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Lightwave on December 24, 1999
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Article Date:
December, 1999
Magazine Volume:
16
Issue:
13
Author(s):
*Rick Schafer
-
Unprecedented demand for pump modules
in optical-amplifier market
By James Jungjohann and Rick Schafer, CIBC World
Markets Corp.
The 980-nm and 1480-nm pump module market could
approach $4.5 billion by 2004, according to Wall Street
estimates.
Wavelength-division multiplexing (WDM) systems engineers
continue to introduce systems with higher channel counts
and increased transmission speeds. At the same time, the
push is on to develop technologies utilizing more of optical
fiber's inherent bandwidth. Systems designers are creating
WDM architectures that use the space outside the
traditional C-band, incorporating both the L- (long) and S-
(short) bands to transmit signals. All these factors are
driving the demand for more powerful optical amplifiers. To
achieve this, erbium-doped fiber amplifier (EDFA) engineers
have begun to design amplifiers with higher-power pump
lasers and with additional pumping stages.
Notably, while the EDFA fostered widespread deployment of
WDM systems, it was the appearance of highly reliable
pump lasers that enabled development of the optical
amplifier. The 1480-nm pump lasers (manufactured by
Furukawa, Sumitomo, Alcatel, JDS Uniphase, Anritsu, and
NEC among others) were the first to be designed in--as
their lower power allowed for heightened reliability--a
characteristic critical to telecommunication network
acceptance. Not long thereafter, higher power 980-nm
pumps begin to be used as companies like JDS Uniphase and
SDL introduced lasers with life test data demonstrating
100-plus-years meantime-to-failure (MTTF) chips.
Click here to enlarge image
Multistage, high-powered EDFAs use very large spools of
erbium-doped fiber--the longer the spools, the greater the
pumping power needed to excite the erbium and amplify the
signal. The 1480-nm lasers can pump these long spools
much harder than the 980-nm models without introducing
nonlinearities and other bandwidth-crippling effects into the
system. As more stages using 1480-nm lasers are added to
EDFA design, we think the current 980-nm/1480-nm pump
volume ratio--tilted in favor of the 980-nm laser--could
reverse.
Higher-channel-count architectures utilizing the L- and
S-bands will use more 1480-nm lasers because the outer
bands must be pumped at lower power (~100mW) to avoid
introducing added noise to the system. These low-cost,
low-power 1480-nm pump modules most likely will come
from Japanese volume producers like Furukawa and
Sumitomo. We believe average prices for 1480-nm modules
could fall from roughly $1400 today to around $675 by
2004. In contrast, pricing for 980-nm modules should
decrease much more slowly as SDL and JDS Uniphase offset
price reductions by offering higher power for the same
price.
Today, dense wavelength-division multiplexing (DWDM) is
the major force influencing EDFA design and the
performance of the diode lasers that pump them. Increased
channel count necessitates proportionately higher total
pump-laser power. For example, if 64 wavelengths are used
in place of 16, EDFAs must have four times higher output to
continue launching the several milliwatts per channel
required to reach the next EDFA. We believe that this trend
of increasing WDM channel counts could boost the average
number of pump lasers per high-power optical amplifier to
nearly eight by 2004 from around three today.
In 980-nm pump lasers, we expect powers to grow 30% to
40% annually through 2004. Currently, SDL and JDS
Uniphase dominate the market for high-powered 980-nm
pump lasers, each producing 300mW chips. SDL expects a
500mW chip (250mW module) by the first quarter with
commercial volumes beginning in the second quarter. The
company will initially qualify its newly designed module at
lower powers, but expects to go above 300mW output
power sometime in 2000. Keeping pace, JDS Uniphase
announced its plans to boost the power of its 300-mW GO4
chip 33% over roughly the same time frame when it
introduces its GO5 chip. JDS Uniphase's GO6 chip is
expected to debut later next year, approaching 500mW. We
believe JDS Uniphase can achieve 800mW in the lab but the
build-up of heat causes the mode of the signal to change
(hop), making the pump ineffectual. SDL expects to
introduce a 1W 980-nm chip in early 2001. Chips are placed
on a heat sink to dissipate heat and prevent mode-hopping.
We believe this fast-ramping power curve will continue to
support very high barriers to entry (highest) and ensure
relatively firm pricing through 2004. High chip powers don't
mean a thing if the companies cannot manufacture them
with yields sufficient to support commercial volumes.
