Other companies are now also exploring the capabilities of silicon for photonics. IBM and Sun Microsystems have active research groups, and a startup called Luxtera has already made advances in silicon-based optical interconnects for data centers. At Intel, however, the pieces are coming together to make a single chip that could process a terabit of data in the space of a thumbnail. This chip and its accompanying electronics could replace racks full of expensive hardware that currently occupy rooms at Internet switching stations. And if all goes well, optical devices made of silicon could allow engineers to replace copper wiring in computers with beams of data-encoded light.

"Intel has pioneered a lot of high-speed silicon-photonics devices, and it's certainly one of the premier research groups," says Jack Cunningham, co-principle investigator of Sun Microsystems' proximity interconnect project, which focuses on low-power interchip communication for high-performance computers. Cunningham says that the Intel test chip is another important step in the evolution of silicon photonics. "It's the right direction in the sense that high-bandwidth optical signaling on silicon chips is very important," he says.

Paniccia notes that there is still a lot of work to do before Intel's optical chips find their way to market. Instead of having only 8 modulators, the goal is to have 25 on a chip. In addition, the modulators will run faster--at 40 gigabits per second. And it's still unclear how light will be piped into the modulators in the future. Currently, it enters via an optical fiber on one end of the device, but future versions of the chip may include hybrid lasers fabricated on the chip. Paniccia hopes that in three to five years, Intel's silicon-photonics chips will be ready for market.