With the increasing demand for massive computing in fields such as AI, communication, and autonomous vehicles, the evolution of integrated circuits (ICs) has reached a physical limit under the premise of Moore’s Law. How can this limit be surpassed? The answer lies in the realm of optics. Currently, many domestic and international companies are actively embracing “Silicon Photonics” technology. When electronics meet photons, it not only addresses the signal transmission loss issue but is also considered a key technology that could usher in a new era, potentially revolutionizing the future world.

Integrated circuits (ICs) cram millions of transistors onto a single chip, performing various complex calculations. Silicon Photonics, on the other hand, represents integrated “light” paths, where light-conductive pathways are consolidated. In simple terms, it is a technology that converts “electronic signals” into “optical signals” on a silicon platform, facilitating the transmission of both electrical and optical signals.

As technology rapidly advances and computer processing speeds increase, communication between chips has become a critical factor in computing performance. For instance, when ChatGPT was first launched, there were issues with lag and interruptions during the question and answer process, which were related to data transmission problems. Therefore, as AI technology continues to evolve, maintaining computational speed is a crucial aspect of embracing the AI era.

Silicon Photonics has the potential to enhance the speed of optoelectronic transmission, addressing the signal loss and heat issues associated with copper wiring in current computer components. Consequently, semiconductor giants such as TSMC and Intel have already invested in related research and development efforts. In this context, we interviewed Dr. Fang Yen Hsiang, director of the Opto-Electronics Micro Device & System Application Division and Electronic and Optoelectronic System Research Laboratories at the Industrial Technology Research Institute (ITRI), to gain insights into this critical technology.

What Is the Relationship Between Silicon Photonics and Optical Transceivers?

An optical transceiver module comprises various components, including optical receivers, amplifiers, modulators, and more. In the past, these components were individually scattered on a PCB (printed circuit board). However, to reduce power consumption, increase data transmission speed, and minimize transmission loss and signal delay, these components have been integrated into a single silicon chip. Fang emphasizes that this integration is the core of Silicon Photonics.

Integrated Circuits’ Next Step: The Three Stages of Silicon Photonics

• Silicon Photonics Stage 1: Upgrading from Traditional Pluggable Modules

Silicon Photonics has been quietly developing for over 20 years. The traditional Silicon Photonics pluggable optical transceiver modules look very much like USB interfaces and connect to two optical fibers—one for incoming and one for outgoing light. However, the electrical transmission path in pluggable modules had a long distance before reaching the switch inside the server. This resulted in significant signal loss at high speeds. To minimize this loss, Silicon Photonics components have been moved closer to the server’s switch, shortening the electrical transmission path. Consequently, the original pluggable modules now only contain optical fibers.

This approach aligns with the actively developing “Co-Packaged Optics” (CPO) technology in the industry. The main idea is to assemble electronic integrated circuits (EIC) and photonic integrated circuits (PIC) onto the same substrate, creating a co-packaged board that integrates chips and modules. This co-packaging, known as CPO light engines (depicted in figure “d” below), replaces optical transceivers and brings optical engines closer to CPU/GPU chips (depicted in figure “d” as chips). This reduces transmission paths, minimizes transmission loss, and reduces signal delay.

According to ITRI, this technology reduces costs, increases data transmission by over 8 times, provides more than 30 times the computing power, and saves 50% in power consumption. However, the integration of chipsets is still a work in progress, and refining CPO technology will be the next important step in the development of Silicon Photonics.

• Solving the CPO Bottleneck and Beyond – Silicon Photonics Stage 2: Addressing CPU/GPU Transmission Issues

Currently, Silicon Photonics primarily addresses the signal delay challenges of plug-in modules. As technology progresses, the next stage will involve solving the electrical signal transmission issues between CPUs and GPUs. Academics point out that chip-to-chip communication is primarily based on electrical signals. Therefore, the next step is to enable internal chip-to-chip communication between GPUs and CPUs using optical waveguides, converting all electrical signals into optical signals to accelerate AI computations and address the current computational bottleneck.

