The big ideas unveiled at the conference were twofold.  First, Huawei is promoting worldwide open standards as a counter to the likelihood that if it gets cut off from US-influenced technology, it may have to create its own, non-standard technology.  Second, the company is promoting “F5G,” which is “fixed 5G,” or a global standard for Passive Optical Network (PON) technology that operates at as high as 50 Gbps and can be used for fixed broadband, optical LAN (Campus Networks), cellular backhaul/fronthaul, and even optical Access uses.  The company also discussed evolutions or themes discussed at previous events like HAS2019, such as mmWave, FDD+TDD integration, Control User Plane Separation (CUPS), and more generally, 5G.  Much to our surprise, the opening keynotes differed significantly from the previous year’s themes in that there was no discussion of the advancements the company was making in developing in-house semiconductors and optical subsystems.

First of all, the company’s keynote, presented by Rotating Chairman, Guo Ping, was focused on Huawei’s views towards the US efforts to thwart Huawei.  The Chairman complained about the year-ago Entity List actions, and then more about this week’s escalation of prohibitions against Huawei.  Huawei expects these US actions will negatively impact Huawei in the future.  It said it is ramping up R&D and is focusing on open standards.  It says US’s efforts will hurt US interests.  In the past year, Huawei says it has redesigned over 1,000 circuit boards and that it grew R&D 30% last year.  Huawei’s supply chain is not “closed off, but open than ever,” and it “will continue to diversify” its base of suppliers.  As a result of US restrictions, the company fell $12B short of its plan in 2019.  Huawei’s view is that it simply hopes to “survive” in 2020.  One key message from the keynote was that Huawei does not want to see a world with two standards and two supply chains for the communications industry.

The company’s big news, in our view, was that it is advocating for F5G, which is a variant on PON technology that could be used in nearly all parts of networks, from indoor enterprise, to residential and business last mile, to cellular backhaul/fronthaul, and so on.  The vision, which was shared by co-sponsor, ETSI, a standards body in the telecom marketplace.  We think Huawei’s goal of creating a single technology platform that can be used in various markets where today multiple standards exist could be a good one.  For instance, in campus LAN environments, one could certainly argue that copper-based Ethernet has run its course (our forecasts are for declining revenue), and in the “last mile,” 1G-class PON and its currently shipping successor, 10G PON will need to be replaced by something.  F5G, which would operate at 10 Gbps and 50 Gbps speeds, differs from another consortium’s approach to a 10G PON successor, which operates at 25G.  So, on the one hand, Huawei is entering the market with a big idea – to put the same kind of fiber system “everywhere” (to the home, in the business, to the cellular towers, for instance) – at a time when many of these markets are currently, or soon will be, undergoing a transition, is a good idea.  On the other hand, there are already other standards bodies working to create accepted approaches for “to the home” fiber at 25 Gbps, for “in the business” at 2.5/5 Gbps, 10 Gbps, 25 Gbps and 100 Gbps (some copper, some fiber), and “to the towers” at 25 Gbps, 50 Gbps and 100 Gbps.  If Huawei gets it way, and F5G succeeds to become a standards, while at the same time the other standards continue to progress as they are today, then we’ll end up with two standards, the Huawei/ETSI approach, and the other approaches used by BBF, IEEE, etc.  This is what Huawei said it is trying to avoid in the keynote.

We enjoyed Huawei’s perspectives about its experience in the Chinese mobile and fixed market, where we see increasingly Chinese vendors are serving an increasing portion of capital equipment needs, while at the same time, it was interesting to hear about how the company is taking its experiences to other markets like Europe, Middle East, Asia and Latin America.  Several topics it discussed that were important, in our view, were the importance of mmWave, FDD+TDD integration, and CUPS.  To review each, we thought it was interesting that Huawei continues to view that the mmWave frequency as being limited to a US-only 5G market implementation; it views the C-band (which is mid-band) as the main spectrum where 5G will be deployed around the world, and it thinks this is sufficient to achieve 5G’s goals.  Next, the company spent ample time discussing its RAN technology that allows both TDD and FDD to operate simultaneously, explaining that FDD is best suited for lower frequencies and allows for superior uplink capabilities, while TDD is best for mid-band and is well-suited for MU-MIMO, high capacity throughput radios.  The company also shared that its CUPS technology has been adopted by 60 customers, which represents significant progress.
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We are eager to see the standards “battle” resolved, whether that means Huawei works closely with existing standards bodies, or whether other players worldwide, get on board with F5G, so that the communications industry will benefit from volume shipments and consumers may benefit with lower prices and new technology getting deployed sooner.

