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Building Big Business with the Next Generation Integrated Circuits!

Sep 28, 2015 11:09:54 AM. By: High Tech Campus

Insights from Michael Lebby, CEO OneChip Photonics Corporation. He is the keynote speaker at the Photonics Integration Conference, Wednesday 23rd September 2015.

Michael Lebby has always been very optimistic that integrated photonics will scaleup, creating business opportunities for many companies. Earlier this year, he was actively involved in assembling California’s bid, led by the University of Southern California, to host the new US integrated photonics manufacturing institute. So we asked him to share some insights into why this is an important time for the industry.

 

Drastically changing customers

“I think we need a better understanding of how the market for photonics is changing. I was particularly interested in how the California submissions reflected the vast changes that have happened in industries that are looking to photonics for solutions. Take the communications industry, for instance. Look back 30 years and you saw the global telecom industry run by monopolies.

In the US, it wasn't until 1984 that the Bell System of companies was broken up. At that time, "Ma Bell" controlled everything, include the development of fibre-optic systems. They were using a different set of metrics for business - it was common for phone companies to demand 20-year reliability. Nobody understood the rate of change happening around them.”

“I was fortunate to be the executive director of the Optical Industry Development Association (OIDA) in Washington DC, from 2005-2010. This is the US trade association for the photonics industry and it gave me a unique opportunity to walk into many of the leading data-centre companies in the world.  The position allowed me to get a deep understanding of their needs and ambitions in the coming 5-10 years. We turned those learnings into comprehensive technology road maps.” 

 

Completely new players with new demands

“Compare all this with the situation in 2015. Companies like Google and Facebook are running on advertising dollars, so the customer and demand for metrics is completely different. Today, companies want to deliver traffic to everybody and they want to do it as efficiently as possible. So when you talk to these big enterprises and ask them what they need in the coming decade, their answer is not what traditional component manufacturers want to hear. These giant customers want to bring costs down to virtually nothing.” 

“One analogy is to think of the photonics guys as the “plumbers of the communications industry”. Their clients and users in the data-centre sector don't want to pay much for the piping that connects things together or the water that flows through. So you have to ask, how will the photonics suppliers achieve this goal and yet be profitable?”

 

Incremental changes will not work

“It’s clear that just extrapolating current technology is not going to work. In fact, a gauntlet has been thrown down by these big high-tech media companies. Google, Facebook, Twitter and others are challenging the photonics industry to come up with new solutions. And they are already setting out their vision of what they expect both in price and speed.”

 

Michael Lebby

Who will Win?

“Whoever gets there first and scales efficiently will get access to a huge bucketful of business. There won’t be much profit margin. But there will be enormous volume.”

“All this puts pressure on the global photonics community to come up with different approaches. “

You're active on both sides of the Atlantic. How should European companies react to the news a few weeks back that over US$ 600 Million is to be invested in the new Photonics Manufacturing Institute? It is being established at the Research Foundation for The State University of New York in Rochester. Is it direct commercial competition or just a logical extension of capacity to kick-start global mass-production?

“There were three finalist bids to host this new institute. But the goal in each case was to generate interest from industry. My role was to help with the California submission. USC was the lead university, which also included proposals from UCLA, UC San Diego, UC Berkeley, Arizona State University and Ohio State University.”

 

Different Approaches

“There were also comprehensive submissions from Florida and the State of New York. It was an open secret that our California plan was a horizontal open-source approach, and the other two were vertically integrated plans.” 

“For some people, vertical integration has some core benefits. One is control. The more activities you carry out in the manufacturing and distribution process, the more control you have over the entire flow of goods until they reach the end customer. On the other hand, it requires your company and its leadership to have expertise in multiple distribution channel activities. The roles of designer, foundry and chip packager are distinct. A manufacturer wanting to distribute its goods directly to customers must not only have production strengths, but also the ability to market and efficiently distribute those goods. “

As the project is managed by the US Department of Defense for the next five years, does that have any effect?

“It has some effect, of course. I believe there are currently 7 of these institutes of manufacturing being set up around the country. The National Network for Manufacturing Innovation (NNMI) intends to build a manufacturing research infrastructure so U.S. industry and academia collaborate to solve industry-relevant problems. They want to create, showcase and deploy new capabilities and manufacturing processes.”

“The initiative is driven by the Obama Administration who clearly want to make the US more competitive. It’s about bringing back jobs for US workers in USA based companies or foreign companies with US employment facilities. The White House office of science and technology then hired the US Department of Defense to allocate the money”.

