From EMS Provider to OTMS Provider -- As optoelectronics usage increases, PCB assemblers must change their manufacturing processes and business models to adapt to the new optical technologies.

The use of light in communication technology is no longer confined to fiber optical networks. Light is now carrying information to and from homes and offices, in computers and many other products and devices. Where electrons were once the foundation of computing devices, photons are now taking hold. This evolution is creating new product, market and manufacturing pressures throughout the optical supply chain.

Speed defines the optoelectronics (OE) market. The pace of technological evolution and product convergence, along with extreme fluctuations in demand, is staggering. To meet these challenges, OE original equipment manufacturers (OE-OEMs) are looking to outsource facilities, processes and related services. As a result, some optical technology manufacturing services (OTMS) providers now offer full services including design, supply chain management, manufacturing, test and repair.

Their success is measured by improving time-to-market, reducing costs and providing global high-volume production. OTMS providers achieve these goals, in part, by cultivating good relationships with printed circuit board (PCB), connector and component manufacturers. In turn, these manufacturers must cope with the demands of leapfrogging technologies and extreme reliability requirements.

Market Overview

The traditional optoelectronics market has been structured into core, edge and metro networks. The core networks move analog (voice) and digital (Internet) data over long distances from city to city, where the data are then distributed through edge networks to metro networks that serve large companies and communities.

Most of the demand for improved metro networks has been for broadband Internet access into homes and offices. Optical networks were required to replace aging copper-based systems, which are increasingly being pushed closer and closer to the last leg.

An increasing demand also exists for optical infrastructure as Internet service providers begin to develop integrated data centers (IDCs). These IDCs offer computing services from storage to application rentals over the Internet. This new market is booming as these start-ups invest heavily in new optical equipment to meet their customer service guarantees.

Several new wireless communications protocols and technologies also promise to increase demand for high-speed data access at the metro and core network levels. For example, third-generation cell phones promise to provide Ethernet-like access speeds for mobile devices. Currently, mobile data access has been limited to 9,600 bits per second (bps), which is much slower than rudimentary desktop modems. This limitation has dampened the appeal of mobile computing, as the Internet content developed for these slower devices is very limited. However, third-generation technologies will provide speeds from two to 10 megabits per second (Mbps), allowing remote access to high-quality video and audio information for many multimedia applications.

Increased demand by consumers and corporate users for multimedia content, particularly rich video, will require greater bandwidth initially at the metro network level but eventually at the edge and core levels. As Internet usage increases, optical networks will provide a cheaper per-bit means of transmitting larger amounts of information over various distances.

However, the optoelectronics market is not tied solely to optical networking products. Points still exist at which high-speed optical information must be converted to electronic information. In the near-future, optical components and communications media will be used on PCBs, driving information to the chip-set level. Essentially, optical components will be used wherever speed is important.

The Case for Outsourcing

One characteristic of the optoelectronics marketplace is wild fluctuations in product demand and market conditions. While some segments slow, such as dense wave division multiplexers, others advance with blinding speed, including widely tunable lasers. As a result, OE-OEMs are increasingly relying on OTMS providers to manage sudden changes in product configuration and consumer demand.

OE-OEMs include established manufacturers and innovators. Each type is approaching OTMS providers for different reasons.

The innovators are often entirely oriented around research and development. Their products are truly revolutionary, but have yet to reach a marketable stage. Many of these emerging companies have little or no experience in developing products for manufacturing.

For innovators, the capital costs of developing a system to prototype, test, manufacture and repair are prohibitive. However, OTMS providers can offer all of these services. They are experts in automating and speeding up the production process.

OE-OEMs can benefit from outsourcing in several ways. They can redirect engineering and design resources toward the end product rather than sub-components. They can also take advantage of the OTMS provider's knowledge of global suppliers for commonly used parts and optical components. This ability allows the OE-OEM to leverage the OTMS provider's worldwide facilities and infrastructure, thereby accessing previously untapped global sources of components, labor and consumers.

Manufacturing Overview

All OEMs have the same needs: improve time-to-market and reduce costs in the face of rapid technological evolution. Meeting these needs are the key markers of success.

However, in the optoelectronics market, concern remains over proprietary technologies, and strong competition exists over standard setting through early market entry. In contrast, in the more "mature" computing industry, most components are interoperable or standardized.

Even with the large presence of proprietary components, the optoelectronics business is no different than the pure electronics business in terms of the solutions the OTMS providers offer. OE-OEMs also need help in design, supply chain development and management, process development and optimization, high-speed analog and digital test, system build, customer delivery, developing inventory hubs and providing after-market service.

