameters                            •   Preview
             o     EEL – Comparison of DML and EML                                        •   TOSA
             o     Comparison of EEL (DFB & FP) and VCSEL
                                                                                          •   TOSA – InP Lasers and Photodiodes
             o     Wavelength and material choice
                                                                                          •   TOSA – Spatial Multiplexer and Fiber Optic Coupler
             o     Technology platform/type vs. Reach distance
             o     Use case example - 100G data center                                    •   TOSA – Fiber Optic Coupler
             o     Integration with InP optical modulator (for coherent emission)         •   ROSA
             o     Silicon Photonic integrated circuits for CPO                           •   Electronic board
   •   Photodiode                                                                         •   Cost estimate
             o     Device type overview
             o     Photodetection principle
             o     Comparison of photodetectors

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Optical Transceivers for Datacom & Telecom Market 2021 - From Technologies to Markets - i ...
TABLE OF CONTENTS
   Part 5/5
   OPTICAL TRANSCEIVER INDUSTRY                                                    239            o     SiPh platform
   •   Introduction                                                                      •   Strategy
   •   Mapping of key players (at transceiver module level)                                       o     Positioning and level of integration of key OT players
   •   Market shares                                                                              o     Disaggregation vs. Vertical integration
             o    2018-2020 evolution - DATACOM & TELECOM                                         o     Product portfolio of key suppliers
             o    2018-2020 evolution - DATACOM
                                                                                         •   Competition
             o    2018-2020 evolution - TELECOM
                                                                                                  o     Key competitive factors
   •   2018-2020 revenue growth/decline for OT suppliers
                                                                                                  o     Small players vs. Large players
   •   2021 revenues trends
                                                                                         •   Cost aspects - Multi-mode vs. Single-mode transceivers 1/2
   •   Technology platform - Indium Phosphide (InP) vs. Silicon Photonics (SiPh)
                                                                                         •   Silicon Photonic
   •   Recent Mergers & Acquisitions (M&A)
             o    Overview
                                                                                                  o     Transceivers suppliers
             o    Recent bidding war in photonics market                                          o     Manufacturing aspects
             o    Coherent opted for II-VI                                               •   Focus on China
             o    InP platform - II-VI acquired Finisar
                                                                                                  o     Historical perspective
             o    InP - Lumentum acquired Oclaro
             o    InP - Others
                                                                                                  o     Recent trends
             o    Silicon Photonics - Acquisitions by Cisco                              •   Global trends
             o    Silicon Photonics – Others                                             • The U.S.-China relationship in the photonics industry
   •   Outlook                                                                               • U.S. vs. CHINA – Optical transceiver market
                                                                                             • How could decoupling China from the U.S impact the laser and photonics
   •   Supply chain
                                                                                                 industry?
             o    Overview
             o    InP platform - The different models in DATACOM                         •   Conclusion
             o    InP platform - The different models in TELECOM

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Optical Transceivers for Datacom & Telecom Market 2021 - From Technologies to Markets - i ...
SCOPE OF THE REPORT

             In Scope            Out of Scope

                    Optical                Optical
               Communication          Communication

                   Datacom                Datacom

           Optical             Optical Fibers,
         Transceivers           Connectors,
          • Technology
                                Equipment,
          • Industry                                                                         Yours needs are
          • Market               Services
                                                                                             out of scope of
                                                                                               this report?
                    Telecom                Telecom                                   Contact us for a custom study:

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Optical Transceivers for Datacom & Telecom Market 2021 - From Technologies to Markets - i ...
WHAT WE GOT RIGHT AND WRONG

