Optical Devices and chips: the key to improving Optical Communication in China

Optical Devices and chips: the key to improving Optical Communication in China

With the development of cloud computing, Internet of Things, mobile Internet and other applications, the rapidly increasing data traffic puts forward higher and higher bandwidth requirements. In the past two years, the "Broadband China" strategy and the strategy of accelerating the construction of a powerful network nation have successively proposed that optical communication, as one of the most important information communication infrastructure, it plays an increasingly important role in supporting China's social informatization, broadband construction and network power. After decades of development, China's optical communication industry has a complete industrial chain layout. The scale and product types of the industry are constantly expanding, and the competitiveness is continuously improved, domestic enterprises, especially Huawei, ZTE, beacon and other equipment vendors, have become the backbone of the global optical communication industry. However, what cannot be ignored is that China's optical communication industry is "Big" rather than "strong", and the development of the industrial chain is unbalanced, especially the optical devices and chips at the source of the industrial chain, compared with developed countries, there is a large gap and it has become a key bottleneck restricting the rapid development of Optical Communication in China.

Industry Development Status

Weak enterprise groups, lack of core technologies, and unreasonable product structure

Optical Devices and chips are dominated by technological innovation. The technical strength of enterprises and products is an important indicator to measure the competitiveness of the industry. Globally, the United States and Japan are the main R & D bases and are at the forefront of industrial development. They are both in the leading position in terms of technology level, R & D investment, and intellectual property rights, and have a large-scale advantage. Optical Device and chip Enterprises in China have made some progress in recent years, accounting for 20% ~ With a market share of 25%, guangxun and Hisense have ranked among the top 10 in the global optical device market.

However, the overall strength of optical devices and chips in China is still weak, and the product structure is not reasonable enough. Most enterprises are stuck in the middle and low-end fields. The homogeneity is serious, and they mainly rely on price advantages to survive. In terms of High-Speed products with high technical content and value-added values, such as active optical devices with a speed of more than 10 GB and GB optical modules, core technologies are missing and the commercialization process is slow, there are only a handful of enterprises with full set of technical lines such as material extension growth and tube core production, as well as vertical integration capabilities from chips to devices to modules. The weakness of upstream materials and chips restricts the development of optical devices, components and modules. Not only do high-end products depend on imports, but even some low-end products cannot be completely localized, procurement channels are controlled by day and beauty. In addition, some well-known overseas manufacturers of optical devices and chips have moved their R & D, production, packaging testing and sales processes to China in order to reduce costs and grasp China's rapidly growing market demands, further squeeze the market space of domestic enterprises.

Industry backwardness

Technology, talent, policy, capital, Environment

High technology of optical devices and chips, with high R & D investment and long return cycle. Among the leading countries, Japan started earlier, has a strong awareness of intellectual property protection, advanced basic research, and strong technical reserves. The United States has developed relatively late in terms of optical devices, but has the advantages of talents, capital, and environment, enterprises are good at achieving step-by-step development through mergers and acquisitions, and are growing rapidly with the help of the capital market.

China's optical devices and chip enterprises have a big gap with foreign leading enterprises in terms of technology, talent, policy, capital, and environment. First, technological backwardness is the root cause. China's long-term lack of accumulation in the active devices and high-end products, now facing the increasing system speed, device integration, more and more complex processes, the upgrading of technical products is accelerating, more catching up with weak. In addition, we do not pay enough attention to the long-term development strategy of optical devices and usually enter the market only after the market is mature. Therefore, we have to face the brutal competition that foreign products have achieved large-scale development at a low price. Second, the talent gap remains to be filled. There is a big gap between the overall level of high-level innovative talents and developed countries. The introduction of overseas talents and the cultivation of local talents need to be strengthened. Third, there are limited financing channels. Many national support policies for the optical device field are concentrated at the planning level, with limited capital investment and scattered investment forms. Domestic venture capital is not yet mature, making it difficult for emerging optical device chip enterprises to gain favor; in terms of listing financing, there are only a few listed companies in China. High-end product R & D requires a high investment and a long period of time. Domestic enterprises mainly focus on small and medium-sized private enterprises and are unable to raise huge amounts of funds. They mainly rely on cost control, yield improvement, and capacity expansion to survive, low profits make them unable to supply their own blood, and gradually lose cutting-edge technology R & D capabilities. Fourth, the overall industrial environment is poor. The Enterprise Group of optical device chips in China is weak, and there are deficiencies in technology R & D and information acquisition. In addition, it is still time for equipment vendors to recognize high-end domestic devices. The high-end cooperation between upstream and downstream companies is limited. Meanwhile, the operator's procurement policy leads to a constant price war, low-cost and low-cost benefits allow the survival space of the optical device chip enterprises to be squeezed.

