Title masthead, Why Outsource, Optoelectronics Manufacturing

Invited paper for journal:
MEPTEC (MicroElectronics Packaging & Test Engineering Council) Report
Volume 5 (4): 19-21, July/August 2001.

Contract manufacturing can be a roller-coaster ride on the rails of market demand. Still, when properly planned, it will compensate for the changing market with solid strategy and execution.

Why would an optoelectronics original equipment manufacturer (OEM) desire to outsource production?

The needs of all OEMs cover a range of facets that have found benefits in outsourcing relationships, such as the leverage of facilities, manufacturing infrastructure, capital equipment expenditures, engineering design, Telcordia qualification, and utilization of processing experience for manufacturability at rate and high production yields.

The use of outsourcing allows the OEMs substantial insulation from painful and expensive staff-up hiring/layoff cycles, by managing volumes in accordance to fluctuating demand via the use of rolling forecasts.

The need to deliver during times of rapidly increasing demand, can be adequately met through well planned outsourcing relationships. Furthermore, many OEMs seek even greater leverage of their designers and process development engineers by freeing them to develop and introduce next generations faster than would be possible without the advantages provided by outsourcing. Additionally, the best outsourcing companies possess capabilities and experience which overlap and often exceed OEM requirements with respect to “design for manufacturability”.

In order to realize these benefits, there must be a fundamental element of assurance that the provider of outsourcing be able to protect its customer’s intellectual property (IP). Likewise, if the outsourcing customer is not willing to embrace this trust, there will be no relationship.

Protection of IP for both established large volume OEMs, and new start-up companies, is an area that requires particular attention for optoelectronic devices. Outsourcing providers may separate processing of different customers into dedicated production cells to address these concerns.

Finding outsourcing manufacturers capable of meeting expectations of advanced OEMs is rare in the field of optoelectronics. This is due to the lack of assembly equipment standardization, few industry packaging standards, the continuing emergence of optoelectronics volume demand, the rapidly increasing complexity of network devices in terms of high bandwidth and DWDM channel count, the challenges of submicrometer precision optical alignment and attachment tolerances, and the expense and long delivery lead times for lightwave test equipment. Compounding these reasons is the fact that production costs have generally not yet been lowered by automation, and that product related IP has been tightly guarded. This has led to high entry costs for outsourcing entities in capital equipment expenditure, and in establishing key processes. Return on investment for optoelectronic outsourcers remains a daunting obstacle because of the difficulties in utilizing assembly equipment over a range of OEM product designs. Consequently, the number of “turn-key” outsourcing providers has remained very small.

The array of optoelectronic suppliers that can benefit from outsourcing relationships may be broadly characterized into the following four groups:

Established OEM with high volume needs. Characterized by desire to expand existing capacity for established products with released process documentation, and an existing component supply chain. Values ability of outsourcing to duplicate and requalify processes. Desires seamless data and management interface with outsourcing provider. Is very sensitive to product and process IP. Turn-key operation is desirable. Outsourcing relationships may vary from an “assembly house” to a true extension of the OEM factory, depending on the level of mutual trust, and commercial agreements.

Established OEM looking to leverage new product design. Seeks to outsource the design and subsequent manufacturing of a new product, as well as to augment engineering capability through the experience of the outsource provider. Values access to proven engineering capability in any number of the following areas to be more competitive: packaging design, process yield improvement, optical alignment automation, microwave design for robust high bandwidth realization, product design for automated assembly, new product qualification, optical modeling for optical coupling optimization, failure analysis, design for manufacturability and lower production cost. IP ownership and manufacturing volume are often shared between the outsourcing services and the OEM.

Start-up company with development capability but without manufacturing capacity. Looking to leverage turn-key manufacturing facilities, assembly equipment and processing knowledge to mitigate risk in qualification of new product design. Often, intent is to outsource all volume manufacturing while retaining engineering control of product design. Seeks to avoid the capital expense and calendar time required to set up a factory. Can be hindered in new process development by lack of experience in volume manufacturing. Seeks to be able to transfer prototype IP to fast production scale-up.

