Manuscript by China Fiber Optics Online (CFOL)
InnoLight Technology (Suzhou) Ltd. is the leading enterprise in the field of optical module of China, as well as the outstanding leader in the industry of optical components worldwide. Since its establishment 13 years ago, InnoLight's development has been 'stuff of legend' in the industry, and in many ways, has set the mark for the industry and become the target of imitation. Early in the morning, while enjoying the spring flowers in bloom on the balcony of the office building's top floor, which overlooks the whole park area of InnoLight, the young employees of InnoLight are walking in small groups towards their working sites with such vigor and youthful spirit. While it is undeniable that, to a certain degree, InnoLight today leaves an impression of aesthetic fatigue on outsiders. Where is InnoLight headed in the future? The editor of CFOL recently did an interview with Dr. Ding Hai, the deputy general manager of InnoLight Product Management Department of Science and Technology.
Q: How does InnoLight view the current challenges domestically and abroad? What is the direction for InnoLight in the next decade? And what will InnoLight do?
Dr. Ding: According to the predictions from LightCounting, InnoLight's volume of the optical modules last year was ranked first in the industry. However, InnoLight has indeed faced many challenges in its development to date. On the one hand, the current international political and economic conflicts are becoming more and more obvious, and on the other, competitors are also blocking and catching up by developing new technological weapons such as Silicon Photonics, Coherent Technique and Co-packaged Optics (CPO), in attempts to surpass InnoLight. From the perspective of the market itself, though InnoLight is maintaining its growth momentum, its further development is still lack of space for imagination.
Therefore, InnoLight is actively searching for new opportunities both vertically and horizontally. The optical module market in which InnoLight is engaged is approximately $10 billion in volume, and meanwhile, the market itself has become relatively transparent with an abundance of competition. What InnoLight needs to do now is to find the next billion-dollar market, and then occupy a larger share of it in advance. And InnoLight shall make great efforts from several aspects towards achieving that goal. InnoLight has already set up an investment team for the public-listed company, and has made arrangements in the upstream and downstream fields to invest in a number of companies. Furthermore, the InnoLight Research Institute has been established and we have hired Dr. Zheng Xuezhe to serve as the President of the Research Institute. Dr. Zheng is a senior technical expert with over 25 years of industry experience. InnoLight, under his leadership, could explore freely in the optical communication field, as well as other optoelectronic-related fields. At the organizational level, the strategic planning I am responsible for shall also take the lead to guide the developmental direction for new products of InnoLight.
The direction of InnoLight's products will expand vertically in two directions: upwards and downwards. The upward product expansion is the chip, in which field InnoLight has already set the layout to an extent. From a technical perspective, we must develop core technology. As it pertains to products, we must be competitive and form good relationships with the supply chains. The downward direction for expansion is the customized subsystem, which has great market potential. As for the horizontal expansion, InnoLight has already developed mechanical rotation type products with laser radar in the past. However, those products were not competitive from a technology standpoint, and the overall market potential was not clear. InnoLight will continue to focus on market and investment opportunities that enable InnoLight to give full play to its core competitive force.
The current goal for InnoLight is to create another flagship product within three to five years.
Q: How does InnoLight view industry hotspots like Silicon Photonics, Coherent Technique and CPO? And how does InnoLight plan on dealing with them?
Dr. Ding: At InnoLight, we have many years of accumulated experience with regards to Silicon Photonics. We have already developed the scheme for 100G/200G/400G chips and Silicon Photonic modules, but we still want to perfect them. At the present stage, InnoLight will put efforts into popularizing the 400G DR4 scheme based on EML, which is much more mature obviously. Certainly, Silicon Photonics is the emphasis we want to focus on. However, before manufacturing can begin on Silicon Photonic chips, the Fab issue must be addressed first. Apart from the IDM mode adopted by Intel, there is still a long way to go for the Fab of Silicon Photonics in domestic China and abroad towards reaching maturity and gaining a scale advantage. With regards to this aspect, I feel it is promising for China.