                            ✓                                                                                ✗
•   Globally we covered all trends in Datacom and Telecom        •   In the first version of the OT report 2020 we have identified the key
•   We have achieved to link material platforms with different       global players. The high number of players shows how fragmented the
    types of optical modules – well structured in the report.        optical modules industry is. Despite the effort to find all top players
                                                                     on the market in 2020, we have additionally recognized important
                                                                     players in 2021, which mostly operate at Chinese market.
                                                                           • Hisense Broadband, Broadex, Luxshare, CIGtech, Crealights
                                                                 •   To avoid changing the market model significantly the revenues top
                                                                     players for 2018 and 2019 were adjusted to the overall revenue
                                                                 •   The OT market size for 2019 was estimated based on quaternal and
                                                                     annual results of key players. In 2020, when we were collecting data
                                                                     for 2019, some of the players’ results had not been completely
                                                                     available. For this reason, some of our estimates were inaccurate.
                                                                 •   As a result, the overall impact on market figures was negligible. The
                                                                     market size for 2018 and 2019 have slightly increased - less than 1%.
                                                                     The market share has also been minimally impacted (~1%). As the
                                                                     new key Chinese players have been recognized the ranking was
                                                                     updated accordingly.
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Optical Transceivers for Datacom & Telecom Market 2021 - From Technologies to Markets - i ...
METHODOLOGIES & DEFINITIONS
   Yole’s market forecast model is based on the matching of several sources:

                                                                                                                                Preexisting
                                                                                                                                information

                                     Market
                                Volume (in M units)
                                    ASP (in $)
                                 Revenue (in $M)

                                                                                                                                 Information
                                                                                                                                 Aggregation

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Optical Transceivers for Datacom & Telecom Market 2021 - From Technologies to Markets - i ...
ACRONYMS 1/2
   ADC     Analog-to-Digital Converter                                  EPON           Ethernet Passive Optical Network
   AOC     Active Optical Cable                                         ER             Extended Reach
   BER     Bit Error Rate                                               ER             Extinction Ratio
   BIDI    Bi-directional                                               eSR            Extended Short Reach
   BOA     Board-mounted Optical Assembly                               eSWDM          extended SDWM
   CATV    Cable TV (Transport)                                         FC             Fiber Channel (protocol)
   CD      Chromatic Dispersion                                         FCoE           Fiber Channel over Ethernet (protocol)
   CFP     Optical Transceiver Form Factor Used For 40G And 100G        FDR            Fourteen Data Rate
   CML     Chirp Managed Laser (Transmitter)                            FEC            Forward Error Correction
   CMOS    Complementary-metal-oxide-semiconductor                      FP             Fabry-Perot (laser)
   CPO     Co-packaged Optics                                           FPP            Faceplate Pluggable Optics
   CPRI    Common Public Radio Interface (Protocol)                     FTTx           Fiber to the “x” (edge, home, etc.)
   CWDM    Coarse Wavelength Division Multiplexing                      Gb/s           Giga bits per second
   CXP     Optical Transceiver Form Factor With 12 Electrical Channels, GBIC           Gigabit Interface Converter (optical transceiver)
           each at 10G                                                  GHz            Gigahertz
   DACs    Digital-to-analog Converters                                 GPON           Gigabit Passive Optical Network
   DBR     Distributed Bragg Reflector (Laser)                          IC             Integrated Circuit (aka “chip”)
   DFB     Distributed Feedback (Laser)                                 InP            Indium-Phosphide
   DPSK    Differential Phase-shift Keying                              LAN            Local Area Network
   DQPSK   Differential Quadrature Phase-shift Keying                   LASER          Light Amplification by Simulated Emission of Radiation
   DSP     Digital Signal Processing                                    LCoS           Liquid Crystal on Silicon
   DWDM    Dense Wavelength Division Multiplexing                       LIDAR          Light Detection and Ranging
   ECPRI   Enhanced CPRI (Protocol)                                     LR             Long Reach
   ECWDM   Extended CWDM                                                LW             Long Wavelength
   EDFA    Erbium-doped Fiber Amplifier
   EDR     Enhanced Data Rate                                           In fiber-optic communication technology there are many terms that may
   EMI     Electromagnetic Interference                                 need explanation. Please refer to the glossary in the appendix.
   EML     Electro-absorption Modulated Laser

