If we ask about the status of the optical communication industry in 2022 , it may be difficult for us to summarize the whole year with just one word. Since the beginning of the year, the entire industry has not only harvested good news such as the recovery of the optical fiber market and the accelerated process of counting from east to west, but also faces the impact of the industry cycle and the ” chip bill”. In order to facilitate everyone to have a clear understanding of the industry throughout the year, Veken Optical Communications reviews the hotspots of optical communications in 2022 in this article, which also serves as the outlook for the industry in 2023.

Counting East and Counting West Brings New Opportunities for the Optical Communication Industry

On February 16, 2022, the “East Number and West Counting” project, which has the same significance as the three major national projects of “South-to-North Water Diversion”, “West-to-East Electricity Transmission” and “West-to-East Gas Transmission”, was officially released. The fourth largest national project after the big project – computing power project.

From the perspective of the development of the information and communication industry, the launch of the “East Counting and West Counting” project will bring two direct opportunities to the optical communication industry: one is the optical fiber and cable of the data center , and the other is the optical module of the data center .

optic cables for data centers, the demand for high-density, large-core optical cables is expected to explode. The deployment of large-scale data centers puts forward higher requirements for compressing wiring space and improving line capacity. High-density and large-core optical cables produced by relying on optical fibers with a unit diameter of 200 μm and smaller, mesh optical fibers, etc. are expected to become future data center wiring In the future, the western data center will perform more tasks such as data information exchange and storage, the amount of data will increase rapidly, and the proportion of optical fiber in the wiring of the data center will increase, especially the one represented by OM5 Multimode fiber can widen the bandwidth performance of traditional OM4 fiber from 850nm to 953nm. At the same time, it uses long-wavelength wavelength division multiplexing technology to realize four wavelengths on one fiber and increase the transmission capacity of fiber by 4 times. OM5 fiber will become a data center. The “sweet pastry”.

In terms of data center optical modules, in general, the proportion of data center optical modules will gradually exceed that of telecom market optical modules. First of all, in the process of transforming the data center to large-scale and intensive, it will promote the evolution of optical modules to high speed, low cost, low power consumption, small package, and low power. On the technical route, 100G will quickly move to 200G/400G At the same time, 800G optical modules will gradually increase in volume; the rigid demand for short- and medium-distance communication within the data center will promote silicon optical modules to gradually replace existing optical modules and become the most competitive solution in the market.

The “Chip Act” is full of malicious intent

From July 27th to 28th, 2022, the U.S. Senate and House of Representatives passed the “Chip and Science Act”, which envisages an investment of 280 billion U.S. dollars within five years, so that the United States will be ahead of China in the global competition for technological superiority.

There are many provisions in the bill related to “competing with China”. For example, if a semiconductor company building a factory in the United States is also building a factory in China or other potentially “unfriendly countries”, it cannot receive subsidies from the bill. The bill strengthens oversight of exchanges between the U.S. and foreign scientists and the government, prohibits scientists who receive federal funding in the U.S. from participating in foreign talent recruitment programs sponsored by China and Russia, prevents NSF from awarding awards to any university with a Confucius Institute, and requires reporting Any donation of $50,000 or more from a foreign source.

In response to the passage of the bill, China resolutely opposes provisions that restrict “normal scientific and technological” cooperation between the two countries. It is reported that the Chinese government has formulated a plan to increase the share of China-made chips to 70% in 2025.

Relevant people in China said that the promulgation of the national chip law will in turn force China to enhance its autonomy in semiconductor manufacturing and accelerate the progress of the introduction and verification of wafer manufacturing equipment and materials made in China. Localization is of great strategic significance for mainland China to “break the game” in the field of science and technology. In fact, since the ZTE and Huawei incidents, under the pressure of a series of U.S. sanctions, Chinese chip companies are generally prepared. Enterprises emphasize independence in supply chain management and actively seek localization. In this context, it is still unclear how much the chip bill will affect domestic companies in the future.

The road to IPO has made progress, and many companies have successfully listed

On August 9, 2022, Wuxi Dekeli Optoelectronics Technology Co., Ltd. was successfully listed. Dekeli’s main business covers R&D, production and sales of optical transceiver modules, optical amplifiers, and optical transmission subsystems . At present, the company has established good cooperative relations with many global mainstream telecom equipment manufacturers such as ZTE, Infinera, Ciena, FiberHome , Nokia, ECI, three major domestic operators, and State Grid and other high-end customers at home and abroad.

On September 13, 2022, Liantech was officially listed on the Shenzhen Stock Exchange, becoming another optical communication company listed on the Shenzhen Stock Exchange. Liante Technology is an enterprise focusing on the R&D, production and sales of optical communication transceiver modules. In 2020, among the local optical module manufacturers in China, Liantech’s optical module revenue ranked seventh, with a domestic market share of about 1.30%. In the field of wavelength division multiplexing optical modules, Liantech ranks even higher. Its cumulative revenue scale from 2018 to 2020 ranks second among domestic optical module manufacturers, with a market share of nearly 3%.

On December 12, 2022, Changyingtong, the “first domestic optical fiber ring stock”, landed on the Science and Technology Innovation Board, becoming the fourth company in Hubei Province to pass the examination and approval of the Science and Technology Innovation Board, and also the fourth new listed company in Optics Valley in 2022. Valley’s 57th listed company. Changyingtong actively develops upstream and downstream, and has established a complete business layout covering optical fiber ring devices (including optical modules), special optical fibers (including special optical cables), adhesives and coating materials, optical device equipment and other accessories and spare parts products and services. , Opened up the “ring-fiber-glue-module-equipment” integrated micro-industrial chain.

