OFC 2024 Preview

OFC 2024 is about three weeks away, and there is no doubt that AI will dominate the event. It’s a world of AI everything, everywhere, all at once. But not all the hype can be justified, and rational questions must be posed to get beyond the knee-jerk answer of “Because of AI.”

The communication optics world is not all about AI – far from it – and there are plenty of interesting developments in the coherent world, from pluggables to high-performance solutions at 120GBaud and beyond. One example is the work underway by operators and vendors building frameworks to integrate and deploy coherent pluggables in a disruptive manner.

Key topics to Watch

• The Impact of AI Inside and Outside the Datacenter
• 800ZR
• 100ZR
• Linear Pluggable Optics (LPO)
• High-Speed Coherent
• IP-over-DWDM

Cignal AI at OFC 2024

You can catch us in person at these events or contact us to arrange a meeting.

• Andrew Schmitt – “State of the Industry” – Tuesday 10:45 – 12:15 – Theater 1
• Scott Wilkinson – “Inside the Data Center – AI/ML” – Tuesday 12:30 – 14:00 – Theater 1
• Andrew Schmitt, Scott Wilkinson, Kyle Hollasch – Raymond James Investor Dinner – Tuesday Evening

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The Impact of AI Inside the Datacenter

AI’s impact inside the datacenter is already evident as 800GbE module shipments skyrocket. Every major component vendor will show its 800GbE modules at OFC. 800GbE shipments have ramped up from a few thousand in 2022 to well over a million in 2023, and they are forecast to reach 8 million in 2024. The phenomenal growth is unprecedented and has enticed many vendors to enter the 800GbE market. Shipments are dominated by SR8 modules for AI, but DR8 modules will be widespread (based on both EMLs and silicon photonics), as will 2xFR4 modules.

200G/lane DSPs and optics debuted last year, and the first commercial products based on 200G/lane will be demonstrated this year. These will include not only the highly anticipated 8-lane 1.6TbE modules but also 4-lane 800G-DR4 modules, which will be lower in cost and power than 8-lane versions. When sample DR4 modules were shown at ECOC last fall, the costs were still too high compared to 100G/lane optics. Will that change at OFC? Vendors like Lumentum expect to have modules commercially available in the second half of the year, so we may soon find out.

… And Outside of the Datacenter

AI’s effect is muted outside the datacenter. AI model training requires very short distances with very low latency, and coherent DCI does not meet those requirements. However, the AI results must eventually be communicated outside of the AI nodes, which will drive bandwidth. Initial estimates suggest AI will merely be the catalyst that keeps traffic outside of the datacenter growing by around 35% per year, but restrictions on site power and size could drive additional short-reach DCI bandwidth as AI takes up more datacenter resources. Current expectations are that AI will not materially impact optical transport growth trends.

800ZR

800ZR has two primary applications: Operating at 400G over long distances and operating at 800G for shorter datacenter interconnections. China will initially use the 400G operating mode, as major operators in the country have started to roll our 400G wavelengths initially based on embedded 120GBaud optics and eventually pluggables as they become available. The 800G DCI application will be much smaller than the 400ZR/ZR+ DCI application since hyperscalers like Microsoft which are focused on 400G will wait for 1.6T.

Marvell, Coherent, and Lumentum demonstrated the first pluggable 800G coherent optics based on Marvell’s Orion DSP at ECOC 2023. The OIF has already begun work on 1600ZR, with products expected in 2026. Network operators following a 1:4:16 upgrade path (e.g. Microsoft) do not believe that changing out the switching infrastructure for a 2x upgrade is worth the effort when the promise of 1.6T is only a few years away. Other companies (including Google and Meta) have less of a monolithic plan and will utilize 800ZR in some parts of the network and 1600ZR in others.

The wild card in 800ZR is the newer OIF agreement to include PCS in the DSP for longer reach 800G operation. Marvell’s Orion, which came out before this agreement, does not have the OIF-standard PCS (a similar situation to Marvell’s original 400ZR DSP lacking O-FEC). If at least one hyperscaler (like Meta) decides to use PCS-capable 800ZR for longer distances, the 800ZR market could be larger than initial forecasts, but it still will not match the size of 400ZR.

At OFC, you can expect to see the latest versions of 800ZR using Orion, including high-output power versions, QSFP-DD form factors, and operational modes spanning longer distances. You may also find an expanded ecosystem of vendors as well, as traditional coherent DSP vendors like Ciena, Acacia, and Infinera have all mentioned 120GBaud pluggable development.

100ZR

2024 should be the year that 100ZR in QSFP28 format finally becomes commercially available. Coherent’s Steelerton DSP, announced in conjunction with ADVA (now Adtran) in July 2022, is supposed to be available in a module this year. Credo and Effect Photonics announced their plans for 100ZR DSP development last year. There may be more DSP announcements in 2024, but companies are waiting to see how demand plays out.

Some customers are eagerly awaiting a low-power 100ZR solution, especially in the access network, but demand will be limited by price. If 100ZR can be price-competitive with 10G DWDM for access (e.g., 2-3x the price), and if a second source enters the market to allay supply chain concerns, then demand could be much higher than current Cignal AI forecasts. But first, the market needs to have some real modules to try, and we hope to get some updates at OFC.

Linear Pluggable Optics (LPO)

Linear Pluggable Optics (aka, Linear Drive) was the darling of OFC23, generating huge buzz and launching dozens of white papers and trade show presentations. Exuberance has toned down since then as the technology encountered implementation and interoperability challenges. There will no doubt be LPO demonstrations and product announcements this year but don’t expect a repeat of 2023’s frenzy. Instead, announcements will center more on the next step in datacom transceiver evolution at 200G/lane operation (see AI above), which is yet another headwind for LPO adoption. See Cignal AI’s report “The Linear Drive Market Opportunity“ for more information.

