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2026.09.30 | TB | Optical | Optical Networking & Ciena Expert

原标题：Optical Networking Market & Ciena – Former Senior Executive, Product Management at Ciena Corp

#optical #networking

Third Bridge · 2026-09-30

Client-led • 16 Sep 2026

Companies: CSCO US, NOKIA FI, CIEN US, LITE US, MRVL US

Expert Former Senior Executive, Product Management at Ciena Corp

Agenda

Questions

00:03:05] We are doing some research on Ciena. What are its key growth drivers in the next three years, in your view?

Expert [00:04:04]: The key drivers for Ciena will continue to be on the AI side. With the AI cluster build-out, that's what's been driving their growth in the past 18-24 months. Certainly, based on everything that's happening in the industry, I think that probably for the next 24-36 months, the trend will continue with the AI build-out. Now, that's going to essentially drive the requirements both for the scale across connectivity as well as some of the emerging growth that we're seeing for the intra-data centre interconnect as well.

00:04:53] Is it possible to quantify it? For instance, is there some qualitative or quantitative framework to understand Ciena's unit economics? For example, how much optical networking revenue can 1GW of data centre capacity or unit bandwidth typically translate into revenue for Ciena?

Expert [00:05:40]: It's hard to quantify that way for a couple of reasons is, a lot of what is driving the economics right now for the scale across and a number of build-outs is essentially a shift from very large data centres to many smaller data centres. It really what's happening is that the trend until recently was to build the largest possible data centre maybe with 1GW of power and so forth. Now with the pushback due to the strain on the power grids and some of the water resources and so forth, there has been a shift towards building a larger number of smaller data centre to achieve the same capacity. However, if you want to achieve the same level of compute and the same level of performance, what you need is a lot more connection in between those data centres, so instead of having one very large data centre with three or four different connections to adjacent large data centres, you may end up with 15-20 smaller data centres that have essentially mesh connection to 20 or so other data centres. From an optical network's perspective, this is what has been driving a lot of the growth on the Ciena's side, and that trend is continuing. From a connectivity perspective, it's no longer the math that you were talking about. We're talking about larger revenue per megawatt compared to what used to be the case.

00:07:38] If we have five small data centres and want to connect them, how much line do we need to have? 15 lines?

Expert [00:07:59]: It depends. The math is a bit different because what you'll need is for any connection instead of having two or four fibre pairs, you'll likely need 20 or so different fibre pairs. What that translates into from a Ciena perspective is instead of having two or four line systems, you end up with 20 different line systems. That's for a single point-to-point connection. Now, if you're multiplying that in a mesh configuration as opposed to having 3-4 different connections, you'll probably end up having connection to all the different five data centres, so you'll probably end up with a mesh of 20 links each with 20 pairs of fibre. You'll see that you're going from what used to be probably 8-12 fibre pairs or 8-12 line systems to probably hundreds of line systems just due to the sheer number of fibres and the number of interconnect between those smaller data centres.

Client [00:09:28]: If we only have two data centres, are you saying that now, the line system will grow from 2-3 to 20 because it's AI?

Expert [00:10:02]: Not only because it's AI, but essentially just because of the amount of information that needs to be transported in between the two data centres. Also the fact that if you're running the AI clusters for inference, then you need to have a lot tighter latency value so that the two data centres are kept in sync to optimise the performance of the AI clusters, so what that means is that instead of consolidating the traffic at a higher layer, you'll essentially pump as much traffic in between the two data centres, so that essentially drives the requirement for additional fibre pairs. That's why you're moving from 2-4 fibre pairs to probably 20 or so fibre pairs in between those two data centres. That's one aspect of it. Then the other aspect is that you have a larger number of data centres with mesh connectivity, which drives the number up exponentially as well.

Client [00:11:21]: Due to the inference, it needs low latency and training as well. You are saying, in the world, if there are only two data centres, the line system will grow from traditional 2-4 to around 12?

Expert [00:11:49]: 12 or higher, so 12-20 sometimes.

Client [00:11:53]: 12-20. It's 5x growth.

Expert [00:12:00]: Yes. That's what's driven. If you've been following the market, so both Ciena and also Nokia have announced the hyper-rails or the multi-rails system, and this is specifically to address the need when moving from 2-4 fibre pair to maybe 20 fibre pairs is you need those new type of line amplifiers just for economies of scales when you have so many fibre pairs in between the data centres.

