The state of optoelectronics.
"The driving force last year was optimism," said the industry veterans. "This year, it's all about cost." Thousands of miles of optical fiber were being laid, and newer and better VCSELs and DWDMs and MEMs were being fanfared daily in a jubilant effort to keep up with the unending need for more bandwidth. Then, last spring, in tune with the downturn in the electronics industry, the OE industry fell even farther because of its shaky infrastructure.
The industry still lacks manufacturing standards. An IPC Task Group is at work on the seventh draft of a 174-page J-STD-040 Optoelectronic Assembly and Packaging Technology, which could be approved as an industry standard by year's end. Meanwhile, performance and testing requirements from Telcordia and the Photonic Manufacturing Association are used as de facto standards, and roadmaps from NEMI and other consortia are valuable guidelines. While the lack of standards isn't impacting the market direction, uncertainties are delaying alliances essential in solving the dire need for more automation in assembly.
These alliances are nevertheless being made, exemplified by four companies who merged their specialties into a fully automated photonics component assembly line, which received best-of-show acclaim at OFC 2002 and resulted in immediate sales to both a first- and a second-level OE manufacturer.
In contrast to this noteworthy achievement are many "islands of automation" which still require operators to load/unload and control the difficult assembly/inspection processes. This practice is destined to change; the CTO for JDS Uniphase, the largest merchant supplier of OE components, was quoted as saying that, after deeply trimming its operational costs during the slump, the firm has no intention of returning to manual assembly and will be reconfigured to mechanical assembly when the industry's health returns.
Last year's optimism stemmed from the marvelous inventions and component advancements made by the OE industry's plethora of brilliant young Ph.D.s who thoroughly understand the science of photonics. They and the venture capitalists financing their firms recognized the vast potential of the broadband telecommunications. But in their enthusiasm they ignored design for manufacturing, and, like the veterans said, "This year, it's all about cost."
With cost control as their forte, Flextronics Photonics, Sanmina-SCI, Celestica, Plexus and other big gun electronics manufacturing services (EMS) providers are already well into first- and second-level OE assembly operations, as are some not-yet-huge EMS providers like Nextek, Inc. These firms did their homework in both the science and practicalities of OE manufacturing, and, thanks to the lull in the OE industry, it isn't too late for others to follow their lead to the future.
While reaching that future won't be easy, Phil Yates, technology VP at Nextek, said, "The market will continue to grow, since business and individual consumers demand bandwidth. As the market grows, large companies will force some level of standardization simply by their consumption of the components they select. Others with significantly innovative, superior performing technologies will also succeed. Many others will fall off the map or be acquired for their assets. I think that, when we look back at this market this time next year, half the OE component companies will be gone. The trick is to guess which ones will make it and go with them."
Bruce Hueners, VP marketing at Palomar Industries, knows his firm will make the cut. "The jury's still out on whether the industry picks up this year or next. But, either way, we have so much faith in the long-term growth of the industry that we're deeply dedicated to developing cost-effective solutions to automated photonic manufacturing."
Rama Shukla, GM of Intel's Photonics Group, said, "Everyone is now more focused on providing the right solutions at the right price. Somewhat like Darwinism, the ones who succeed will provide great solutions, the right business strategies and the fiscal responsibility for excellent execution. We're strengthening our position by making photonics another Intel core competency."
The light of optoelectronics may be dim right now, but there's still a pulse. Stay tuned for the long haul.
Jerry Murray, West Coast Editor
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|Date:||May 1, 2002|
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