• Silicon Photonics Ultimate Stage 3: The Arrival of the All-Optical Network (AON) Era

As technology advances even further, we will usher in the era of the “All-Optical Network” (AON). This means that all chip-to-chip communication will rely on optical signals, including random storage, transmission, switching, and processing, all of which will be transmitted as optical signals. Japan has already been actively implementing Silicon Photonics in preparation for the full transition to all-optical networks in this context.

Where Does Silicon Photonics Currently Face Technological Challenges?

Currently, Silicon Photonics faces several challenges related to component integration. First and foremost is the issue of communication. Dr. Fang Yen Hsiang provides an example: semiconductor manufacturers understand electronic processes, but because the performance of photonic components is sensitive to factors such as temperature and path length, and because linewidth and spacing have a significant impact on optical signal transmission, a communication platform is needed. This platform would provide design specifications, materials, parameters, and other information to facilitate communication between electronic and photonic manufacturers.

Furthermore, Silicon Photonics is currently being applied in niche markets, and various packaging processes and material standards are still being established. Most of the wafer foundries that provide Silicon Photonics chip fabrication belong to the realm of customized services and may not be suitable for use by other customers. The lack of a unified platform could hinder the development of Silicon Photonics technology.

In addition to the lack of a common platform, high manufacturing costs, integrated light sources, component performance, material compatibility, thermal effects, and reliability are also challenges in Silicon Photonics manufacturing processes. With ongoing technological progress and innovation, it is expected that these bottlenecks will be overcome in the coming years to a decade.

This article is from TechNews, a collaborative media partner of TrendForce.

(Photo credit: Google)

According to the news from ChinaTimes, Qualcomm announced on the 11th that it has reached a three-year agreement with Apple to supply 5G communication chips for Apple’s smartphones from 2024 to 2026. This also implies that Apple’s efforts to develop its own 5G modem chips may fall through, and the contract manufacturer TSMC stands to benefit the most.

Qualcomm did not disclose the value of this deal but mentioned that the terms of the agreement are similar to previous ones. Previous supply agreements have been highly profitable for Qualcomm but costly for Apple. According to UBS estimates from last month, Qualcomm’s sales of modem chips to Apple in the previous fiscal year amounted to $7.26 billion, accounting for approximately 16% of the company’s revenue.

This also highlights that Apple’s progress in developing modem chips may not be as expected, leading to a delay in their use in their flagship smartphones. Currently, Apple’s iPhones use 5G modem chips from Qualcomm.

Only a few companies worldwide have the capability to produce communication chips, including Qualcomm, MediaTek, and Samsung. In 2019, Apple acquired Intel’s smartphone modem business for $1 billion, along with 2,200 employees and a series of patents. Intel faced difficulties in developing 5G modem chips, resulting in annual losses of around $1 billion.

The market expects Apple to gradually reduce its reliance on third-party chip suppliers. Qualcomm originally estimated that by 2023, their 5G chips would make up only 20% of iPhones. However, Qualcomm’s CFO stated in November of the previous year that “most” of Apple’s phones in 2023 would contain their chips.

(Source: https://www.chinatimes.com/newspapers/20230912000097-260202?chdtv)

According to a report by Taiwanese media Money DJ, after establishing a stable position as a major supplier for NVIDIA GPU baseboard, Wistron has secured orders for AMD MI300 baseboards. Reliable sources indicate that Wistron has expanded its involvement beyond AMD baseboards and entered the module assembling segment.

In addition to NVIDIA and AMD, Wistron has also entered the Intel AI chip module and baseboard supply chain, encompassing orders from the three major AI chip manufacturers.

The NVIDIA AI server supply chain includes GPU modules, GPU baseboards, motherboards, server systems, complete server cabinets, and more. Wistron holds a significant share in GPU baseboard supply and is also involved in server system assembly.