Client [00:12:39]: On the unit value for two data centres' interconnection, for Ciena, vs before AI and now with AI, is it around 5x content value increase or less?

Expert [00:13:03]: It's definitely in the order of the five multipliers because essentially for every fibre pair that you have, you will need that line system. Therefore, if you're going from four fibre pairs to 20 fibre pairs, then you'll need 5x as many line systems.

00:13:29] This process has just started. Is this AI DCI [data centre interconnect] still early stage?

Expert [00:13:44]: It's something that has been driving the revenue growth at Ciena probably for 12-18 months. It's something that has already started and is continuing, yes.

Client [00:14:06]: Unit economics-wise, it's a 5x growth and also you are saying there will be more smaller data centre, which means this connection grows, because as I said, the mesh activity is exponential. For five data centres, you need 15 interconnections, so three years maximum?

Expert [00:14:31]: Exactly. That's why on the revenue side, you see that Ciena has grown tremendously in the past 12-18 months is driven primarily by the growth in AI connectivity.

00:14:59] In addition to this multi-rail or line system, will any other Ciena products also benefit from this AI cluster build-up or connection?

Expert [00:15:18]: From a scale across, it's really the line system and the transponders and so forth. Now, what's also happening in parallel, and this is probably more recent and it is still an emerging market is the growth of the connectivity inside the data centres. This is truly a new addressable market for Ciena is with the coherent transceivers, so these would be the 800ZRs, and then down the road, the 1600ZRs. That technology is geared towards the intra-data centre connection, which is a market that in the past with 100Gbit and even with 400Gbit connection, non-coherent solution was the norm. Now, as the traffic grows from 400Gbit connections to 800Gbit and then 1.6Tbit connection, there is a need for coherent transceivers inside the data centre. This is essentially something where it's still emerging, so we're not quite there yet in terms of volume, but this is a secondary market where the intra-data centre connectivity is a new addressable market for them.

Now, the interesting part on that side is not only in this side, they'll be competing with similar companies like the Nokia, the Cisco and so forth, but they will also be competing against the Marvell, the Lumentum, the II-VI, which were handling the market for the non-coherent transceivers in the past at 100Gbit and 400Gbit. Now, they also came up with their 800Gbit and soon their 1.6Tbit coherent transceiver devices to compete with the Cienas and Nokia. Also it's a new addressable market, there's also going to be increased competition from a larger number of players in this intra-data centre connectivity side.

00:17:54] You mentioned scale across line system and transponder. There's a product called WaveLogic Extreme and WaveLogic Nano. Is this part of transponder or line system?

Expert [00:18:13]: These would be part of the transponders. The line system really is the RLS. This is the Reconfigurable Line System. When you're talking about the WaveLogic, both the Extreme and the Nano, this would be for the transponders and the transceivers. Typically, the transponders would be using the WaveLogic Extreme portfolio. The products using that would be the Waveserver platform. Then the WaveLogic Nano is being used for the coherent transceivers, so these are the pluggable transceivers with coherent technology. This is what is going into the intra-data centre connectivity.

Client [00:19:14]: Are you saying this Nano transceiver can be used both within and across the data centre?

Expert [00:19:26]: Yes. It can be used for both the intra-data centre as well as the scale across.

00:19:34] Transceiver has more competition. In the scale across, is Ciena facing more competition? You mentioned this Nano transceiver can be made by Lumentum, other guys, not just Nokia and Cisco.

Expert [00:19:58]: That's correct. When it comes to that technology, there is increased competition from the different players. Now, in the scale across, essentially, there's two components. One is the optical line system where you'll find the Nokia, Ciena, Cisco and a few other players, but these would be much smaller players. However, when you're looking at the transceiver business, this is where you would find the Marvell, Lumentum and so forth. Now, the transceiver business being used in the scale across is limited in terms of distance and capacity, so this is where if you're trying to maximise the capacity or if the distances are a bit longer, then this forces you to go to a WaveLogic Extreme technology because you get more performance out of the Extreme. However, if the links are fairly short, let's say, they're 20km apart, then the WaveLogic Nano technology is suitable, and this is where you would see increased competition for the shorter links or where you don't necessarily need to maximise the bandwidth.