Start-up company without development capability or manufacturing capacity. Looking for turn-key outsourcing partner. May intend to leverage outsource partner’s design and manufacturing experience, depending upon seasoned experience of leaders. Desires prototype qualification testing. Seeks manufacturing outsource partner for investor confidence. Usually keen to use outsourcing partner’s knowledge of supply chain.

While each of these outsourcing customer types have different needs to be met, they are bound together in seeking solutions unique to optoelectronics manufacturing. Characteristics of manufacturing optoelectronic device are expanded upon below:

Optoelectronics manufacturing is not equivalent to manufacturing in the classical electronics industry due to the higher placement tolerance required for single mode fiber optical coupling, the lack of standard interfaces and processes, and the volumetric aspect of handling optical fiber pigtails in automated assembly.

Optical alignment involves positioning an optoelectronic component relative to an optical waveguide, and often, with optics in between the two. Typical optoelectronic components are lasers, photodiodes, other semiconductor chips, and optoelectronic crystals. Typical waveguides are optical fibers and planar waveguides, such as arrayed waveguide gratings (AWG), made of silica or polymer material. Optics may be free standing such as collimator lenses, focus lenses, optical isolators, and wavelength selective optical filters, or may be integrated onto the optical waveguide such as is the case with tip lensed fiber and fiber collimator lens subsassemblies. Achieving stable alignment of these components requires a detailed understanding of attachment methods, assembly materials and their dimensional tolerances. The degree of alignment complexity and mechanical stability challenges increases non-linearly with the number of optical alignments, particularly with free standing optics. Laboratory optical bench dimensions due not scale to the small sizes and alignment stability required of telecommunication devices. Thermal modeling may be a necessary design tool depending upon the required alignment tolerances and design complexity.

Optical alignment tolerances range from a few micrometers (microns) with multimode fiber (MMF), to submicron tolerance for single mode fiber (SMF), and polarization maintaining fibers (PMF). Arrayed SMF fibers demand alignment control to be held in increasing degrees of freedom at submicron tolerances. In optical alignment processes, the degree of difficulty increases with tighter alignment tolerances. Submicron optical alignment processes demand nanostage actuator positioners, which typically move in 50 nanometer (nm) steps in order to profile optical beam coupling prior to attachment of the components.

Attachment methods for optoelectronic components range from thermally-cured or UV-cured epoxy and solder methods for lower tolerance alignments, to laser weld techniques and precision micromachined silicon optical benches for higher tolerance alignments. Precision optical alignment and attachment process details are usually fiercely protected IP. The ability to perform submicron precision optical alignment and attachment is a critical factor that determines true outsourcing capability.

Laser weld processing requires greater expenditure in capital equipment and extensive process knowledge. An indication of process knowledge depth, yield and throughput optimization is whether the provider of outsourcing services relies solely on “market available” optical alignment and attachment equipment, and/or processes. A provider’s capability to modify, design, and build efficient production lines is a strong indicator of its engineering pedigree.

Fiber pigtail handling in manufacturing process requires palletized tooling to move away from traditional manual assembly. Presently, no standard fiber pigtail pallets are available.

Processes required for optoelectronic assembly include substrate design and fabrication using thick film and thin film processes, automated die attach, flip chip 1-5mm automated placement, automated wire bonding, and hermetic sealing of TO cans, butterfly, or DIL packages.

Optical characterization of components is also valued as it enables reduction in variation of product performance and yield losses. Optical modeling capability with Gaussian beam mode matching, and ray trace modeling, are resources possessed by some outsourcing entities with a broad depth of optical processing knowledge that can prove essential to new design development and optimization.