On December 21, 2022, Yuanjie Technology landed on the Science and Technology Innovation Board. Yuanjie Technology focuses on the optical chip industry. Its main business is the research and development, design, production and sales of optical chips. The main products include 2. 5G , 10G and 25G and higher rate laser chip series products are currently mainly used in the field of optical communications, including optical fiber access, 4G /5G mobile communication networks and data centers. The company’s main business income comes from 2.5G, 10G, 25G and higher rate laser chip series products, and other business income is sporadic technical service income. In recent years, the company’s main business income has accounted for more than 99% of the operating income, and the main business has outstanding performance.

Optical communication investment projects are in full swing

In September 2022, Shijia Photonics announced that it will participate in the establishment of an industrial investment fund with a total investment of 402 million yuan, which will be used to invest in the equity of emerging companies such as the optoelectronics industry, and invest around the upstream and downstream of the company’s industrial chain.

In October 2022, Zhongke Xintong announced that its “multi-material, cross-size” photonic chip production line is expected to be completed in Beijing in 2023. After the completion of the production line, it will be able to meet the market demand in the fields of communication, data center, laser radar, microwave photonics, medical testing, etc. It will fill the gap in the field of photonic chip wafer foundry in my country, and it is expected to accelerate the large-scale process of domestic photonic chip replacement. .

In December 2022, the Wuxi Photonics Valley Innovation Center (Phase I), jointly built by Wuxi Binhu District and Shanghai Jiaotong University, officially held a groundbreaking ceremony. The project will focus on the research and development of high-end photonic integrated chips, focus on quantum computing, optical artificial intelligence and optical communication cutting-edge technologies and industrial applications, and create a global photonic chip design, development and industrialization cluster.

In November 2022, the “National Integrated Circuit Innovation Center-Silicon Photonics Joint Laboratory” was officially unveiled in Zhangjiang, Shanghai. The implementation of this project will help solve the non-standard problems in the design and processing of silicon photonic chips, and promote the scale and standardization of the silicon photonic chip industry.

The semiconductor industry is the core of the information technology industry. With the rapid rise of emerging industries such as automotive electronics, artificial intelligence, intelligent manufacturing, and the Internet of Things, semiconductors have become a key force leading a new round of technological revolution and industrial transformation. and an important basis for social informatization”.

Among them, optical chips are an important subdivision track of the global semiconductor industry, and are considered to be the most suitable underlying technology to solve the bottleneck of computing power development. According to Gartner’s forecast, the global photonic chip market is expected to reach US$56.1 billion by 2025. The current application scenarios of silicon photonics technology are mainly concentrated in the communication field, and there is still huge room for growth in the non-communication market. Industry insiders believe that the application field of silicon photonics technology will continue to expand in the future, and this technology will soon usher in an explosion in the fields of lidar, wearable devices, and AI photon computing.

Investment and financing projects complement the hard power of the enterprise

On April 7, 2022, YOFC obtained the control of Borch Technology through agreement transfer. After the acquisition, YOFC will hold a total of 12.72% shares of Borch Technology, plus the voting rights under the entrustment agreement. 12.71% of the voting rights, YOFC will control 25.43% of the voting rights of Borch Technology, and Borch Technology will become a non-wholly owned subsidiary of YOFC. In May 2022, YOFC completed the acquisition and integration of Wuhu Tus Semiconductor Co., Ltd. and Wuhu Terahertz Engineering Center Co., Ltd., and has changed the name of the acquired target company to Anhui YOFC Advanced Semiconductor Co., Ltd. In November 2022, YOFC established a new semiconductor company “YOFC Advanced Semiconductor (Wuhan) Co., Ltd.” in Wuhan.

In June 2022, Sony announced the establishment of a new company that will enter the fast-growing space field by supplying laser beam communication equipment for small satellites in orbit in the future. The company’s equipment will be used to communicate with satellites in space and with ground station communications satellites, using laser technology to avoid radio frequency bottlenecks.

In August 2022, Qixin Optoelectronics Technology Co., Ltd., a leading company in optoelectronic integrated chips, announced the completion of a Pre-IPO round of financing of 350 million yuan. The investor is managed by Shenzhen Investment Control Donghai Investment Management Co., Ltd., a subsidiary of Shenzhen Investment Holdings Co., Ltd. Chongqing Southern Fund. This Pre-IPO round of financing received a higher price of financing, which shows that the communication capital market recognizes the strength of Qixin Optoelectronics. Qixin Optoelectronics will also grow rapidly on the road to IPO.

In August 2022, Lumentum and NeoPhotonics (New Photonics) announced that Lumentum’s acquisition of NeoPhotonics has obtained an anti-monopoly license from the State Administration for Market Regulation of China. The acquisition of NeoPhotonics will help Lumentum expand into multiple fast-growing optical device markets above $10 billion, and help it seize development opportunities in the fastest-growing individual areas of cloud computing and telecom network infrastructure markets. The integrated new company makes better use of photonic technology to accelerate digital transformation and virtualization transformation, promote the development of the Internet of Things, 5G and next-generation mobile networks, and transition to advanced cloud computing architectures.

It can be seen that for the optical communication industry, 2022 is still a year full of vitality. In this regard, we also have reasons to believe that the steady advancement of national policy projects such as East Digital and Western Computing, and the hard work of domestic optical communication companies will lay a solid foundation for the further development of the entire industry in 2023.