00:21:25] You announced the cooperation with the biggest CSP [cloud service provider], such as Microsoft, Amazon, or Google. This is public information. They have a news release. What products does Ciena sell to the biggest CSPs? Are they line system plus WaveLogic Nano, WaveLogic Extreme?

Expert [00:21:53]: It would be, yes. Those three platforms, so it would be the line system, the RLS, it would be the transponder platform, the WaveLogic Extreme, which would be found on the Waveserver platform. Then you have the WaveLogic Nano, the transceivers that could be sold to these companies.

00:22:21] Does Ciena manufacturing by itself or is it outsourced to Asia manufacturers, ODMs [original design manufacturers], OEMs?

Expert [00:22:39]: Majorly it's sourced through contract manufacturers, and these could be located. Some of them are in Asia, others are in Mexico and other parts of North America, but by and large, the Ciena uses contract manufacturers for the assembly of the platforms.

Client [00:23:05]: Are they in North America or do they also have manufacturing in Asia?

Expert [00:23:13]: Yes, they do have some manufacturing in Asia.

Client [00:23:26]: Do you know who manufactures for it? In the Morgan Stanley report, it mentioned Flex. Is Flex or Foxconn the other manufacturer?

Expert [00:23:40]: I think publicly, Flextronics is known as one of their CMs. However, I'm not sure if that information is public.

00:23:57] Ciena mentioned it has some capacity constraint. In your view, this capacity constraint is in which area, line system, transponder or transceiver?

Expert [00:24:28]: Some of the supply challenges, there are a couple of components. Obviously, there are some component shortages. Definitely, the lasers and the optical amplifiers, the EDFA modules, the pumps are key components that are facing shortages across the industry.

Client [00:25:23]: Are you saying this component is like ABF [air blown fiber] laser and pump laser?

Expert [00:25:37]: Yes, exactly. The pump, these are the optical amplifier, they call the EDFAs. There's also the lasers that are being used for the transceivers and transponders.

00:25:54] Lumentum also mentioned the scale opportunity is huge. When Lumentum mentioned scale across growing fast, is its exposure mainly the laser?

Expert [00:26:17]: Lumentum is producing many different components, so they are manufacturing lasers, obviously, for both their coherent transceiver business as well as whoever they sell components to, but Lumentum is also manufacturing EDFA modules as well as wavelength selective switches modules. All of these modules are in extremely high demand.

Client [00:26:53]: Do you mean EDFA [erbium doped fiber amplifier] modules?

Expert [00:27:04]: Modules, yes. Essentially, these are the optical amplifiers.

Client [00:27:12]: Is this EDFA module optical amplifier?

Expert [00:27:17]: Exactly, yes.

Client [00:27:19]: Is this EDFA module also known as some form of optical amplifier, are they in shortage?

Expert [00:27:29]: Exactly. That's one of the module that is in very, very high demand.

00:27:35] Coherent mentioned something called a pump laser. Is that the same thing? Is EDFA [erbium doped fiber amplifier] another name for it?

Expert [00:27:45]: Yes. Essentially EDFA, it's the technical name. It stands for erbium-doped, I can't remember the last two, but essentially, that's the material level. The pump lasers are essentially when you're talking about optical amplifier, you are pumping more light into the fibre, so the pump lasers and the EDFAs and optical amplifiers are all synonymous.

Client [00:28:21]: Are the pump lasers part of the EDFA module?

Expert [00:28:30]: Exactly. Yes, it's all the same.

00:28:36] WaveLogic Extreme is a transponder, much larger than the Nano transceiver. For transponders, is the competition still Cisco, Nokia and Ciena?

Expert [00:29:02]: Yes. At the transponder level, it's really the main optical vendor, so the Ciena, Nokia, and Cisco. These would be the three primary vendors.

00:29:17] The DSP [digital signal processor] is important within it. In the transponder, this coherent DSP, is is true that Ciena is still leading in the 1.6T? What's the situation now?

Expert [00:29:38]: At the DSP level and certainly with the WaveLogic Extreme portfolio, Ciena is still the only manufacturer out there with a 1.6Tbit offering. When you look at Nokia, Nokia has 1.2Tbit and so does Cisco, but Ciena right now is still the only vendor out there with the 1.6Tbit technology.