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ACRONYMS 2/2
   MLSE      Maximum Likely Sequence Estimator                             ROSA        Receive Optical Subassembly
   MMF       Multimode Fiber                                               RU          Rack Unit
   MPO       Multi-fiber Push On (Connector)                               SAS         Serial Attached SCSI
   MSA       Multi-source Agreement                                        SDM         Space-division Multiplexing
   MSO       Multi System Operator (Cable Operators)                       SFF         Small Form-factor (Optical Transceiver)
   μP        Micro Processor                                               SFP         Small Form-factor Pluggable (Optical Transceiver)
   OADM      Optical Add/Drop Multiplexer                                  SFP+        Small Form-factor Pluggable Plus (Optical Transceiver Capable Of 10G)
   OCM       Optical Channel Monitor                                       SMF         Single Mode Fiber
   OMA       Optical Modulation Amplitude                                  SONET/SDH   Synchronous Optical Networking/Synchronous Digital Hierarchy
   OSA       Optical Subassembly                                                       (Protocols)
   OSNR      Optical Signal To Noise Ratio                                 SR          Short Reach
   OT        Optical Transceiver                                           SW          Short Wavelength
   OTN       Optical Transport Network                                     SWDM        Shortwave Wavelength Division Multiplexing
   PAM       Pulse Amplitude Modulation                                    T2DOC       Transceiver To Transceiver Digital Optical Communication
   PCI       Peripheral Component Interconnect (Protocol)                  TIA         Trans Impedance Amplifier
   PCIe      PCI Express (Protocol)                                        TOSA        Transmit Optical Subassembly
   PDM       Polarization Division Multiplexing                            WSS         Wavelength Selective Switch
   PMD       Physical medium dependent                                     VCSEL       Vertical Cavity Surface Emitting Laser
   PMD       Polarization-mode Dispersion                                  VOA         Variable Optical Attenuator
   PON       Passive Optical Network                                       VSR         Very Short Reach
   PSM       Parallel Single Mode                                          XFP         10G Pluggable Form Factor (Optical Transceiver)
   QDR       Quad Data Rate
   QSFP+     Quad Small Form-factor Pluggable Plus (Optical Transceiver)    In fiber-optic communication technology there are many terms
   QSFP-DD   QSFP Double-density                                            that may need explanation. Please refer to the glossary in the
   RF        Radio Frequency (Over Fiber)                                   appendix.
   ROADM     Reconfigurable Optical Add/Drop Multiplexer
   RoHS      Restriction of Hazardous Substances

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COMPANIES CITED IN THIS REPORT

        Acacia Communication, Accelink, Adtran, ADVA, Alibaba, Amazon Web Services, Apple, Applied
    Optoelectronics Inc (AOI), Arista, ATOP, AZ by CyrusOne, Baidu, Broadcom, Champion ONE, Ciena
     (Cyan), Cisco, ColorChip, Dell, E.C.I. Networks, Ekinops, Emcore, Eoptolink, Facebook, Fiberhome,
       Finisar (now II-VI), Foxconn Interconnect Technology (FOIT), Fujitsu Networks, Fujitsu Optical
    Components, Gigalight, Google, HG Genuine Optics, Hisense Broadband, Huawei, HUBER+SUHNER
    Cube Optics AG, IBM+Softlayer Cloud Services , II-VI, Infinera (Coriant, Transmode), InnoLight, Inphi,
   Intel, IPG Photonics (Menara Network), J.P. Morgan, Juniper Networks, Lumentum, MACOM, Mellanox,
   Microsoft, NEC, NeoPhotonics, Nokia (Alcatel Lucent), NTT Electronics, Oclaro, OE Solutions, Oplink
    (MOLEX), Padtec, Rackspace , Ranovus, Renesas (Integrated Device Technology), Rockley Photonics,
     Sicoya, Skorpios Technologies, Source Photonics, ST, Sumitomo, Tencent,Verizon , Xtera,Yahoo, ZTE,
                                                  and more.