Currently, NVIDIA commands a 70% market share in AI chips, but various chip manufacturers are eager to compete. Both AMD and Intel have introduced corresponding solutions. While Wistron was previously rumored to have entered AMD baseboard supply, it has also ventured into AMD GPU module assembling, serving as the sole source, according to reliable sources.

Regarding the news of Wistron’s involvement in AMD and Intel chip manufacturing, the company has chosen not to respond to market rumors.

(Photo credit: Google)

According to a report by Taiwan’s Commercial Times, TSMC is facing a tight supply of advanced packaging capacity, with its Taichung factory ramping up equipment support at a rapid pace. Industry insiders have disclosed that TSMC’s annual production capacity for the backend CoWoS (Chip-on-Wafer-on-Substrate) advanced packaging is only 150,000 to 300,000 units, falling short of customer demand by over 20%.

To address this shortfall, TSMC officially inaugurated its advanced packaging and testing Plant 6 in Zhunan in June. TSMC’s management has also committed to steadily increasing CoWoS production capacity each quarter, and third-party testing facilities are being actively engaged to bridge the gap.

It is worth noting that TSMC’s Longtan factory has traditionally been a key hub for CoWoS and InFO (Integrated Fan-Out) packaging, with a primary focus on InFO production at approximately 100,000 units per month and a smaller portion allocated to CoWoS. Although some of the InFO capacity has been relocated to the Southern Taiwan Science Park, Longtan’s physical space constraints continue to make Zhunan the primary location for CoWoS expansion. TSMC’s Taichung AP5 factory, on the other hand, is prioritizing WoS (Wafer-on-Substrate) expansion, with CoW (Chip-on-Wafer) expansion slated to commence next year. Many equipment suppliers have reportedly received urgent orders related to these expansion efforts.

Analysts estimate that this year’s overall CoWoS production will reach 110,000 units, doubling to 250,000 units next year. However, analysts caution that while TSMC currently dominates the CoWoS production landscape, other players are gradually entering the field. Therefore, it is crucial to monitor whether an oversupply situation may emerge in the mid-term next year.

(Photo credit: TSMC)

In response to persistent softening in demand, Samsung has taken a decisive step: a sweeping 50% production cut from September, with the focus mainly on processes under 128 layers. According to TrendForce‘s research, other suppliers are also expected to follow suit and increase their production cutbacks in the fourth quarter to accelerate inventory reduction. With this maneuver in play, Q4 NAND Flash average prices are projected to either hold firm or witness a mild surge, possibly in the ballpark of 0~5%.

Aligning with TrendForce’s early-year forecasts, NAND Flash prices are poised to rally ahead of DRAM. With mounting losses for NAND Flash vendors and sales prices nearing production costs, suppliers are opting to amplify production cuts to help stabilize and potentially increase prices. Notably, NAND Flash Wafer contract prices kickstarted their revival in August. Given expanding production curtailments, there’s optimism around the resurgence of customer stockpiling, further amplifying price dynamics in September. Yet, for this positive price trajectory to sail smoothly into 2024, a sustained curtailing in production and a robust rebound in enterprise SSD purchase orders are pivotal.

A silver lining for suppliers: Deficit anticipated to shrink, with module makers reaping benefits

While NAND Flash enjoys a nimbleness in pricing over its counterpart, DRAM, 2023 has yet to witness any notable demand upticks. The overshadowing influence of AI servers, especially edging out general-purpose servers, has made the NAND Flash market forecast underwhelming this year. This narrative unfolds with a continuing dip in Q3 average prices and suppliers grappling with widening deficits.

Diving into supplier inventory levels, TrendForce casts its gaze on Samsung. If the hope is for end-users to ramp up stockpiling to slash inventory by year-end, it might be wishful thinking. Instead, the real game-changer is stringent production control. Samsung’s aggressive production cuts are likely to set off a ripple effect: a potential price uplift for their primary products. This ripple is anticipated to propel the overall bit shipment volume of NAND Flash in Q4, gradually narrowing the deficit gap for suppliers. Simultaneously, this shift will likely improve the profit outlook for module makers.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com