 

Defense Interests

“Of course, the DOD has its own interests, asking what can be developed to help their particular interests. But, in the end, the US government doesn't really mind if the end user is a defense department or a US consumer. So we had to put a proposal together that caters for a bit of both. In particular, one that meets the low volume expectations from the DOD, while providing a platform for high volume in the data-centre segment.  Export controls on technology may come up because of the Defense involvements, but it wasn't seen as the major impediment.” 

“Our proposal had four main areas we thought needed development. The first was fibre optic transceivers for data centres. The second one was RF photonics, which has not yet been integrated yet. The third topic was Integrated photonics and sensing. That will benefit both the DOD as well as consumers. We chose "packaging" as the fourth application. We still feel that this is important to opening up this key technology to many other applications. You may be able to put a few devices on a chip, but how do you connect it all up and package it at a cost level that commercial customers will pay for? Defense is used to completely different specs and pricing levels.”

 

New opportunities dawn for Europe

“As someone who is active on both sides of the Atlantic, it is clear that the investments in integrated photonics are starting to show results. If you look at where the investment has been made in the last 15-20 years, the answer is mostly Europe and little bit in Japan.

The Brainport Eindhoven region has certainly been a driving force in bringing teams and initiatives together for integrated photonics, both locally and across the continent.

So is the announcement in Rochester a good development from the European perspective? I think it is, because it reinforces the fact that photonics is here to stay, especially as an integrated platform.

 

Exponential Growth, backed by billions

“I believe the large customers are more concerned about the price than what technology is inside the box. So, although a few hundred million dollars sounds like a lot for the new US Photonics initiative, in fact it is simply an early stage foot in the door. They want to see similar pilot production lines develop like in the European Horizon 2020 program. It’s true that latest investment is probably an order of magnitude bigger than what has happened so far in Europe.”

 “But to really scale up this industry, you need tens of billions of dollars. So, Europe can still maintain its leadership role. The open question is whether Europe can get the IBM's, Cisco’s and Intel’s of this world to put in the billions. I think it is a challenge worth accepting. Europe has taught itself to collaborate efficiently, it has direction, a clear set of goals and lots of small innovative companies.” 

“If you think about the US, the winning teams will be using a vertically integrated model. The Europeans, like Jeppix and a few others, are all open collaborative, horizontal models. I see advantages to this approach. You can negotiate various pieces of the pie that don't cost you a fortune. It’s not cheap, but neither is it outrageously expensive to develop new chip designs. It means an expanding market for smaller companies like Smart photonics, Effect photonics, VLC photonics and companies like that.”

“That was also what drove the California photonics proposal, an open source approach using a silicon brokering business called MOSIS.”

“The US government has decided to fund a vertical model. There is still a lot we don't know, but I'm sure big silicon fabs will benefit. But what about the disruptive “little guys”? Everything is done in one place, you have to go to a particular foundry. It might be better for the DOD as a way of keeping trade secrets. But I think some US startups and SME's may well benefit by looking to collaborate with partners in Europe, using its open source model.”

What do you hope the audience will take away from your presentation on September 23rd?

“An Integrated Circuit is simply a bunch of CMOS transistors on silicon, everyone knows that. I believe, in the near future, we’re unlikely to displace the incumbent. But it is going to be symbiotic with a platform that has photonics in it. Basically, you are going to have electronics closely integrated with photonics. There are various approaches to how that is going to happen like silicon photonics, indium phosphide, gallium arsenide, optical polymers etc. But I'm sure we'll figure out the technologies that will be adequately scalable for the markets soon”.

“On the 23rd September, I will show the roadmaps we've been working on. They make the commercial goals and challenges ahead much clearer. Integration is going to be essential to get the costs down and keep customers happy!”

 Michael Lebby 

Michael Lebby is the opening keynote speaker at the first Photonics Integration Conference taking place in Eindhoven on September 23rd. He divides his time between a role as CEO of Ottawa-based OneChip Photonics, a family base in San Francisco, and being a professor and chair of optoelectronics at Glyndwr University in Wrexham, Wales. UK. They have a world-class optics program connected with the European Extremely Large Telescope Project being built in Northern Chile. Michael is helping to build an active integrated photonics program, as well as raise the profile of this Welsh University. Michael recently joined Lightwave Logic (LWLG) as a board director to help guide their optical polymer technology in photonics applications.

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