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ABOUT THE AUTHORS
   Biographies & contacts
         Dr. Martin VALLO, Market & Technology Analyst
         Dr Martin Vallo is a Technology & Market Analyst specializing in solid-state lighting technologies within the Photonics, Sensing & Display division at Yole Développement (Yole).
         With 9 years’ experience in semiconductor technology, Martin is currently involved in the development of technology & market reports as well as the production of custom
         consulting projects at Yole.
         Prior to his work at Yole, Dr Vallo worked at CEA (Grenoble, France), with a mission focused on the epitaxial growth of InGaN/GaN core-shell nanowire LEDs by MOCVD
         and their characterization for highly flexible photonic devices. Martin graduated from Academy of Sciences, Institute of Electrical Engineering (Slovakia) with an engineering
         degree in III-nitride semiconductors.
         Contact: martin.vallo@yole.fr

         Pars Mukish, Business Unit Manager
         Pars Mukish holds a Master’s in Materials Science and Polymers from ITECH in France and a Master’s in Innovation and Technology Management from EM Lyon, also in France.
         He is a Business Unit Manager at Yole Développement, the ‘More than Moore’ market research and strategy consulting company, as senior market and technology analyst in
         the fields of LED, OLED, lighting technologies, and compound semiconductors. He performs technical, economic, and marketing analyses. In 2015, Pars was named business unit
         manager for emerging sapphire, LED/OLED, and display/lighting activities.
         Previously, he worked as marketing analyst and techno-economic analyst at CEA, a French research center for several years.
         Contact: pars.mukish@yole.fr

         Dr. Eric Mounier, Fellow Analyst
         With more than 25+ years of experience within the semiconductor industry, Eric Mounier, PhD. is Fellow Analyst at Yole Développement (Yole). Eric is daily providing deep
         insights into current and future semiconductor markets and innovative technologies such as Si photonics, MEMS, quantum computing and new type of sensors.
         Based on a relevant methodology expertise and strong technological background, he is closely working with the overall teams at Yole to point out disruptive technologies and
         analyze business opportunities.
         Eric Mounier has a Semiconductor Engineering Degree and a Ph.-D in Optoelectronics from the National Polytechnic Institute of Grenoble (France).
         Contact: eric.mounier@yole.fr

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Impact of Recent Macroeconomic Trends –
                 the COVID-19 Pandemic
IMPACT OF COVID-19
      New types of bandwidth demand

New behavior
emerging out of
the COVID-19
crisis driving
new types of
bandwidth
demand.

                                                                       Courtesy of Inphi and other industrials

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IMPACT OF COVID-19
   Global economic downturns (also related to COVID-19)
   •   The global economy have higher level of uncertainty.
   •   It is difficult to estimate growth or contraction in various parts, sectors, and regions of the economy, including optical
       communications, semiconductor, and other markets.
   •   Economic downturns is related to decreases in the rate of consumption or use of products along the supply chain. Such
       conditions could have adverse effect on demand for products integrators as well as on demand for suppliers’ products.
   •   Adverse changes that may affect operating results:
           •   disruption in the credit and financial markets in major markets
           •   adverse effects of slowdowns in the U.S., European, or Chinese economies,
           •   reductions or limited growth in consumer spending or consumer credit
           •   global trade tariffs
   •   Furthermore, adverse changes may negatively affect sales of products, commodity prices, the financing availability, and costs
       associated with manufacturing and distributing products.

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FIBER-OPTIC COMMUNICATION APPLICATION TRENDS
          Macro-trends – Global network IP traffic growth
                  • Each year,                Global device and connection growth
                    various new               (Market share 2018 → 2023)                2023
                    devices with              Other (2% → 4%)
                    increased                 Tablets (4%→3%)
                    capabilities and          PCs (7%→4%)                                                1.1B
                    intelligence are          TVs (including game consoles) (13%→11%)
                    introduced and
The trend is to     adopted in the            Non-Smartphones (14%→5%)                                                                   1.6B
accelerate the      market.                   Smartphones (27%→23%)
                                                                                         0.8B
increase in the                               Machine-to-Machine (M2M) (33%→50%)
                  • The average
average number      number of          2018
of devices and      devices and                      0.4B                                                                                               3.2B
connections per     connections per                                                     1.2B
household and       capita will grow      0.7B                                                                                  14.7B
per capita.         from 2.4 in 2018
                    to 3.6 by 2023                            2.7B
                                        1.4B                                                            6.7B