High frequency characterization of optoelectronic components, electronic components, substrate electrical layout and the assembled device is fundamental to the success in design of high data rate devices. Microwave modeling, using s-parameter measurements of these components and assemblies, is necessary to achieve product development schedules and designs that can realize device performance in manufacturing without yield losses. Outsource providers with microwave modeling, test equipment and production experience can provide substantial advantages to OEMs in bringing new products to market, especially if the OEM is less experienced with high data rates.

Optoelectronics’ test equipment is expensive with long lead times especially for high data bandwidth equipment such as OC-192 and OC-768 devices, and for bit-error-rate-testing (BERT). Investment in optoelectronic test capabilities in terms of equipment, engineering implementation, software automation, and hardware palletization automation, is an indication of the level of commitment from the provider of outsourcing, and an indication of its ability to deliver to customer expectations. Lightwave component test measurement differs from electronic test measurement due to optical connector cleanliness issues, and fiber pigtail three-dimensional volume, rather than pogo-pin probe standards.

Outsourcing providers that offer a vertical integration of the supply chain are valued by both start-up companies for realization of new product production, and by established OEMs for turn-key manufacturing. Components and subassemblies usually include: hermetic packages; optoelectronic die, lasers, photodetectors; thermal electric coolers (TEC); fiber pigtails, tip lensed fiber, metallized fiber, connectors; lenses; isolators; anti-reflection (AR) coatings; thin film filters, fiber Bragg gratings (FBG), planar waveguides; v-grooves and arrayed fiber pigtails; and precision micromachined silicon optical benches.

“One-stop-shop” manufacturing services yields value to customers by integrating all processes under one roof, allowing for workable solutions to be found for customer designs by having experienced engineers covering the range of applicable processes in one design trade-off meeting. Coordinating design reviews at a multiplicity of outsourcing providers, who may not share processing information with each other, is a common dilemma faced by start-up companies in new product design. Problems encountered in technical communication, design trades-offs, end product manufacturability, and schedule delays, can be greatly mitigated if a “one-stop-shop” solution is available and attainable.

The seamless integration of the outsourcing factory with the requirements of the OEM is an essential aspect of the outsourcing service. Real-time access to statistical process control (SPC) data between companies, through internet based portals is indispensable for both parties. Benefits of using a seamless interface are realized in production tracking, scheduling, quality assurance, effective communication between production planners, matching forecasts with inventory tracking, device traceability data, process documentation, reduced travel costs, ability to effectively service customers in different time zones, and reduced management costs. In the future, outsourcing manufacturers without this level of integration with their customers, will not be able to remain competitive.

Most active optoelectronics device costs are dominated by the cost of the bill-of-material and yield loss associated with processes, such that there is no or little advantage in transposing operations to countries with cheap labor, due to the cost of scrapping devices. The lack of standardization for optoelectronic design and pertinent automated production equipment, requires a depth of engineering resources that is not readily available at off-shore manufacturing sources.

The recent downturn of the telecommunications market has limited immediate revenue opportunities for volume outsourcing providers, but has laid a new foundation of increased benefits and leverage for optoelectronic OEM outsourcers. The outsourcing provider’s ability to respond to market demand opportunities with fast turn-on times for volume production will be a determining factor of success when the telecommunications capex market returns. The ability to automate processes and to provide controls of manufacturing yields will determine staying power when we climb out of the telecom recession, as the future will demand lower costs versus availability as a major factor in sales of optoelectronic devices to the marketplace.

Edward J. Palen, Ph.D., P.E. was Director of Advanced Process Development at Teledyne Optoelectronics,
a provider of high volume optoelectronic outsource manufacturing and optoelectronic packaging design services.
Teledyne Optoelectronics provides all of the services described in this article to their customers.

Further information may be found at

Inquiries should be addressed to
Dianna German
(310) 574-2057

Edward Palen, Ph.D.

phone: 415-850-8166

email: epalen@earthlink.net

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Copyright © 2002, 2004 E. J. Palen
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