PETER DYKES TRANSCEIVER SUPPLY CHAIN
What we’re seeing now is that it’s not so much about having a tuneable laser, or about having a DSP, it’s actually about having both.
LASERS AND DSP’S A significant element of the supply chain consolidation process involves creating partnerships with other manufacturers. Hughes argues that supply chain issues can be alleviated further if companies consolidate access to their optics and DSP supplies, either by acquisition or by a careful choice of partners. According to Hughes, there are two things that are problematic at the moment. One is getting high-quality optics, the other is getting DSPs. He says there are only a handful of players who actually have highly tuneable lasers on the one hand, and on the other, there are only a few DSP vendors. As we’ve been seeing over the last few years, there’s been a big race for companies to add DSPs to their portfolios and while the likes of Nokia and Huawei have their own, Cisco’s purchase of Acacia and the acquisition of ClariPhy by Inphi, and Inphi by Marvell, means there are fewer suppliers to choose from. He says, “What we’re seeing now is that it’s not so much about having a tuneable laser, or about having a DSP, it’s actually about having both, so if you’ve got both, you’re in a reasonably good position. If you’re unfortunate enough to only have one or the other, then you’re potentially at the mercy of whoever, in this case, has a DSP, who would want you to have access to that and for how long. What we’re seeing now a big scramble for companies to get their arms around both elements. For example, Cisco has both, Marvell is pretty close to having both, but not quite at the performance level that Cisco has, and there are others. We also see a lot of movement in the industry by those ready to protect their own markets, such as HiSilicon. In China, they have tuneable lasers that are coming along, and that’s another key part of the puzzle. I would say at the moment, the only other player outside of these who would be willing to look at engaging with a company on a DSP would be someone like NEL, which is up there with the others. So there seems to be a much stronger move now around how to get
secure access and availability in a way that’s not going to hamstring your business. Now, it’s much more about relationships and how you secure your supply chain, and it’s not just supply chain in terms of a DSP. It’s a supply chain, around the DSP, around the optics and around your packaging partner. We’re also starting to see a lot more focus towards having a capability within a particular region, and part of that is because of the geopolitical situation that’s going on in various parts of the world. Right now. I think what people are doing is they’re saying, look, Covid has happened, we have a massive shortage of supply within the market and everyone is in catch up mode right now. But as far as I can see, there’s a lot more focus around supplying your near term, closest partners first, before starting to expand. We’re catching up, but will we ever really get there? Let’s put it this way, I’m not convinced we will get there quickly.”
and systems, and that will continue. There are shortages now around the sub components such as the ICs and chips that go into those modules. The question then becomes, are we ever going to get to a point where we will be able to satisfy demand? I think the reality is that there will be shortages, but how long will it take? That really depends how quickly the fibre rollouts continue and the requirement for components and subsystems to support all of that. So, we’re starting to see a much stronger need for a highly integrated supply chain, and it’s not just from the making of lasers or ICs, you need that right through the system and the rollout of that as well.” It’s not just potential component shortages that could slow things down however, there are other factors involved apart from supply chain issues, there are the much-reported skill shortages, geopolitical problems and of course, the impact of Covid-19. Hughes says, “Obviously, we’ve got to get out of this pandemic and everyone’s got to get back to work, but I think productivity is going to have to increase to the point where we can actually get slightly ahead of the curve. However, I don’t know how the geopolitical aspects will play out. I think that’s a big unknown at the moment in terms of the US and China, and maybe even Russia. We’ve still to see how that will work out, but there has to be partnerships right the way through from lasers through to modules, through to systems, right the way through to the actual rollout. I don’t think we’ve ever experienced that before, but I think that part of it is going to become a lot more critical. What we will see I would say, is at the beginning, probably those who are willing to pay a little bit more, have the better relationships, and are able to pull together a very complete supply chain right away, from the availability of lasers, ICs and component modules and the way they get rolled out, will be the most successful. This is the end-to-end supply chain relationship that’s going to have to happen.
Robert Hughes, CEO Westbury Photonics
Hughes brings over 25 years’ experience in the photonics and communications industry spanning development, manufacturing, fund raising, sales, marketing, business development, and working organisations from foundries to components, system OEMs, and service providers around the world. Robert is passionate about bringing new disruptive technologies to market as well as innovative business models.
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ISSUE 28 | Q1 2022
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