                                                                     2.4B
                                              4.8B                                                                                                            ~29.3B
                                                            6.1B                                                                                                    CAGR 10%

                                                                            ~18.4B                                                 (Source: Yole & Cisco Annual Internet Report)

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FIBER-OPTIC COMMUNICATION APPLICATION TRENDS
         Macro-trends – Drivers
                                            Data-centric applications                                                     Emerging applications
                         Cloud services                         Industrial automation traffic

Global traffic          Video streaming at higher-definition (4k or 8k)
growth is mainly                                                                                Connected               Automated logistics
                                                                                                                                                                      AR/VR
                                                                                                   car                   & manufaturing
driven by high-
resolution video
streaming                                                                                       Video data rates of today and the future
services.
                   Global internet video traffic
                             UHD Video (3%→22%)
                             HD Video (46%→57%)
                             SD Video (50%→21%)

                                                                                                                                       Source: Cisco Annual Internet Report
                         Source: Cisco Annual Internet Report                                   Optical Transceivers for Datacom & Telecom Market 2021 | Sample | www.yole.fr | ©2021   18
OPTICAL TRANSCEIVER MARKET
   Optical transceiver revenue growth forecast by segment (2020 vs. 2026)

                                                                                                           2026
          Datacom                                 $15.1B                                                  $20.9B
          Telecom                                CAGR 19%

                       2020
                       $9.6B
         $5.3B                                          $5.8B
                                                       CAGR 5%

            $4.3B           CAGR 2020-2026:
                               14%

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OPTICAL TRANSCEIVER MARKET
          DATACOM OT shipment forecast (2017-2026) 1/2

                  •   The vast volume of optical
                      transceivers for data
                      centers depends on …
                  High demand continues:
The OT            • Xx
shipments in
datacom           •   Xx
segment is
expected to
grow from xx      •   xx
Munits in 2020
to xx Munits in
2026.
CAGR2020-2026 =
xx%.

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OPTICAL TRANSCEIVER MARKET
        TELECOM OT shipment forecast (2017-2026) 1/2
                •   xx

                •   Xx

The total
shipments of    •   Xx
OT for
telecom is
highly          •   xx
impacted by
deployment of
wireless OTs
over the
period.

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OPTICAL TRANSCEIVER INTRODUCTION – TECHNOLOGY & TRENDS
  Notations & Terminology – PMDs for 100G OT and above – Overview

                                               ER4         ER4
                                               LR4  LR8    LR4 LR8
                                               FR4  FR8    FR4                                            xx                               xx
                                               DR4 PSM4    DR4  PSM
                                              CWDM4/CLR4     CWDM8

                                               SR4   AOC   SR4        AOC                                 xx                               xx

                                              AOC    DAC   AOC         DAC                    AOC            DAC

                          Source: Gigalight      100G          200G                                  400G                               800G

     PMD = Physical medium dependent

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OPTICAL TRANSCEIVER INTRODUCTION – TECHNOLOGY & TRENDS
                              Form factors – Mapping by application | data rate | reach

                                                                                                                                    Applications
                     •    Use cases for different optical modules.                                      Datacom                           Telecom
                     •    Different form factors and data rates can be used for other applications.
                     •    Typical example: 100G optical transceiver has wide range of form
OPTICAL TRANSCEIVER INTRODUCTION – TECHNOLOGY & TRENDS
      Key trends – Evolution from FPP to CPO 1/2
                      2019                                                                             2023/2024
                   12.8 Tbps                                                                                51.2 Tbps

                                                Evolution toward CPO
                                                assembly with pluggable ELS
                                                modules on the switch PCBA

                                                                                                                                                     Source: Cisco

      32x 400G QSFP-DD or OSFP                                                                                          8x optical modules for CPO