Client [00:30:09]: You also mentioned Nokia. Nokia has a 1.6Tbit product.

Expert [00:30:20]: They've announced the 1.6T product at OFC earlier this year. They've announced the product, but I don't think that the product is commercially available yet.

00:30:38] Is Ciena technology ahead of Nokia in high-performance workloads?

Expert [00:30:54]: Yes and no. Don't get me wrong, I think that Ciena still has a technical advantage over Nokia. However, it's not saying, "One got 1.2Tbit and the other one got 1.6Tbit. Therefore, one has 30% more capacity." That's not exactly the way it works because a 1.2Tbit signal is slightly narrower than a 1.6Tbit signal. When you're looking at a DWDM system, you can fit more 1.2Tbit signals inside the fibre compared to the number of 1.6Tbit channels. What that means is that overall in the same fibre pair, you're not getting a 30% improvement by going from 1.2Tbit to 1.6Tbit, but you're probably getting somewhere between 5% and 10% improvement, which is still interesting, but it's not as drastic as a 30% improvement.

Client [00:32:18]: Are you saying that even if it's a number like 1.2Tbit, 1.6Tbit, there's 30% difference, but the actual improvement is just 5-10%?

Expert [00:32:34]: Exactly. When you look at the total amount of capacity on a fibre, you're probably just looking at somewhere between 5% and 10%.

00:32:45] For example, if a hyperscaler is breaking ground on a new data centre or announcing a cluster expansion, where will Ciena revenue come? Will it only come when the data centre is almost finished or is it going to work at the same time as the data centre construction?

Expert [00:33:45]: It's going to be coming shortly before it's ready for operation because essentially, when you look at the data centre build-out, if they're just breaking ground, it's probably going to be call it two years for the data centre to be fully operational for the construction and so forth. Then during that two years, there's also going to be construction happening to essentially install the fibre, the new fibre in the ground. That's going to be all the trenching and the fibre and the conduit installation will take several months as well. Let's say, data centre is breaking ground and it's going to be ready for service in two years, while the Ciena revenue would probably come in, in the H2 of the second year because that's really when the data centre would be ready to start accepting the equipment inside the data centre, so the revenue would really be coming in towards essentially the H2 of the second year.

Client [00:35:05]: You mentioned you need to install new fibre on the ground. Will the Ciena demand come a little later than this fibre demand, because fibre needs to be put underground first?

Expert [00:35:20]: Exactly, yes.

Client [00:35:25]: The fibre demand is huge. In the news, Verizon and a fibre vendor announced a big deal recently during a major China conference, a big exhibition. Verizon between Corning. It has the bigger deal in DC.

Expert [00:35:51]: I think Lumen was probably in the news recently with something similar where essentially they're trying to get their hands on the fibre and signing a multi-year supply contract. Yes, fibre is definitely scarce in the marketplace right now.

00:36:13] Is the high-end DCI fibre a good leading proxy or indicator for Ciena's demand?

Expert [00:36:31]: Yes, definitely, one of the big indication of when the demand will start to maybe flatten or plateau for Ciena, and Nokia will be when there's a pause or some data centre construction that are being paused or that are being stopped and so forth. That would be an indication because it takes two years to build the data centres, that's delayed demand for Ciena. However, if we're starting to see a slowdown in the number of new data centres being proposed and breaking ground, that would translate into an impact on Ciena demand down the road.

Client [00:37:33]: Is there some concern, but currently, the demand is very strong? Do you not see any inflection point?

Expert [00:37:47]: Right now, I think that the demand will continue to be very strong.

00:38:09] You mentioned the Waveserver system. Is it a combination of line plus WaveLogic?

Expert [00:38:19]: No. The Waveserver does not include the line system. The Waveserver is purely a transponder platform that leverages the WaveLogic Extreme portfolio. The line system really is the RLS platform. It stands for Reconfigurable Line System.

Client [00:39:09]: It's reconfigured for what in operation?

Expert [00:39:15]: It can be reconfigured for where the light is going, and I don't want to get too technical, but this is where the wavelength selective switch, the WSS component comes in, where you can redirect the light from one direction to another direction without changing the physical fibre or the physical layout. This is why they called it reconfigurable is by using those wavelength selective switch, they can reconfigure the light from one path to another path.

00:40:06] Is this wavelength switch also sold by Ciena? Is that similar to OCS [optical circuit switching]?