Half-retimed solutions (aka HALO) like the Credo Dove850, announced in December last year, have the potential to bridge the gap between true LPO and full DSP implementation and provide lower power without performance issues. Half-retimed solutions are trivial for companies like Marvell and Broadcom to implement (disable half of the DSP), but so far only Credo has announced a product. With the buzz around LPO slowing down, you can expect more companies to be talking about HALO as the next best thing at this year’s show.

High-Speed Coherent

High-speed coherent optics returned to the forefront at last year’s OFC with five vendors touting new DSPs and interface modules. This latest generation features rates exceeding 120GBaud with an emphasis on performance; hence their categorization by Cignal AI as Gen120P. At the time, none of the products were shipping and they varied widely in their phases of development. Over the past year, several field trials have been announced, which are summarized in Cignal AI’s “Gen120+ Coherent Trials and Deployments” tracker.

OFC24 will provide an opportunity for hardware vendors to show live hardware accompanied by new announcements of trials – maybe even actual deployments. Progress made since OFC23 is as follows:

• Acacia is furthest along in development, but not by much, with general availability announced in September 2023. Following a difficult 2023 in which optical transport revenues declined -44%, Cisco is surely looking for a boost from its time-to-market advantage in Gen120P (recall that Cisco/Acacia chose to forgo a Gen90P product). Besides Cisco (in the NCS 1014), Ribbon is the only other vendor to announce a product using the module so far.
• Nokia’s PSE-6 is just behind, with first customer shipments in late 4Q23. Following two generations in which its products were severely late to market, Nokia has a lot riding on the success of PSE-6, including ambitions to again become a coherent supplier to hyperscalers and at long last harmonizing product lines with its subsea subsidiary ASN.
• Infinera’s embedded ICE7 pairs Acacia’s Jannu DSP with its vertically integrated ICTR140 TROSA to differentiate with higher baud rates and better performance. The company has forecasted availability in 1H24 but it has yet to announce a field trial, so the pressure is on to show progress at OFC24.
• A year ago, Fujitsu introduced a 1.2T transponder based on the NEL ExaSPEED GAIA DSP as part of the broader announcement of its 1FINITY Ultra Optical System. The 1FINITY T900 is notable as the first commercial optical transport product to feature liquid cooling. Fujitsu has announced an award and successful field trial with NTT but lacks a proof point beyond its domestic champion and development partner. OFC24 is an important opportunity to show that it has traction with the broader market.
• The most surprising announcement of OFC23 was Ciena’s audacious decision to jump to an even higher baud rate (180+GBaud) and more advanced silicon process (3nm) with its WaveLogic 6e. By leapfrogging its competitors, Ciena can offer a 1.6T solution that better aligns to 800G payloads and provides extended long-haul performance at 800G rates (800G using 1.2T solutions tops out at roughly 2000km in terrestrial networks). The company maintains a mid-2024 timeframe for the availability of the product. And while Ciena recently announced two design wins, we’ll be looking for news of WaveLogic 6e’s development and release to production progress.
• Although absent from OFC this year, Chinese hardware manufacturers ZTE and Huawei must be mentioned. Throughout 2023, ZTE and Acacia highlighted their partnership in developing a Gen120P interface. Several of ZTE’s press releases marked its progress in supporting forthcoming pan-China networks based on 400G QPSK ultra-long-haul wavelengths. Volume shipments to China Mobile were expected in 4Q23 but have yet to materialize.
• Unlike ZTE, Huawei and domestic chip manufacturer SMIC are subject to U.S. trade restrictions, which cast into doubt their ability to produce advanced DSPs. Nevertheless, Huawei has continued to message a robust coherent technology roadmap and reported 4Q23 shipments of several thousand Gen120P interfaces using domestically sourced technology.

What comes after Gen120P?  Will other vendors go down the 180GBaud path trailblazed by Ciena, or will the industry look to 240GBaud solutions, as has been hinted at by Acacia and Infinera? With these new products still in their infancy, unfortunately, announcements of this next generation are unlikely at this year’s show.

IP-over-DWDM

After five years of standardization, proof of concept, interoperability tests, field trials, and now deployments, 400ZRx (as the family of related interfaces is called) is the fastest-growing coherent generation ever and accounted for more than 50% of all coherent ports shipped in 2023. With 800ZR (and 1600ZR) on the horizon, will 400ZRx finally take a back seat at OFC 2024?

Probably not. Hyperscalers are deploying 400ZRx by the tens of thousands in point-to-point DCI applications, but the technology has barely scratched the surface of Service Provider networks and applications. More hardware vendors are utilizing 400ZRx QSFP-DD modules within transponders, but it is IP-over-DWDM that threatens to bring about a tectonic shift in transport spending. See Cignal AI’s report “Assessing the Impact of IP-over-DWDM” for more information.  Here are some open questions we plan to pursue at OFC:

• Is the vendor ecosystem surrounding 0dBm 400ZR+ modules sufficiently robust for Service Providers to adopt these interfaces in volume?
• Is the industry coalescing around best practices or a common architecture for the management of router-hosted coherent pluggables?
• Is CMIS mature enough in its capabilities and adoption for universal plug-and-play management of router-hosted coherent modules?  Or will alternative architectures for the management of pluggables emerge?
• Will demand materialize for long haul applications using 800ZR+ pluggables (120GBaud 400G QPSK), or will IP-over-DWDM forever be relegated to the Metro?

Wrapping It Up

Our OFC calendar is already getting full! Reach out to Andrew, Kyle, and Scott now to set up your meetings. And if we see you in the halls and must run along, don’t take it personally – we don’t have much wiggle room in our schedule, but we are always happy to get on the phone and catch up before or after OFC.

See you in San Diego!