We expect future high-power 980-nm pump laser chip
designs to include two options for boosting power, both of
which raise reliability issues:
Junction side down. Flipping the laser upside down
improves thermal conductivity. This means better
cooling and helps prevent mode-hopping (see Fig. 2a)
A tapered laser. Also called the trumpet approach,
this technique funnels a broad-beam (higher power)
laser into a focused, narrow area (see Fig. 2b).
Click here to enlarge image
Click here to enlarge image
JDS Uniphase and SDL are the dominant manufacturers of
980-nm lasers with approximately 60% and 30% of the
market, respectively. Both companies offer extremely
reliable lasers (100-years-plus MTTF), but only SDL can
package its own laser into a grating-stabilized package--a
key competency as high-channel-count WDM systems
designers require very precise stable output.
Currently, JDS Uniphase sells the bulk of its chips to Oak
Industries' Lasertron division, Lucent Technologies, Nortel
Networks, and Pirelli; all these companies package their
own modules. JDS Uniphase is moving to add packaging
capability by the end of this year. This is a critical move: A
typical terrestrial high-powered (300mW) 980-nm chip may
sell for around $500; a packaged terrestrial module can
garner in excess of $2200. Failure to add packaging by
year-end could limit upside margin potential for the JDS
Uniphase unit in 2000.
In response to increased demand for 980-nm pump lasers,
JDS Uniphase and SDL recently expanded capacity. JDS
Uniphase opened a laser-fabrication plant in Zurich to
produce its new generation 4 (GO4), 300mW 980-nm diode.
Yields at this new plant are improving and the company
expects to exit 1999 at a 250,000-chip run-rate.
SDL also greatly increased chip capacity this year, doubling
production to 200,000 chips. The introduction of a
wafer-fabrication plant this year could ramp chip capacity
beyond 300,000 units by mid-2000. Because chip
production has many benefits similar to semiconductor
production and leverages fixed assets, we believe both
companies stand to gain economies of scale and
subsequent margin expansion.
Both JDS Uniphase and SDL remain capacity constrained in
the production of 980-nm pumps. SDL's bottleneck is in
packaging modules, JDS Uniphase's remains at the chip
level. SDL's chip production is likely half of its capacity. SDL
opened a 40,000-sq.-ft. packaging facility in Victoria,
British Columbia, to help alleviate this bottleneck. We
estimate SDL's current production capacity in Victoria at
10,000-plus units a quarter and expect the new facility to
boost this number by two times or more.
The barriers to entry in 980-nm pump laser manufacturing
are very high-higher than for any other optical component.
Perhaps the most significant hurdle is the thousands of
hours of both laboratory and field-test data both SDL and
JDS Uniphase have logged proving their lasers meet network
operators' stringent terrestrial and undersea requirements.
The companies' failure-in-time scores, near 100, show their
lasers will not fail in 100-plus years of continuous use. A
second key barrier to entry is power requirements. As WDM
system OEMs move to higher channel-count systems, they
continuously demand higher-powered pump lasers. The fact
that power and reliability are inversely related makes for a
very steep learning curve, leaving Oak Industries' Lasertron
division, Furukawa, ADC's Spectracom, and other
competitors continually playing catch-up.
As pump lasers are pushed to their physical limits to provide
maximum amplification power, high reliability is critical. The
technologies behind reliable pumps involve molecular beam
epitaxy (MBE, used by JDS Uniphase) and metal organic
vapor phase epitaxy (MOVPE, used by SDL).
A key part of any reliable 980-nm pump laser is the mirror
passivation. The area between the mirrors offers the lasing
cavity needed for laser performance. Higher power can
dramatically intensify heat buildup within the laser. If the
cleaved mirror is not properly protected, its degradation
from oxidation eventually leads to failure of the laser, or
catastrophic optical mirror damage (COMD). JDS Uniphase's
patented E2 mirror passivation completely suppresses
COMD. The E2 process is an important proprietary IBM
technology licensed to JDS Uniphase. Notably, older
versions of the E2 process were licensed to Lasertron,
Nortel, Pirelli, and Hewlett-Packard Co.
The general perception has been that 1480-nm lasers are
more reliable than 980-nm devices. Indium gallium arsenide
phosphide (InGaAsP) lasers (of which 1480s are made) tend
not to fail suddenly but to degrade slowly and predictably
over time.
Reliability issues have long been associated with 980-nm
pump lasers. The crux of the problem is that when a
980-nm pump laser in a single-pumped EDFA fails, the
entire system goes down. To ensure signal delivery,
engineers designed the "dual-pumped" EDFAs, which utilize
two 980-nm pump lasers, essentially making the amplifier
fail-safe.
