Global Photonic IC Market - 2024-2031

Overview

Global Photonic IC Market reached US$ 3.2 Billion in 2023 and is expected to reach US$ 31.7 Billion by 2031, growing with a CAGR of 33.2% during the forecast period 2024-2031.

One major factor driving the photonic integrated circuit market is the increasing need for data transport and high-speed communication systems. Photonic integrated circuits are crucial for applications such as data centers, 5G networks, telecommunications and high-performance computing because they enable data to be sent at fast rates utilizing optical signals. The need for increasing bandwidth capacity is constant due to the growth of data-intensive applications. High bandwidth capabilities provided by photonic integrated circuits (ICs) make it possible to transmit massive amounts of data across optical networks effectively.

Growing product launches by major key players help to boost market growth over the forecast period. For instance, on September 28, 2021, Freedom Photonics launched 2.5-watt diffraction-limited 1550 nm Semiconductor Lasers and Amplifiers in the market. The first commercial offerings are 1550 nm semiconductor lasers and semiconductor optical amplifiers, which achieve 2.5 W continuous wave optical power with >25% E/O efficiency and nearly diffraction-limited beam quality

North America is a dominating region in the market due to the growing collaboration between the companies for photonic IC. For instance, on April 04, 2022, Synopsys, Inc. and Juniper Networks are going to open a new company that will provide the industry with an open silicon photonics platform to address the growing photonic requirements in applications such as telecom, datacom, LiDAR, AI, healthcare, HPC and optical computing. The new company can enable a new level of integration with the lowest power consumption for high-performance Photonic Integrated Circuits.

Dynamics

Increasing Demand for High-Speed Data Communication and Internet Connectivity

Due to a rise in internet traffic, data center operators are building more space for their infrastructure to meet the growing need for digital applications such as social networking, cloud computing, streaming video, e-commerce and online services. High-speed optical interconnects, switches and transceivers made possible by silicon photonics technology enable effective data transfer both inside and between data center buildings, meeting the scalability and performance demands of contemporary data centers. Businesses organizations and individuals wishing scalable, on-demand access to computer resources, storage and applications are driving the continued growth in the usage of cloud computing services.

According to information gathered through live data analysis, over 60% of website traffic comes from mobile devices. 92.3% of internet users receive their internet via a mobile device. There are currently 4.32 billion mobile internet users globally. The proportion of internet traffic via mobile devices is greatest in Africa which accounted for around 69.13%. There are around over 1 billion 5G connections globally by 2025. The increase in the adoption of the internet helps to boost the market growth of photonics IC.

Rise of 5G Networks and IoT Applications

5G networks require high-speed data and efficient transmission capabilities to support massive amounts of data generated by connected devices and IoT applications. Photonic ICs enable the transmission of data at high speeds using optical signals, offering advantages in terms of bandwidth. The requirement for high-speed data transmission drives the demand for PICs in 5G infrastructure and optical interconnects. 5G networks promise ultra-low latency and real-time communication capabilities essential for applications like autonomous vehicles, augmented reality and telemedicine.

Photonic ICs play a vital role in reducing latency, enhancing signal processing and optimizing data routing in 5G networks, enabling seamless connectivity and high-performance applications that rely on real-time data processing and response. According to the data given by GSM Association, by 2025 5G networks will cover around 1/3rd of the global population. 5G introduced 13.1 Trillion dollars of global economic output. In 2023 around 59% of the population is using 5G network and in Asia-Pacific around 42% of the population adopted 5G network.

Lack of Standardization in the Common Fabrication and Process Techniques

Without standardized fabrication and process techniques, interoperability between different PICs becomes challenging. Flexibility, scalability and compatibility are hindered by this lack of interoperability, which restricts the seamless integration of PICs from various providers or manufacturers into larger optical systems or networks. Lack of standardization can cause design complexity since businesses have to create distinctive approaches or modify existing ones to account for differences in component specifications, fabrication methods, materials and interfaces. Design complexity makes it more difficult for businesses to quickly and efficiently launch PIC-based products onto the market by raising development time, expenses and risks.

Customized fabrication and process techniques often result in higher development costs for PICs. Companies need to invest in specialized equipment, expertise, design tools, testing procedures and quality control measures tailored to their specific fabrication methods. The higher costs can deter smaller companies or startups from entering the PIC market or scaling their operations. The lack of standardization limits the availability of suppliers or fabrication facilities capable of meeting specific requirements or producing PICs with desired performance characteristics. The limited supplier ecosystem reduces market competition, choice and innovation, potentially leading to higher prices, longer lead times and supply chain vulnerabilities.

Segment Analysis

The global photonic ic market is segmented based on component, raw material, integration, application, end-user and region.

Growing Adoption of Interposer Approach Type Photonic ICs

Based on the Application, the Photonic IC market is segmented into optical communications, sensing, optical signal processing and biophotonics.

The biophotonics application segment accounted the largest share of the market due to the growing emergence of nanotechnology in biophotonics. Due to the government's efforts to advance the biophotonics sector, US is a significant market for the business. Additionally, the biophotonics business in US has been pushed by the development of nanotechnology. The Jenoptik Light and Optics Biophotonics business received many new development orders in North America in November 2020. The initial challenge is to create a camera system for medical equipment that will be utilized in a robotic surgical instrument.

The major players in the market launched new products in the market which helps to boost regional market growth. For instance, in March 2021, Zeiss expanded its presence in North America by launching a new research & development, sales and customer service center in U.S. with an investment of US$ 180 Billion. The new site will incorporate the X-ray microscopy business along with the ZEISS Microscopy Customer Center to provide support for opportunities in materials research, life sciences and industrial applications.

