We demonstrated all-optical demultiplexing of 160-Gb/s signal to 40- and 80-Gb/s by a Mach-Zehnder Interferometric all-optical switch, where the picosecond cross-phase modulation (XPM) induced by intersubband excitation in InGaAs/AlAsSb coupled double quantum wells is utilized. A bi-directional pump configuration, i.e., two control pulses are injected from both sides of a waveguide chip simultaneously, increases a nonlinear phase shift twice in comparison with injection of single pump beam with forward- and backward direction. The bi-directional pump configuration is the effective way to avoid damaging waveguide facets in the case where high optical power of control pulse is necessary to be injected for optical gating at repetition rate of 40/80GHz. Bit error rate (BER) measurements on 40-Gb/s demultiplexed signal show that the power penalty is decreased slightly for the bi-directional pump case in the BER range less than ∼10^-6. The power penalty is 1.3dB at BER of 10^-9 for the bi-directional pump case, while it increases by 0.3-0.6dB for single pump cases. A power penalty is influenced mainly by signal attenuation at “off” state due to the insufficient nonlinear phase shift, upper limit of which is constrained by the current low XPM efficiency of ∼0.1rad/pJ and the damage threshold power of ∼100mW in a waveguide facet.