JDS Uniphase, recognizing the need for an improved 980-nm
laser, introduced the E2 process in 1990 to resolve the
980-nm lasers' reliability problems. E2 allowed JDS Uniphase
to differentiate its 980-nm product by making it extremely
reliable. Prior to the E2 process, 980-nm lasers failed
frequently, suddenly, and unpredictably due to mirror
degradation. Wafer growth and the development of mirror
passivation procedures like E2 have eliminated the major
sudden-failure mechanisms, however.
Meanwhile, enough field data has been accumulated with
JDS Uniphase's and SDL's 980-nm pump lasers to develop a
convincing reliability picture. Extended life testing has
allowed JDS Uniphase to raise its MTTF estimate for 980-nm
lasers above 2-million hours; in 1998, it could claim only
1-million hours. Results suggest that as 980-nm pump lasers
continue to accumulate a track record versus 1480-nm
technology, the reliability gap will narrow further, or
disappear altogether.
The 980-nm pumping band also has important implications.
The absorption spectrum versus pump wavelength is
strongly peaked around 980 nm. As pump powers were
increased over the past year, in conjunction with higher
channel (40 to 80) WDM systems, the pumps were required
to be wavelength selective. As a result, 980-nm pumps are
increasingly wavelength stabilized using fiber Bragg gratings
(FBGs) to eliminate gain variations and improve spectral
quality.
New 80-plus lambda systems place channels closer
together than ever before. Additionally, in most long-haul
and undersea DWDM systems, many EDFAs are cascaded in
sequence. After each amplification, if EDFA gain flatness is
not tightly controlled across the entire band (all 40 or 80
channels), the power of each channel can eventually vary
widely introducing nonlinear effects in higher-power
channels or signal degradation in lower-powered channels.
This combination of higher channel count and cascaded
amplification makes FBG technology increasingly
important-and it was this grating process that propelled
SDL into the market in 1998. SDL manufactured an
inherently unstable 980-nm chip that needed an FBG to
work properly. Comparably, JDS Uniphase's chip was quite
stable and did not need a stabilization feature--until the
recent move to higher channel counts for WDM systems.
When the WDM market went to higher channel counts
sooner than expected, vendors packaging the JDS Uniphase
chip were caught by surprise and could not come to the
market with the grating feature in a qualified package soon
enough to trump SDL. But Oak Industries' Lasertron division
recently qualified its FBG modules at several OEMs.
The introduction of gratings didn't fix all the problems
associated with advancing multiplexer technology, however.
Different wavelengths tend to propagate at slightly
different speeds in the optical fiber--an effect called
dispersion. As WDM networks increasingly migrate to
10-Gbit/sec modulation rates, power levels must be
managed effectively. An important concept is that both
gain flattening and dispersion compensation are needed
immediately after signals are amplified. Ironically, gratings
introduce additional power loss, adding to the total
pump-power requirements.
As a result of increased channel counts and the transition
to OC-192 (10 Gbits/sec), the roughly 100-km amplifier
spacing typical in long-haul DWDM networks is predicted to
decrease over the next few years. Added EDFA
functionality for DWDM introduces large internal losses that
must be compensated for by higher power pumps and
additional pump stages. More amplifiers per kilometer and
more pumps per EDFA created a dramatic surge in pump
laser-unit demand in 1998. In response, both 980-nm and
1480-nm pump manufacturers are redesigning their chips for
higher power and rapidly adding capacity.
Because fabrication of both 980-nm and 1480-nm pumps
require extraordinary skills, only a handful of companies
have developed a Bellcore-qualified 980-nm pump laser
manufacturing process, and even fewer can realize
>200-mW output power with high reliability. We believe only
JDS Uniphase and SDL have reached this level of reliability,
power, and manufacturing capacity.
Bellcore-qualified 1480-nm chips are more widely available,
with more than 10 suppliers actively vying for market share.
But high-power 1480-nm pumps appear to be a different
story. As with 980-nm pumps, high-power 1480-nm
production is dominated by a few large players. We believe
Furukawa currently holds about 40% of the market for
1480-nm pumps, Sumitomo about 20%, and JDS Uniphase
and Alcatel about 15% each. Anritsu, Fujitsu, and others
round out the space. This group offers 1480-nm modules
with output powers exceeding 150mW or higher, although
even 140mW and 150mW packages can be tough to
purchase in volume.