Expert [00:40:16]: No, it's not the same. The wavelength selective switch, the WSS is part of the RLS platform. This is existing technology. When you're talking about OCS or the next flavour technology, which is adding the onboard optical components, this is something that is still fairly new, where essentially it's still pretty much in prototypes and trials and evaluation. This is technology that's probably going to be important in the market in 12-18 months, but right now, the WSS is what is being used by the line system.

Client [00:41:12]: For example, one big CSP bought USD 100m of this scale across Ciena's products. What will be the mix? If we bought USD 100m products from Ciena, one biggest CSP, what will be the revenue mix across line system, the transponder, etc?

Expert [00:41:43]: The mix I would see is probably somewhere around 30% for the line system and probably 70% for the transponders, transceiver platforms.

Client [00:41:59]: Which WSS [wavelength selective switch], within this line system?

Expert [00:42:09]: Within the line system, yes, that's right.

00:42:17] Why do the biggest CSPs buy products from Ciena? Will they try comparing price with other vendors? How about the price competition in this area? Ciena's margin is stable. How do you think about competition? Is this just the three bigger ones, or as you mentioned, the transceiver has more competition, but others are just the three bigger ones?

Expert [00:42:48]: Yes. Both for the transponders and the line systems, these would be the traditional competitors, so Nokia, Cisco competing with Ciena. For the transceivers, this is where it also extends to the Marvell, Lumentum, II-VI and others.

Client [00:43:16]: This is like a transponder with transceivers, roughly 50% of this USD 100m. Is it possible to break down into transponder with transceivers, rough mix?

Expert [00:43:34]: For scale across, it's probably, I would say 80/20 split.

Client [00:43:54]: How about the remaining 20%? Is it possible to break down into major ones or remaining?

Expert [00:44:09]: For the other USD 1m, the bulk of it would come from one, the line system and from the transponder or transceivers.

Client [00:44:45]: Within this transponder or transceiver, the majority, is transponder. The other remaining maybe software-as-a-service?

Expert [00:45:04]: Exactly, yes.

00:45:07] There's a debate on whether Ciena is going to have a high margin. What's your view? I read in the earnings call, which is public information, the management said they are raising price and a price hike is within their backlog. What is your view in this product margin?

Expert [00:45:46]: Yes, which is interesting because what we're seeing right now is that the hyperscalers are buying so much in the market, and I've seen that throughout the market, not only for the Ciena platforms and so forth, but just in terms of the fibre in terms of the conduits of the metal pipes that are being used for the conduits in which the fibres are buried in the ground. The hyperscalers are essentially trying to buy everything that's available in the market. What's happening is that all the manufacturers, so that goes from the metal pipes, the conduits to the fibre, to the equipment manufacturers like Ciena, Nokia and so forth is there is so much demand that this allows them to raise their price, and this is where the margins are so healthy.

Client [00:46:56]: You mentioned the supply chain, the fibre. What else?

Expert [00:47:07]: The conduit, the metal pipes, which is essentially the conduits. Typically, when you put fibre in the ground, you will put the fibre bundle inside a metal pipe, which is typically called the conduit, so those two start.

Client [00:47:49]: Who makes this conduit? Do lots of companies make it?

Expert [00:47:57]: Yes, lots of companies. This is essentially just a metal pipe that is being used, so lots of companies make them.

Client [00:48:08]: You are saying the demand is strong. Do CSPs go out in the market and buy all the fibre and conduits?

Expert [00:48:17]: Exactly. That's what the hyperscalers are doing right now is they're buying everything that they can get their hands on.

00:48:35] Can you tell me Ciena's market share in line systems, transponder or transceivers? When the big CSPs buy something from the vendors, do they buy the whole system or line systems from Ciena, transponders from Nokia, etc?

Expert [00:49:09]: That has changed quite a bit. I would say that maybe 5-8 years ago, if you were buying the line system from Ciena, you would also buy the transponders from Ciena. In the past five years and recently, that dynamic has changed where you will compete for the line system and then you will compete for the transponders and the transceivers. With these what they call the OLS, the optical line system, you can deploy anyone's transponders or transceivers on the line system provided that you have the right licensing to be able to do so. That's really been a shift in the marketplace since the past five years is in the past, vendors would pretty much sell the line systems with no margin and then because they knew that they could sell the transponders at a very high margin to essentially come up margin-neutral. Nowadays, they're no longer doing that, so they're selling the line system with healthy margin, and then they're selling the transponders with good margin as well, but that margin shift has changed quite a bit in the past five years. When we're looking at the market share, certainly with the AI build-out and the hyperscalers, Ciena certainly in North America does have the majority of the market and Nokia is probably a close second in that marketplace.