Technology Development Trend

The general trend of photon integration, silicon photon will assume an important role

Compared with the widely used discrete components, the photon integration (PIC) technology has obvious advantages in terms of size, power consumption, cost, and reliability, and is the mainstream development direction of optical devices in the future.

In recent years, with the gradual accumulation of technology and the rise of industrial demand, PIC has entered a period of rapid development. Small and Medium Sized PIC has been mature and widely used, and the integration of large-scale PIC has reached hundreds of components. The companies involved in PIC technology and industry include system equipment vendors, optical device chip manufacturers, integrated service providers, and semiconductor Foundry. They are oriented to the telecom and data application markets.

In terms of materials, tri-five semiconductors are widely used in high-speed active devices. Indium phosphating is the only material that can achieve large-scale Monolithic Integration of the communication wavelength. It will still have a certain development potential in the future, representative products are Infinera's high-speed optical transmitting and receiving chips. However, indium phosphating is a rare material, and the size of the extended sheet is small, which is limited in terms of low cost and large-scale production capacity. In addition, silicon photon can apply investment and technical experience in CMOS integrated circuits to the PIC field, effectively reducing costs and improving production efficiency. It has become one of the important technical directions of PIC in the future. Representative technical products of silicon photon, such as luxw.aoc chip, Cisco CPAK optical module, Acacia coherent CFP optical module, and Intel's Hybrid Integrated Laser and Chip-level optical interconnection technology, there are also a few enterprises involved in China, but the scale is limited. There is no feasible technical route for silicon photon Technology in light sources. Currently, hybrid integration and short-range applications are the main technologies, which are constantly developing and mature and will play an important role in the future.

Industry Development Trend

Challenges Continue, industry chain integration is intensifying, and the competition landscape will continue to evolve

In the entire optical communication industry chain, optical devices and chips face multiple challenges.

On the one hand, Huawei, Cisco and other system equipment vendors are constantly involved in the chip and module fields, which has a huge impact on upstream manufacturers and has given birth to a new industrial landscape. On the other hand, the emergence of new technologies such as Board integration (BOSA On Board) poses an important threat to optical modules.

In the face of splitting and integration of upstream enterprises, devices and module vendors without core chip technology will be squeezed, and may face major risks of component out of stock due to the acquisition of suppliers. In the field of optical devices and chips, there are many manufacturers around the world, with a low concentration and relatively scattered market share. In recent years, mergers and acquisitions have been surging, and large enterprises have accelerated the evolution of the integrated vertical integration model that penetrated upstream game chips. The integration of industrial chains has also intensified, and has gradually become a highly centralized development direction for R & D and manufacturing.

M & A is the most frequently used and effective expansion method for foreign optical device enterprises. At present, M & A and restructuring are dominated by American manufacturers. The increase in concentration and competitiveness further enhances the scale advantage. Domestic enterprises represented by guangxun, Hisense, and Huawei have also opened the chapter of global mergers and acquisitions in recent years. In the future, improving the horizontal and vertical integration capabilities will be a long-term strategy of global leading optical device enterprises, and the competitive landscape of the industry will continue to evolve.

The development of optical devices and chips is not only a breakthrough of several enterprises, but also has the characteristics of strong industry group, strong Technology Monopoly, large R & D investment, and long return period, it also requires a sound industrial foundation. Although China has the world's largest optical communication market and high-quality system equipment vendors, it is difficult to effectively solve the essential problems of devices and chips lagging behind by market forces alone. The national, social, and industry-university-research parties should work together to take the development of optical devices and chips as a priority action area for strategic deployment and an important measure to seize the competitive heights of the optical communication industry, break through the essential weak links of China's optical communication industry, and help China's optical communication industry grow stronger and stronger.