Microsoft announced that it will acquire Metaswitch, a telecom core software company with deep expertise in IMS Core, automation, containers and cloud-native telecom systems.  The acquisition will complement Microsoft's previously-announced acquisition (April 2020) of packet core and IoT software specialist, Affirmed Networks.  Microsoft is positioning itself to become a viable alternative to in-house-built telecommunications core networks.  The company says that by running core functions on Azure, operators will be able deliver services to customers at lower capital and operating costs.

The company said it plans to continue to engage with existing suppliers and network equipment partners to share roadmaps and explore expanded opportunities to work together, including in technologies such as radio, 5G Core, orchestration and OSS/BSS.  Historically, Metaswitch has worked collaboratively with many companies that offer such software and hardware, so we think Microsoft is saying that this constructive relationship may continue.  But, we wonder, could it be that Microsoft intends to further bolster its capabilities to potentially include radio and OSS/BSS after successfully working with these kinds of companies for a period of time.  

It is clear that Microsoft is interested in serving the communications needs of customers.  It recently announced it will re-sell CBRS managed services from Federated Wireless, for instance.  Without question, collaboration services such as Teams have been very popular, and quite different from the types of services that have traditionally been offered by telecom operators.  To complement its own services, Verizon acquired a Teams competitor called BlueJeans Networks; however there are many opportunities for Microsoft to partner with other telcos.  It is deals like the AT&T / Microsoft Edge services announcement last summer that get us thinking that Microsoft has very big plans for collaborative working relationships with the telecom industry, extending its own offerings to telecom customers.

By gobbling up software companies like Metaswitch and Affirmed, and offering these technologies both as software-at-telco (premises-based) or as cloud-based software (Cloud/SaaS), you can argue Microsoft will be an ideal telco partner, offering capital efficient choice, with the two added kickers:  a- services may be deployed more rapidly if cloud-delivered services are chosen, and b-that Microsoft services (Microsoft365, AI, Teams, Azure and so much more) can be easily integrated into a telco's offerings.  

112 Gbps is one of the most important building blocks for Ethernet Switching, and networking in general, for this decade and today Innovium announced a 25.6 Tbps ASIC based on the technology. 

650 Group has been forecasting 112 Gbps in our reports for over three years and are excited to see the market getting ready for shipments in 2021.

We expect 25.6 Tbps ASICs to manifest as 32-port 1RU 800 Gbps platforms, as well as a higher density of 400 Gbps and 100/200 Gbps platforms.  112 Gbps is also an important technology for Data Center Interconnect (DCI) as more tiers in the networking are being added at many hyperscalers will utilize this technology to connect buildings and locations as metro spines become popular and widespread.
 
While 400 Gbps optics have been in short supply for over one year, we are more optimistic about 800 Gbps as the technology leap to get there in a pluggable is more manageable.  At the same time, the industry can use gearboxes and retimers to use older (generation 1) 400 Gbps optics.  With the continued interest from Cloud providers to use Fixed CLOS racks, the industry will also benefit from these higher-speed ASICs with copper connectivity.  Not 100% dependent and gated on optics availability is an important aspect to 800 Gbps in the early quarters of shipments.
 
With each 25.6 Tbps switch replacing at least six 12.8 Tbps (dependent on over subscription), the market will adopt and move rapidly towards 25.6 Tbps ASICs.  Besides DCI and the increased bandwidth mentioned earlier, AI/ML workloads will be moving from nascent to mainstream in 2021, which will provide additional market demand for the increased bandwidth.