                                                                               External Laser
                                                                               Source       Optical
                                                                               (ELS)
                                                                                  ↓ Tx          module
                                                Evolution toward CPO
                                                                                              Rx
                                                optical modules
QSFP-DD W: 18.35 mm, L: 89.4 mm and T: 8.5 mm                                 CPO optical module W: ~20 mm, L: ~60 mm
OSFP W: 22.58 mm, L: 107.8 mm and T: 13.0 mm                             The standard organizations do not intend to define a fixed form factor
            FPP – Faceplate-pluggable Optics                             for the ELS module.
            CPO – Co-Packaged Optics                                                Optical Transceivers for Datacom & Telecom Market 2021 | Sample | www.yole.fr | ©2021   24
OPTICAL TRANSCEIVER APPLICATIONS – DATACOM TRENDS
         Status of migration to higher speed
                    Intra-rack
KEY PARTS OF OPTICAL TRANSCEIVER – 100G QSFP28 CWDM
                                                                                                                        Courtesy of

   Preview

  Module housing                                                                    ROSA

                                             Electronic board                                                                TOSA

                    Optical transceiver   Courtesy of System Plus Consulting
                                              Optical Transceivers for Datacom & Telecom Market 2021 | Sample | www.yole.fr | ©2021   26
KEY PARTS OF OPTICAL TRANSCEIVER – 100G QSFP28 CWDM
                                                                                                                           Courtesy of

   Cost estimate (3/3)

 Transceiver module      Total Material Cost   TOSA                                                       ROSA
         $xx                    $xx             $xx                                                        $x

                                                 Optical Transceivers for Datacom & Telecom Market 2021 | Sample | www.yole.fr | ©2021   27
OPTICAL TRANSCEIVER KEY COMPONENTS
   Laser diode – EELs vs. VCSELs – Attributes and parameters – 1/2

                                           EEL                                 VCSEL
                                                                     Primarily GaAs devices
                                    Any material systems                650nm low yield
   Wavelength                    650, 780, 850, 1300, 1500nm            850nm high yield
                                   low to moderate yield                940nm high yield
                                                                     1300nm very low yield
   Speed                                     Xx                                    Xx
   Optical beam                              Xx                                    Xx
   Electrical to optical power
                                             Xx                                    Xx
   conversion
   Modal characteristics                     Xx                                    Xx
   Processing                                xx                                     xx

                                                               Optical Transceivers for Datacom & Telecom Market 2021 | Sample | www.yole.fr | ©2021   28
OPTICAL TRANSCEIVER KEY COMPONENTS
           Laser diode - Comparison of EEL (DFB & FP) and VCSEL

                                                                                                                                         Transmission Speed
                                 DFB             FP           VCSEL
                                                                                                                        xx              xx              xx               xx                 xx
                                                                                                                       Mbps            Mbps            Gbps             Gbps               Gbps
                                  ++              +              –
Different laser                                                                                                    850 nm LED                                                        PAROLI*
                                                                                                       xx m
diode                                                       AlGaAs/AlAs                                            Multi Mode          850 nm VCSEL                                  Multi Mode

                                                                           Transmission Distance
                              InGaAsP/InP   InGaAsP/InGaP   InGaAsN/GaAs
technologies                                                                                                                           Multi Mode                                    Multiple
                                                                                                       xx m                                                                          Fibers
are present in                     –              +             ++
optical
communicatio                                                                                         xx km
                                   –              –             ++                                                          1.3 µm Fabry-Pérot          1.55 µm
n sector                                                                                                                                                DFB
                                                                                                                            Single Mode     1.3 µm DFB Single Mode
depending on                      ++              –              +                                   xx km
transmission                                                                                                                                Single Mode Externally
                                                                                                                                                                                    Modulated
distance and                      ++             ++              –                                   xx km
speed.
                                                                                                                                                        *PAROLI = Parallel optical link

                                                                                                   Optical Transceivers for Datacom & Telecom Market 2021 | Sample | www.yole.fr | ©2021          29
OPTICAL TRANSCEIVER INDUSTRY
     Market shares - 2018-2020 evolution - DATACOM & TELECOM 1/3
       2018                                           2019                                                                       2020

              Total                                     Total                                                              Total
              2018:                                     2019:                                                              2020:
               $xB                                       $xB                                                                $xB