Coherent Technique is a bigger challenge for us. Among the three core components (COSA, ITLA, and DSP) of the coherent module, DSP is really the hardest part. Basically, COSA most definitely belong to Silicon Photonics and a number of manufacturers in China are now working on it. The same with ITLA, but it is still far from reaching stability and mass production. The only way InnoLight can gain a real product-advantage in coherent modules is through research and development in core components.
Co-packaged Optics (CPO) undoubtedly represents one of the hotspots in the industry direction. Now some final customers have showed great enthusiasm on it. But for the whole industry, including the manufacturers of optical modules, the technological trends will face great challenges. In addition to the technological challenges from optoelectronics and packaging, the commercial mode is also another stumbling block, which means that operators, instrument manufacturers, modules vendors and chip manufacturers all have a chance in this field. Whoever possesses the core technology of CPO and wins the trust of the final customers will have the last laugh.
InnoLight is laying the groundwork and doing all necessary research on all the new technologies mentioned above. On the surface, it seems that all manufacturers are still on the same starting line, but when the time comes to deliver the product in numbers, that's the time to show real mettle. InnoLight is full of confidence for the future.
Q: InnoLight is the leader in the 400G optical module, how do you view the market and competition in this field?
Dr. Ding: The market for the 400G is stepping into maturity. Looking at the status quo of InnoLight, the volume of 200G/400G products will account for half of the company's sales in 2021. InnoLight's 400G product series include the SR8, DR4, FR4, LR4, DR1 and others as such. It is expected that this situation will inevitably enhance InnoLight's profit this year and also lay a good foundation for the following years.
As the 400G optical modules are relatively immature in both technology and supply chain, in the meantime, different customers have their own network structures and plans. For example, some customers are optimistic about the 400G series, while some prefer to gradually switch from the 200G series to the 400G series, and some others want to adopt the 400 G series using the 2x200G solution. However, with the gradual maturity of the 400G products, more and more customers will eventually deploy the 400G products directly until they evolve to the 800G series and 1.6T products.
Q: I noticed the company motto, "Innovation, Speed, Preciseness, Teamwork" at the gate of InnoLight, what do you think about the distinctive corporate DNA of InnoLight? What is reason that InnoLight is InnoLight?
Dr. Ding Hai: A decade ago, we positioned ourselves as a company focusing on optoelectronic packaging. Looking ahead to the next decade, InnoLight will overcome the difficulties in core technologies and chips to provide customers with the products of the next generation, as well as complete solutions, and also take full advantage of the resources of a public-listed company to expand into new optoelectronic fields.
As for the company motto, "Innovation, Speed, Preciseness, Teamwork", actually, there is still much room for us to improve and the spirit behind these characters is what we will continue to pursue. Innovation is where the corporate value lies, Speed is the only way to adapt to the fast ever-evolving market, and Preciseness, in particular, represents the solid product performance and stability of InnoLight. We believe that a visionary team with execution, strong innovation capability, digitalized and automated delivery platform for mass production, as well as high quality and reliable products are the solid foundations for further development of InnoLight!
Q: What is the positioning of InnoLight in the city of Suzhou, which is aiming to create an optical communication industry with a total output value of 100 billion?
Dr. Ding: The GDP in Suzhou has surpassed $2 trillion. In the past years, Suzhou has been strong in the traditional manufacturing industries like, biomedicines, light industry, nanotechnology, etc. The optical communication industry is a part of the IT industry. With the up-rising of optical component companies such as InnoLight, Suzhou municipal government has gradually realized the advantages of Suzhou in developing the optical communication industry and its values. So it proposed the development goal of the optical communication industry to exceed 100 billion. For the purpose of achieving this ambitious goal, InnoLight is willing to contribute its power, which has been accumulating for more than ten years.
Dr. Hai Ding told the editor that looking into the future, InnoLight is striving to become a company with a market value that exceeds 100 billion. Although InnoLight will face all sorts of challenges, they will not prevent InnoLight from growing. At least for now, the decoupling of trade and commerce between the US and China will not have much impact on InnoLight, as major Cloud vendors in North America still favor InnoLight. Optical modules remain a market segment with deterministic growth. Although the challenges of new technologies are arduous, in general, these technologies are still in the early stages of development, and InnoLight is still on the same starting line as its major international competitors. Looking at the next decade, InnoLight will continue to innovate and strive for new glories.