Geographical Penetration

North America is Dominating the Photonic IC Market

A robust ecosystem of universities and research centers is present in North America, propelling technical innovation in integrated circuits and photonics. Entrepreneurship are highly valued in the region and this has led to breakthroughs in manufacturing processes and system integration. North America receives the benefits of broad industry-academia-government agency-research group collaboration and partnerships. Working together makes it easier to share expertise, transfer technology and conduct joint research initiatives aimed at creating cutting-edge PIC solutions for a range of sectors, including data centers, telecommunications, healthcare, aerospace, defense and the automotive sector.

Growing major key players' focus on the photonic IC helps to boost regional market growth over the forecast period. For instance, on October 16, 2022, Enosemi completed a commercial agreement with Luminous Computing to license and sell the silicon photonics design IP originally developed at Luminous, a key technology for AI supercomputing applications. The management team of Enosemi is experienced in silicon photonics, analog mixed signals, lasers, packaging, control and system hardware.

Competitive Landscape

The major global players in the market include Intel Corporation, Cisco Systems, Inc., Infinera Corporation, Polariton Technologies AG, teem photonics, Lumentum Holdings Inc., Luxtera, Inc., LIGENTEC SA, Acacia Communications, Inc., Kaiam Corporation and TCG Crest.

COVID-19 Impact Analysis

Global supply networks in the semiconductor sector were impacted by the pandemic. Production and shipping of PICs and related components were delayed as a result of reduced capacity and logistical difficulties. Disruptions in the supply chain impacted the supply of raw materials, manufacturing testing and packaging, which in turn hampered the availability of PICs in the market and the overall efficiency of the supply chain.

Shifts in the economy and lockdowns brought on by the epidemic prompted changes in the market need for PICs. PIC-based solutions were in higher demand in some industries such as data centers and healthcare to facilitate remote work and healthcare technology. In contrast, demand in other industries such as consumer electronics-was lower as a result of slower manufacturing and lower consumer expenditure. The need for high-speed data transmission and communication infrastructure broadened during the pandemic due to developments in telemedicine, distant work and digital collaboration. PICs played an important role in supporting these applications by enabling high-speed optical communication, signal processing, data routing and network connectivity, driving market growth in telecommunication and data center segments.

Russia-Ukraine War Impact Analysis

The semiconductor industry is one of the globally supply chains impacted by the war between Russia and Ukraine. via companies such as EpiLas GmbH, which in the semiconductor supply chain produces epitaxial wafers for optoelectronic devices. Any interruptions in the transportation of essential components or materials from Ukraine might have an impact on PIC production and availability, potentially leading to delays or shortages in the market. A rise in demand for data center infrastructure, particularly optical communication systems based on PICs occurs as corporations and organizations emphasize data protection and continuity in unpredictable geopolitical times.

Major key players in the semiconductor industry reassess their manufacturing strategies in response to geopolitical risks. The led to a diversification of manufacturing locations, increased investment in domestic and efforts to secure alternative suppliers for critical components used in PICs. Geopolitical tensions contribute to market volatility, impacting the pricing of PICs. Uncertainty in material costs and trade tariffs leads to fluctuations in component prices, affecting the profitability of companies involved in the PIC market.

By Component

• Optical Laser
• Modulator
• Detector
• Transceivers
• Attenuators
• Others

By Raw Material

• Lithium Niobate
• Indium Phosphide
• Silica-on-Silicon
• Gallium Arsenide
• Silicon
• Quantum Dots
• Silicon-on-Insulator
• Others

By Integration

• Hybrid
• Monolithic
• Module

By Application

• Optical Communications
• Sensing
• Optical Signal Processing
• Bio Photonics

By End-User

• Telecommunications
• Biomedical
• Data Centres
• Others

By Region

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • Germany
  • UK
  • France
  • Italy
  • Spain
  • Rest of Europe
• South America
  • Brazil
  • Argentina
  • Rest of South America
• Asia-Pacific
  • China
  • India
  • Japan
  • Australia
  • Rest of Asia-Pacific
• Middle East and Africa

Key Developments

• On December 14, 2022, OpenLight launched First 800G DR8 Photonic Integrated Circuit Design for the Advance Global Datacenter Interconnect Industry. The new design provides consumers with an easy-to-use, validated approach to jump-start their transceiver production design.
• On October 02, 2023, DustPhotonics launched Industry-First Merchant 800G Silicon Photonics Chip in the market for Hyperscale Data Centers and AI Applications. The new solution is suitable for DR8 and DR8+ applications which offers 8 optical channels independently modulated at 100Gb/s for an aggregate bandwidth of 800Gb/s.
• On October 20, 2023, the Indian Institute of Technology Madras collaborated with the Ministry of Electronics & Information Technology for the launch of the Centre of Excellence for Silicon Photonics. Silicon photonic technology is suitable for various applications such as quantum computation, quantum key distribution and artificial intelligence.

Why Purchase the Report?

• To visualize the global photonic IC market segmentation based on component, raw material, integration, application, end-user and region, as well as understand key commercial assets and players.
• Identify commercial opportunities by analyzing trends and co-development.
• Excel data sheet with numerous data points of photonic IC market-level with all segments.
• PDF report consists of a comprehensive analysis after exhaustive qualitative interviews and an in-depth study.
• Product mapping available as excel consisting of key products of all the major players.

The global photonic IC market report would provide approximately 78 tables, 82 figures and 206 Pages.

Target Audience 2024

• Manufacturers/ Buyers
• Industry Investors/Investment Bankers
• Research Professionals
• Emerging Companies