                                         +1.6%                                                                    +xx%

 • Strong growth of Chinese players -      • Finisar is wholly owned by II-VI – combined revenue.            • II-VI – increased share.
   particularly InnoLight.                 • Lumentum strengthened after the acquisition of                  • Broadcom has reacquired the optical transceiver and
 • Lumentum completed acquisition of         Oclaro and returned to 2nd position.                              technology assets Avago Technologies sold to
   Oclaro in the end of third quarter.     • Lower demand from major cloud companies -                         Foxconn Interconnect Technology
                                             InnoLight impacted.
                                                                                            Optical Transceivers for Datacom & Telecom Market 2021 | Sample | www.yole.fr | ©2021   30
OPTICAL TRANSCEIVER INDUSTRY
           2017-2020 revenue growth/decline for OT suppliers 1/3

The US – China
                    In this analysis, it is important
trade war and       to understand that all revenues
the new small       have been converted to USD
vendors that have   (for comparison) and fiscal
emerged on the      years of all players have been
market recently     unified to calendar year.
                    As a result the revenues
caused decline in   presented are dependent on
some of the         annual exchange rate and
TOP15 players’      unified fiscal years.
revenues.

                                                                                                                              Discontinued

                                                          Optical Transceivers for Datacom & Telecom Market 2021 | Sample | www.yole.fr | ©2021   31
OPTICAL TRANSCEIVER INDUSTRY
        Strategy - Product portfolio of key suppliers

                                                                         DATACOM                                           TELECOM
                                                                     Fibre                  SONET/ CWDM/ 5G &   Bidi           High Speed
                                                         Ethernet           Infiniband AOCs                           Coherent
                                                                    channel                  SDH DWDM Wireless Access          Components
                 II-VI (+Finisar)
Different        Lumentum (Oclaro)
strategies is    Foxconn Interconnect Technology (FIT)
also projected   HG Genuine Optics
into the         Accelink
product          Sumitomo
portfolio and    InnoLight
segment          Source Photonics

interest.        Cisco (Acacia)
                 Fujitsu Optical components
                 MOLEX (Oplink)
                 NeoPhotonics
                 Macom
                 HUBER+SUHNER Cube Optics AG
                 NTT Electronics
                                                          In portfolio     Not in portfolio

                                                                                              Optical Transceivers for Datacom & Telecom Market 2021 | Sample | www.yole.fr | ©2021   32
OPTICAL TRANSCEIVER INDUSTRY
       Supply chain - InP platform - The different models in DATACOM
                     InP substrate                   Epitaxy            Device processing               Transceiver                     Equipment                               Operator

Model I
                                                                                                             And more…

Model II
                                                                                                         And more…

Model III
                                                                             And more…

Model IV                                                                                                And more…

                                                                                                                                                                                    And more…
Model V
                                                                                                                                             And more…

            •   Non-exhaustive list,
            •   No direct link between companies
            •   Infinera has its InP fab, Huawei is building an InP fab in Wuhan China.
            •   Silicon photonic uses InP laser. Intel has internal Epi wafer development capability.          Optical Transceivers for Datacom & Telecom Market 2021 | Sample | www.yole.fr | ©2021   33
U.S. VS. CHINA – OPTICAL TRANSCEIVER MARKET
                                                                            U.S. vs. CHINA – Optical transceiver market
                   • Chinese DC operators heavily invested
                     into the local optics products which
                     leads to steep growth of Chinese
                     transceiver market.                                                  CAGR2017-2020 = 9%                                    TOTAL
                                                                                                                                               MARKET
                   • China wants to maintain its economic
                     growth by ensuring a secure and
                     controllable technology supply chain as
                     well as building domestic technology
                     sectors to be self-sufficient in those U.S.
Optical              parts impacted by tariffs.
                                                                                                CAGR2017-2020 =1%
transceivers       • American companies cannot sell in
industry in the      China or become targets of consumer
                     boycotts. The loss of revenue for
U.S. has grown       American photonic companies will far
last three years     exceed that of their Chinese
only by 1%           counterparts.                                                            CAGR2017-2020 = 24%
while in china
by 24%.
                                                                          U.S. players                                          Chinese players

