The device, known as a silicon Mach-Zehnder electro-optic modulator--converts electrical signals into pulses of light. The trick is that IBM's modulator is 100 or more times smaller than other small modulators produced by other labs. Eventually, IBM hopes the modulator could be integrated into chips.The technology looks promising but it's still far from completion.
Here's how it works. Electric pulses, the yellow dots, hit the modulator, which is also being hit with a constant beam of light from a laser. The modulator emits light pulses to correspond to the electrical pulses. In a sense, the modulator is substituting photons for electrons.
Since the beginning of the decade, several companies--Intel, Primarion, Luxtera, IBM--have been coming up with components that, ideally, will let chip designers replace wires in computers and ultimately chips with optical fiber. Wires radiate heat, a big problem, and the signals don't travel as fast as light pulses. (The research in this area is known as silicon photonics and optoelectronics.)