Juniper Networks to acquire Aurrion for $165 million

The announcement of the acquisition was low key. A CTO blog post and a statement that Juniper Networks had entered into an agreement to acquire Aurrion, the fabless silicon photonics start-up. No fee was mentioned.

However, in the company's US Securities and Exchange Commission filing, Juniper values the deal at approximately $165 million. "The Company believes the acquisition will help to fuel its long-term competitive advantage by enabling cost-effective, high-density, high-speed optical networks," it said. The deal is expected to be closed this quarter.

Source: Gazettabyte

At first glance, Juniper is simply the latest in a series of systems vendors bringing silicon photonics in-house. Silicon photonics is a technology that allows photonic devices to be made on a silicon substrate, fabricated in a CMOS facility.

Earlier this year Ciena acquired Teraxion, while in recent years Cisco acquired Lightwire, Mellanox bought Kotura and Huawei bought a small Belgium start-up, Caliopa. Meanwhile, other vendors have their own silicon photonics developments. Intel is one, Nokia has Bell Labs while Coriant has its own silicon photonics R&D.

But the deal is significant for a number of reasons.

First, Aurrion, like Intel, is a proponent of heterogeneous integration, combining indium phosphide and other technologies on a silicon wafer platform through bonding. The approach has still to be proven in commercial volumes but it promises the use of III-V materials on 12-inch silicon wafers manufactured in a chip fabrication plant.

Aurrion has made tunable lasers for telecom that cover both the C- and L-bands, as well as uncooled laser arrays for datacom applications. The start-up has also been developing high-speed transceivers for the data centre.

The company has also been working on the manufacturing aspects of silicon photonics, a considerable undertaking. These include automated wafer-scale testing, connecting fibre to a silicon photonics chip, and packaging.

Juniper is thus getting an advanced silicon photonics technology suited for volume manufacturing that it will use to advance its data centre networking offerings.

Juniper may choose to make its own optical transceivers but, more likely, it will use silicon photonics as part of its switch designs to tackle issues of data centre scaling and the continual challenge of growing power consumption. It could also use the technology for its IP core routers and longer term, to tackle I/O issues alongside custom ASICs.

Systems vendors drive silicon photonics

The Aurrion acquisition also highlights how it is systems vendors that are acquiring silicon photonics start-ups rather than the traditional optical component and module makers.

This is partly a recognition that silicon photonics' main promise is as a systems technology. Acacia, the coherent transmission specialist, is one company that has shown how silicon photonics can benefit optical module design but the technology's longer-term promise is for systems design rather than optical modules.

A consequence of such acquisitions by systems vendors is that technology being developed by silicon-photonics start-ups is being swallowed within systems houses for their own use and not for the merchant market. Systems vendors have deep pockets to develop the technology but it will be for their own use. For the wider community, silicon photonics technology being developed by the likes of Aurrion is no longer available.

This is what AIM Photonics, the US public-private partnership that is developing technology for integrated photonics, is looking to address: to advance the manufacturing of silicon photonics, making the resulting technology available to small to medium sized businesses and entrepreneurial ventures. However, AIM Photonics is one year into a five-year venture.

Implications

Should major systems vendors owning silicon photonics technology in-house concern the traditional optical component vendors?

Not for now.

Optical transceiver sales continue to grow and the bulk of designs are not integrated. And while silicon photonics is starting to be used for integrated designs, it is competing against the established technologies of indium phosphide and gallium arsenide.

But as photonics moves closer to the silicon and away from a system's faceplate, silicon photonics becomes more strategically important and this is where systems vendors can start developing custom designs.

Must the systems houses own the technology to do that?

Not necessarily, but they will need silicon photonics design expertise, and in the case of Juniper, it can hit the ground running with Aurrion.

Longer term, it will be the much larger chip industry that will drive silicon photonics rather than the optical industry. There are chip foundries now that are making silicon photonic ICs as there are top-ten chip companies such as Intel and STMicroelectronics. But ultimately it will be a very different supply chain that will take shape.

It is early days but Juniper's acquisition is the latest indicator that it is the systems vendors that are moving first at the very beginnings of this new ecosystem.