                                 Value                  •    Optics & Electronics component designers       •      High volume deployment
                                                             and manufacturers                              •      Cost drivers
                                                        •    Patent portfolio                               •      High domestic demand
                                                        •    Standard leaders
                                 Characteristic         Looking at other markets to levarage know-how       Mostly focus on Datacom/Telecom
                                                        and material platforms foundries → LiDAR for        markets
                                                        automotive, 3D sensing for consumer
                                                                                                        Optical Transceivers for Datacom & Telecom Market 2021 | Sample | www.yole.fr | ©2021   34
YOLE GROUP OF COMPANIES RELATED ANALYSES
        Yole Développement
               Silicon Photonics 2021         Edge Emitting Lasers – Technology                         VCSEL - Technology and
                                                   and Market Trends 2021
                                                                                                         Market Trends 2021

Contact our
Sales Team
for more
information

                           InP Wafer and Epiwafer Market           GaAs Wafer and Epiwafer Market:
                                                                   RF, Photonics, LED, Display and PV
                           – Photonic and RF Applications                  Applications 2020

                                                                        Optical Transceivers for Datacom & Telecom Market 2021 | Sample | www.yole.fr | ©2021   35
YOLE GROUP OF COMPANIES RELATED ANALYSES
        System Plus Consulting
                       InnoLight’s 400G QSFP-DD         Intel Silicon Photonic 100G
                           Optical Transceiver           PSM4 QFSP28 Transceiver

Contact our
Sales Team
for more
information

                                      Intel Silicon Photonic 100G
                                     CWDM4 QFSP28 Transceiver

                                                               Optical Transceivers for Datacom & Telecom Market 2021 | Sample | www.yole.fr | ©2021   36
HOW TO USE OUR DATA?

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   System Plus Consulting, Knowmade and PISEO, are pleased to
   provide you a glimpse of our accumulated knowledge.

   Feel free to share our data with your own network, within your
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   before that, contact our Public Relations department to
   make sure you get up-to-date, licensed materials.

   We will be more than happy to give you our latest results and
   appropriate formats of our approved content.

   Your contact: Sandrine       Leroy,   Dir.   Public   Relations
   Email: leroy@yole.fr

                                                                     Optical Transceivers for Datacom & Telecom Market 2021 | Sample | www.yole.fr | ©2021   37
CONTACTS
                                                           REPORTS, MONITORS & TRACKS
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                Eastern US & Canada                             South Germany & France                                                     Japan
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                    +1 919 607 9839                                  +49 173 69 43 31                                                +81 34 4059 204
                  Europe and RoW                                      India and RoA                                               Japan and Singapore
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                  +49 15 123 544 182                                 +81 80 4371 4887                                                +81 80 3577 3042
                 Benelux, UK & Spain                                  Greater China                                                        Japan
    Marine Wybranietz - marine.wybranietz@yole.fr             Mavis Wang - mavis.wang@yole.fr                               Toru Hosaka – toru.hosaka@yole.fr
                   +49 69 96 21 76 78                       +886 979 336 809 +86 136 6156 6824                                       +81 90 1775 3866

               FINANCIAL SERVICES                           CUSTOM PROJECT SERVICES                                                           GENERAL
         ›     Jean-Christophe Eloy - eloy@yole.fr          ›      Jérome Azémar, Yole Développement -            ›     Jean-Christophe Eloy, Marketing & Communication
                       +33 4 72 83 01 80                        jerome.azemar@yole.fr - +33 6 27 68 69 33                       eloy@yole.fr - +33 472 83 01 01
                                                                                                                              ›    Sandrine Leroy, Public Relations
     ›       Ivan Donaldson - ivan.donaldson@yole.fr        › Julie Coulon, System Plus Consulting -
                                                                                                                             sandrine.leroy@yole.fr - +33 4 72 83 01 89
                        +1 208 850 3914                    jcoulon@systemplus.fr - +33 2 72 17 89 85
                                                                                                                 ›      General inquiries: info@yole.fr - +33 4 72 83 01 80

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