In the construction of optical communications, optical modules and optical devices represent the core competitiveness of the optical communications industry. From the perspective of the entire optical device industry chain, the main links are optical chips, optical devices, optical modules, and optical equipment. Among them, the optical chip belongs to a technology-intensive industry, the process flow is extremely complex, is at the core position of the industrial chain, and has extremely high technical barriers.
 
In optical communication systems, the most commonly used optical chips are three types: DFB, EML and VCSEL. In terms of DFB chips, on behalf of manufacturers Avago and mitsubishi; For EML chips, manufacturers include Neophotonics, Oclaro and Sumitimo. In terms of VCSEL, manufacturers include Lumentum, Finisar, Avago, mitsubishi, etc.


Data traffic surges optical chip market gets further release
 
With the coming of 5G era, the market space of 100G optical module in data center is constantly being released, and it adopts four 25G optical chips, so the 25G optical chip market can take advantage of the trend to explode.At present, in the telecommunication network market, the transmission network expansion is being vigorously promoted, the access network is gradually upgraded to 10G PON, and the construction of 5G base station can bring more than 2 billion us dollars of optical chip market space, which is the largest market space of optical chips, accounting for about 60% of the total.In addition, the successful entry of VCSEL chips into the consumer electronics market in recent years has also led to a new round of growth.
 
At present, domestic manufacturers are strengthening research and development to accelerate the domestic substitution process of optical devices, and optical chips are a crucial part of this "tough battle." Generally speaking, in low-speed optical modules and optical devices, the proportion of optical chips in cost is about 30%, and in high-speed optical modules and devices above 25G, this proportion rises to about 60%. At present, domestic manufacturers have made breakthroughs in the field of low-speed chips, which is also a good start for domestic substitution. With the continuous breakthroughs in the field of high-end chips, the position of domestic manufacturers in the global industrial chain of optical devices will be further improved.
 
Intense market competition, frequent M & A in the industry
 
At present, from the perspective of the regional distribution of global industries, US and Japanese manufacturers occupy the global high-end optical device market with core technology. However, domestic manufacturers gathered in the low-end market and gradually advanced to the high-end, and achieved good results.
 
As a product with a very high technological content, optical chips have several characteristics such as long research and development cycle, large investment and high risk. Because different types of chips rely on different process platforms, the technical difficulty of optical chip manufacturers wanting to cut into other types of chips is still very high. Therefore, in order to obtain more high-end optical chip technology, overseas listed optical device manufacturers mostly use mergers and acquisitions to strengthen their technical strength and further seize the high-end optical chip market.
 
For example, the photoelectric giant II-VI acquired Oclaro's gallium arsenide manufacturing plant, and thus acquired the R & D and manufacturing capabilities of VCSEL chips. Then successfully entered Apple's 3D sensing supplier sequence, successfully achieved a breakthrough from the optical communication VCSEL market to the consumer electronics VCSEL market, and became the top five VCSEL chip suppliers in the world, further opening up its own growth space. Neophotonics acquired LAPIS, which is a leader in high-speed semiconductors and high-speed lasers and photodetectors used in communication networks. The company's lasers, photodetectors, and analog semiconductor integrated circuits are key elements in coherent and other high-speed optical transmission devices. The acquisition further broadened Neophotonics' product line on optical chips and consolidated its leading position in the field of optical chips.
 
In addition, Finisar acquired the integrated SOA and tunable laser technology through the acquisition of Ignis, and acquired the high-speed detector technology based on InP through the acquisition of U2T. Avago strengthened its wireless chip product portfolio by annexing Broadcom. There are many related cases. Through these mergers and acquisitions, we can find that the industry concentration is increasing, and high-end optical chips are the core factors that promote these mergers and acquisitions.

Domestic production accelerates the process of localization
 
Compared with the communications equipment and optical fiber and cable markets, the market share of optical devices is more dispersed, and the optical device industry is also a communications sub-industry that lacks competitiveness in China. Among the top ten manufacturers in the world, the United States and Japan occupy nine of these seats, and China is only a shortlisted company. In the optical communications device market, profitability is characterized by polarization, and the profit margin of high-end devices and chips is much higher than that of low-end products.


At present, China has become the world's largest optical communication market, and the market share of optical devices accounts for about 25% to 30% of the world. The localization rate of optical chips at 10Gb / s rate is close to 50%, but the localization rate at higher speeds is far below this level. China's optical communication device manufacturers are mainly private small and medium-sized enterprises, which are generally small in scale and weak in product research and development and investment strength. This is also a major obstacle that restricts their transformation to high-end. Accelink Technology, Hisense Broadband and O-Net Technology are the few domestic manufacturers that can independently develop optical chips.
 
In January 2018, the requirements of the "China Optoelectronic Device Technology Development Roadmap (2018-2022)" issued by the Ministry of Industry and Information Technology made it clear that by 2022, the localization rate of domestic low-end optoelectronic chips will exceed 60%, and the high-end optoelectronic chips will be domestically produced. The conversion rate exceeded 20%.
 
On August 30, 2018, China's first 100G commercial silicon optical transceiver chip was successfully developed and put into production in Wuhan. The chip was jointly developed by the State Information Optoelectronics Innovation Center, Accelink Technology, the State Key Laboratory of Optical Fiber Communication Technology and Network, and China Information and Communication Technology Group. The launch of this chip is a milestone for domestic optical chips, which has greatly accelerated the process of localization and replacement of high-end chips.