00:51:48] Now the line systems also have decent margins. Transponder margin now is lower than before. Previously, did it charge higher for transponder, or is it bundled today?

Expert [00:52:06]: Exactly. Yes. Essentially, the margin for the line system has gone up and the margin for the transponders has gone down with that shift in how the deals are structured.

Client [00:52:23]: Is the overall blended margin similar? Ciena is finally stable.

Expert [00:52:30]: Yes.

Client [00:52:30]: Is that just the change of terms, not a change of the business?

Expert [00:52:40]: Exactly. The overall margin remains relatively the same. It just shifted from one part of the portfolio to another part of the portfolio.

Client [00:52:55]: Currently, the market is in high demand, so price is going up. Are Ciena and Nokia likely enjoying better margin?

Expert [00:53:14]: Yes.

00:53:19] How big is this TAM? In Ciena's earnings call, it mentioned USD 25bn-50bn in three years in total. Is that the whole market, including hyperscaler or traditional telecom or is it just AI-related, in your view?

Expert [00:54:02]: It is the entire market. Now, a lot of the growth is coming from the hyperscalers and the AI build-out. A lot of the growth from an addressable market perspective is coming from the intra-data centre connectivity because while there is some growth for the scale across and the intra-data centre connectivity. There is some growth on that side, but the largest contributor to the explosion on the addressable market size come from both the intra-data centre connectivity that includes both the coherent transceivers portion and what they see is the future of CPO or the co-packaged optical.

Client [00:55:13]: You are seeing this entire addressable market double in three years. Is a lot of growth from scale-across?

Expert [00:55:24]: Yes. A lot of the growth that we've seen has been on the scale across. However, when Ciena is reporting in their latest earnings call that their addressable market is growing significantly. This is driven in large part by the intra-data centre connectivity, which includes the transceivers as well as the CPO.

Client [00:55:58]: On this intra-data centre opportunity. You mentioned this is an 800Gbit coherent transceiver 1.8Tbit coherent transceiver plus the CPO transceiver. Is it a pluggable CPO?

Expert [00:56:19]: No, the CPO is what they call co-packaged optical. This is where they're putting the optical components directly onto the chips, and the reason they're doing that is that it consumes much less power. That's why the growth is coming in the addressable market. One is the intra-data centre connectivity. Before 800Gbit, Ciena was not a player, so this was not an addressable market for Ciena, but it is quite a large market, so with 800Gbit.

00:57:09] How large is this intra-data coherent transceiver market?

Expert [00:57:20]: The intra-data centre connectivity is, I would say, probably USD 10bn-15bn.

Client [00:57:30]: In how many years can this market grow this size?

Expert [00:57:38]: This is a market that already existed. The market itself, let's go 3-4 years ago, it was probably still a USD 10bn-12bn market. However, because it was for 100Gbit or 400Gbit connectivity, it's not a market that was addressable by Ciena because non-coherent solutions were the norm. Now, that the connection rate is going to 800Gbit and 1.6Tbit and beyond, this now requires coherent connectivity or coherent transceivers. This is a new addressable market for Ciena, not that the market did not exist before that. It was not addressable by Ciena.

Client [00:58:39]: Are you saying this market is USD 10bn-15bn, 800Gbit, 1.6Tbit coherent transceiver?

Expert [00:58:47]: That's right, yes.

Client [00:58:48]: This one will have a lot of competition. Can the traditional transceiver folks, such as InnoLight, Lumentum, or Coherent, also do that?

Expert [00:59:02]: Yes, definitely. That's why in the coherent transceiver space, there will be a lot more price pressure and margin pressure because Ciena, Nokia, Cisco will be competing with InnoLight, with II-VI, with Marvell, with Lumentum and everybody else.

Client [00:59:24]: Will Ciena outsource this transceiver manufacturing to OEMs?

Expert [00:59:35]: Exactly, yes.