A good guide to 1480-nm pump pricing in the most common,
100mW to 140mW range is $10/mW. Still-higher powers are
available; Anritsu offers a 200-mW package and Furukawa
claims to have a 250mW module. Prices for these packages
can run well in excess of $5000 each and the units are not
currently available in volume. The drivers for these
high-powered 1480-nm pumps mirror those of 980-nm pump
demand, leading to capacity issues in this market as well.
Its larger effective pumping power makes 1480-nm the
preferred wavelength in the booster (second) stage of an
amplifier, since noise generation can be accommodated by
providing an adequate signal-power input. In general, the
choice of pump wavelength in the booster is determined by
power output (measured in dBm) per dollar; this metric
currently favors 1480-nm lasers.
Two major factors have contributed to the 1480-nm pump's
continued popularity. As channel counts for DWDM systems
increased from 8 to 80, EDFAs required more output power.
This demand was largely met with 140mW 1480-nm lasers
because the equivalent 200mW 980-nm pumps were not
yet commercially available. This is important because a
200mW 1480-nm pump module gives the same output
power from an EDFA as a 300mW 980-nm pump module.
The 980-nm photon has 50% more energy than a 1480-nm
photon owing to its shorter wavelength. Although the
980-nm photon wastes 50% of its energy, it gives a much
better signal-to-noise ratio than 1480-nm pumping, where
one 1480-nm photon equals one 1550-nm photon.
Secondly, the decline of the yen gave Japanese producers
of 1480-nm pumps a pricing advantage. JDS Uniphase
believes the available power will favor 1480-nm through this
year, but the price-performance gap will narrow somewhat
as 200mW-plus 980-nm pump modules become available.
This year also saw the debut of Bellcore-qualified multimode
aluminum gallium indium arsenide (AlGaInAs) pump lasers for
next-generation fiber amplifiers capable of >30 dBm output
power. Demand for high-power (>1W) multimode pump
modules is driven by the need for fewer pump modules in
high-power EDFAs. Typically, 70% to 80% of pump lasers'
cost is in the butterfly package, so considerable cost can
be spared using fewer modules, especially considering the
additional cost of wavelength combiners for pump laser
multiplexing. Many manufacturers are readying
ytterbium/erbium cladding-pumped fiber amplifier and
Raman-shifted amplifier technologies for commercial
production in 2000. With reliable, high-power multimode
pump lasers now available, these new amplifier technologies
will enable even further DWDM capacity expansion at ever
lower cost.
The introduction of 980-nm pump laser technology into
submarine networks was another major market shift this
year. Submarine networks are long-haul in nature,
necessitating that many EDFAs be cascaded between
landfalls. In the past, eight-channel, 2.5-Gbit/sec systems
could tolerate the noise generation of 1480-nm pumps.
With submarine designers moving to 16 OC-192 channels (in
Alcatel's case, 32 channels), however, 980-nm pump lasers'
improved noise performance is now indispensable.
Submarine systems also require extremely high reliability,
another reason undersea network designers chose 1480-nm
pumps exclusively.
The 980-nm pumps' higher power should drive a rapid
transition in the submarine market from the exclusive use of
1480 nm to amplifier designs utilizing both 1480-nm and
980-nm pumps, much like what happened in terrestrial
systems. We believe the undersea opportunity could soon
rival that of the terrestrial market in dollars, as these
components can garner an average selling price three times
that of their dry-land counterparts. We expect JDS
Uniphase and SDL will account for virtually 100% of the
undersea 980-nm chip market going forward given their
extremely reliable, high-powered products. At this time, we
give a slight advantage to SDL in terms of projected
980-nm undersea market share.
In sum, more amplifiers per kilometer, more pumps per
EDFA, and more market applications are creating a dramatic
surge in pump laser unit demand--such that it is outpacing
current capacity. In response, both 980-nm and 1480-nm
pump laser manufacturers are redesigning their chips for
higher power and doubling or tripling capacity almost
annually.
As strong demand persists, pricing for amplifiers and
high-end pump lasers should stabilize relative to that for
many other optical components. Couple this with robust
undersea network growth, where components can garner
three times the price of their terrestrial counterparts, and
we believe pricing should stabilize.
Click here to enlarge image
James Jungjohann and Rick Schafer are equity research
analysts at CIBC World Markets Corp. in New York. James
can be reached at e-mail: James.Jungjohann@us.cibc.com
or at (212) 667-7013. Rick can be reached at e-mail:
Richard.Schafer@us.cibc.com or at (212) 667-7905.
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