Cisco said it's closed its deal to buy optical-semiconductor firm Luxtera for $660 million, bringing it the advanced optical technology customers will need for speed and throughput for future data-center and webscale networks.\nWhen Cisco announced the deal in December, Rob Salvagno, Cisco's vice president of Corporate Business Development, said, \u201cAs system port capacity increases from 100GbE to 400GbE and beyond, optics plays an increasingly important role in addressing network infrastructure constraints, particularly density and power requirements.\u201d\n\nThe combination of Cisco\u2019s and Luxtera\u2019s capabilities in 100GbE\/400GbE optics, silicon and process technology will enable customers to build future-proof networks optimized for performance, reliability and cost, Salvago stated.\nThe reason Cisco snatched-up Luxtera is its silicon photonics technology that moves data among computer chips optically, which is far quicker than today's electrical transfer, Cisco said. Photonics will be the underpinning of future switches and other networking devices.\nOne of the most attractive things about Luxtera is that it is well down the road dealing with the issues around converting electronic information into photons and carrying them over fiber-optic cables directly into semiconductors, said Bill Gartner, vice president and general manager at Cisco.\n\u201cLuxtera has the silicon photonics technology that is the salvation for the optic industry,\u201d Gartner said. \u201cThey have combined some of the development and production techniques from the semiconductor industry for the optical world, which will ultimately drive optical costs down and yield up.\u201d\n"As we move from 400G to terabit speeds, it gets challenging to get all that capacity off a line card or ASIC, and you're going to need a different optics architecture to handle speeds like that. That\u2019s where we expect technology from Luxtera to come into play," Gartner said. "Optics is important in how we advance the capacity, etc., of routers and switches and how silicon and optics integrate will be an important step."\nLuxtera said its patented technology blends the long-reach capabilities of single-mode fiber with the low cost of highly integrated opto-electronics to create transceivers that have advanced high-speed optical communications.\nGartner said Cisco needs to make sure it hits the right price points in the market. While silicon-based semiconductors have driven port prices down, that hasn't happened to the same degree wtih the optical technology. That's because optics require more manually intensive assembly, Gartner said.\n\u201cAs we look at port speeds beyond 100G, its important for Cisco to have right technology in-house so we deliver optics at competitive port price for enterprise, data center, large scale web or service providers," he said. "We have to have control of that technology to compete in the optics food chain,\u201d he said.\nJimmy Yu, vice president of the Dell'Oro Group, said Luxtera was one of the first movers in developing small-form-factor pluggable components for 100G. This was accomplished through the company\u2019s work on silicon photonics (SiPh). \u201cThe market continues to demand devices that take up less footprint and costs less to make. SiPh or photonic integration is one of the key enablers to achieve this,\u201d he said.\u00a0\nEarlier, due to component suppliers taking too long to develop smaller 100 Gbps pluggables, Cisco bought LightWire. With that acquisition, Cisco was able to sell a product called CPAK that had a smaller footprint than the component market could manufacture at the time. The advantage for Cisco was that it could produce higher port-density switches and routers at favorable costs, Yu said.\u00a0 \u00a0\nIn terms of technology, the biggest elephant in the room is the lack of a silicon-photonics laser integrated in the chip to get data off quickly, Gartner said. \u201cNo one has developed that yet, and it is one of the holy grails of photonics.\u201d\nOther challenges include better modulators and longer-distance transmission support, analysts say.\u00a0\nThese sorts of challenges and problems require multi-year exploration, many of which Luxtera and Cisco have already started, Gartner said. \u201cYou can\u2019t start solving a problem when you are in the middle of trouble. Very few vendors have the capacity and investment in silicon that we have to do something about those issues," he said.\u00a0\nThere are alternatives to optical technology, but those options would be to use individual components to make up the chip, and that would take up a lot of space and cost much more, Yu said. Another alternative is to use Indium Phosphide (InP) - a semiconducting material typically used in high-speed chip applications\u00a0\u2013 as a substrate material. "Infinera has been doing this for many years," he said. "However, it is generally used for long spans such as metro and long-haul [applications].\u201d\nWhile silicon photonics technology has been around for a few years, it is only now beginning to gain serious footing, experts say.\u00a0\n\u201cSilicon photonics technology will grow from a few percent of [the] total optical transceiver market value in 2016 to 35 percent of the market in 2025, mostly for intra-data-center communication,\u201d analysts from the\u00a0Yole D\u00e9veloppement research firm recently wrote. Demand for 400Gb\/s links will be the primary driver.\nThe next evolution is to develop a 400G optical port over a single fiber across 500 meters at less than $1 per gigabit and with power [less than] 5 mW\/Gb,\u201d Yole stated. Terabit-per-second rates should follow.