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In this letter, a high-efficiency low-power-driven 40-Gb/s electroabsorption modulator is demonstrated using a new type of waveguide, i.e., self-aligned two-step undercut-etched waveguide (SATSUEW). The low-optical-and-electrical-loss performance can be realized from the smooth side wall, wide ridge, and small core of SATSUEW, enabling high-efficiency high-speed optical modulation. Through a 350-μm-long waveguide, 35-dB extinction ratio and 25-dB/V dc modulation efficiency are observed, while optical insertion loss is kept at -6.5 dB (transmission loss of 1 dB/100 μm). A 40-Gb/s operation using 1-Vpp ac driving power with 13-dB extinction ratio is attained, further verified by 55-GHz electrical-to-optical response. The simulated 40-Gb/s eye diagram using distributive effect exhibits a consistent result with the experiment, suggesting that long SATSUEW can be applied to high-bit-rate and high-efficiency operation and thus relaxing the requirements of material and structure in high-speed optoelectronics.