An increasing interest also exists in pushing manufacturability and cost considerations to the forefront. While increased functionality is important, costs must be managed. Accordingly, standardized components and procedures are being accepted.

To meet the needs of OE-OEMs, OTMS providers must partner closely with component suppliers in both design and production. The first step in developing acceptance for standardized components is to establish product roadmaps. OTMS providers have to demonstrate how standardized components will evolve and what opportunities these will create now and in the future. While acceptance of reference designs even at the board level is less than in computing manufacturing, a general movement is occurring in this direction that, in the long-term, will provide real value to OE-OEMs.

Challenges for PCB Manufacturing

The primary concerns for optoelectronics marketers are reliability, followed closely by cost. For example, in the telecommunications market, 99.999 percent reliability is necessary. When end users pick up a telephone, they expect a dial tone every time. In the long run, ensuring this level of reliability, while meeting demands for more dense, powerful and functional optical systems, poses enormous challenges for design, manufacturability and the assembly process itself.

In the high-end computing environment, some precision forgiveness exists-albeit marginal-in the placement of parts. However, the interfacing of optical connectors to fibers and boards requires sub-micron alignment. Being misaligned by a micron or two can affect performance and even render a device useless. Current technologies are adequate to meet today's requirements, but maintaining quality as optical components become a part of the PCB itself will require many new investments in research, development and process.

To ensure these strict quality requirements continue to be met, manufacturers must invest in areas that automate and speed-up assembly, and that maximize precision and minimize error. For example, PCB manufacturers might bury fiber or create optical paths so manually assembled splices can be avoided.

Another key area needed to facilitate the movement of optical components into boards is optical transmission between components. Current soldering techniques are more than adequate to move electrons between components and the PCB. However, the technology to move photons with the same ease as electrons is still on the drawing board.

Several promising technologies are under development, and OE-OEMs and OTMS providers must get involved early. For example, once the infrastructure is available for mobile broadband communication, OE-EMS providers will be asked to manufacture consumer- and business-oriented devices that may themselves include optical components.

At one time, everything was on a breadboard and wrapped up with wires. However, over time, manufacturers developed PCBs instead. This same incremental but determined attitude must be taken toward the integration of optical components. In particular, manufacturers must examine new polymers that can create optical interconnects by integrating flip chip with vertical cavity surface-emitting lasers (VCSELs), which emit light in a perpendicular direction. This capability would allow light to be taken down into the board and easily moved between components.

As these enhanced optical products, techniques, technologies and substances are introduced, they will evolve in a proprietary direction. This trend will challenge the adoption of standardized designs at the board level.

In response, OTMS providers must collaborate with PCB substrate and optical component designers to establish, among OE-OEMs, standards that will allow these new technologies to work together and to develop processes that control the costs of assembly, test and repair.

Future Opportunities

Although a renewed emphasis exists on developing standardized components and boards, engineers should not view optical equipment manufacturing as a less exciting environment to ply their trade. Standardization is still in the future, and several new technologies are being developed that will require close examination.

For example, nano and crystal technologies that can steer light without first converting it to electrons are showing promise. New switching systems aimed at the core market are moving from the realm of theory to the drawing board. However, unlike their predecessors, these technologies must be rolled out with an eye toward manufacturability and cost management.

Collaborative relationships have many benefits beyond design and manufacturability, including much tighter supplier/customer relationships, which translate to increased speed-to-market. They enable demand information to be passed quickly through the supply chain.

As rapidly as the communications industry is changing, flexibility is required for survival. Production must be ramped up or scaled back on a moment's notice. To minimize the impact of excess inventories, the assembly and delivery process must be as streamlined as possible.

As the optoelectronics industry moves forward, OTMS providers and component manufacturers must invest in new technologies that offer customers a competitive advantage, and, just as important, they must invest in relationship building. The earlier that OTMS providers are integrated into the design of new products and components, the more likely the concepts will get off the drawing board, with the lowest overhead, to the OE-OEMs and end user.

Over the next few years, OE-OEMs must radically redefine their business models as they struggle with rapidly changing consumer demand and continued technological progress. Whatever direction this restructuring takes, OE-OEMs must bring lower cost technologies to market quickly in ever-changing volumes. To meet these demands, they will need quality components to be delivered quickly on less notice. This approach requires significant collaboration in terms of design, assembly and logistics throughout the optoelectronics supply chain. Component manufacturers and OTMS providers must work closely to ensure that all these goals are met through the appropriate investments in technology, business systems and collaborative relationships.

Dan Shea is senior vice president and chief technology officer with Celestica, Toronto, Canada; e-mail: [e-mail].

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