Silicon Photonics Market Size, Share, Analysis, Growth, Forecasts 2032

Silicon Photonics Industry Prospective:

The global silicon photonics market size was worth around USD 1.70 billion in 2023 and is predicted to grow to around USD 12.63 billion by 2032 with a compound annual growth rate (CAGR) of roughly 25.00% between 2024 and 2032.

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Silicon Photonics Market: Overview

Silicon photonics refers to modern technology that works as the integration of technological elements such as optical switches, optical waveguides, photodetectors, and optical modulators. The novel technology that gained higher momentum in the 2000s, is used for fabricating electronic and optical integrated circuits on silicon microchips. Silicon photonics is used for manufacturing or producing photonic integrated circuits (PICs). Silicon on Insulator (SOI) wafers are used as the semiconductor substrate material. PICs can be used using any of the currently available fabrication processes for complementary metal-oxide-semiconductor (CMOS)s.

The increased need in modern times to increase the intensity and speed of data transmission led to the innovation of PICs. Additionally, silicon photonics enables less power consumption and heat generation as compared to traditionally used electronic circuits hence photonic integrated circuits promote energy-efficient scaling of bandwidth. Silicon photonics technology is widely used across growing industries such as quantum computing, biomedicine, optical interconnectivity, and autonomous vehicles to name a few. The increasing investments in extending silicon photonics market application in other industries such as healthcare will help the industry generate significant revenue.

Key Insights:

• As per the analysis shared by our research analyst, the global silicon photonics market is estimated to grow annually at a CAGR of around 25.00% over the forecast period (2024-2032)
• In terms of revenue, the global silicon photonics market size was valued at around USD 1.70 billion in 2023 and is projected to reach USD 12.63 billion, by 2032.
• The market is projected to grow at a significant rate due to the rising use of silicon photonics in data centers
• Based on the product, the active optical cables segment is growing at a high rate and will continue to dominate the global market as per industry projection
• Based on the application, the IT & telecommunications segment is anticipated to command the largest market share
• Based on region, North America is projected to dominate the global market during the forecast period

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Silicon Photonics Market: Growth Drivers

Rising use of silicon photonics in data centers will drive the market revenue

The global silicon photonics market is expected to witness high growth due to the increasing use of silicon photonics technology in data centers. A structure that may include a building or a row of buildings and in some cases, a small segment in a building that is dedicated specifically for housing computer systems and its components including storage and telecommunication systems is known as a data center. These facilities have become an integral part of the modern digital world since every company relies to a large extent on interconnected computer systems running several digital programs and storing huge amounts of data every day.

This is made possible by leveraging the benefits of data centers. In recent times, the application of optical fiber connections has surged across data centers for shorter connections through the extensive network infrastructure. Research indicates that the latest trend in data centers includes bringing all forms of optical components in data centers toward switch Application-Specific Integrated Circuits (ASIC) which is termed as the focal point of the network device. The novel method will help reduce energy consumption thus making the set-up more energy efficient. As per recent findings and projections, the Indian data center market is projected to grow twice its current size in the coming 3 years. In 2023, the European data center market was valued at over USD 16 billion. 

Applications of silicon photonics in the healthcare industry will fuel the market expansion rate

Silicon photonics has a wider growth scope in the healthcare sector mainly due to the growing integration of advanced technologies for more reliable diagnostic techniques. Silicon photonics technology can be used for processes such as biomedical imaging and biosensing. Healthcare segments such as ophthalmology, neurology, endocrinology, and infectious diseases can leverage the benefits of the global silicon photonics market.

Silicon Photonics Market: Restraints

Performance limitations of silicon photonics will restrict the market expansion rate

The global industry for silicon photonics is expected to be restricted due to several performance limitations of the technology. For instance, devices made using silicon photonics are highly sensitive to temperature and hence manufacturers or users of the device must remain attentive to thermal management when using silicon photonic devices. The initial investment for silicon photonic applications is extremely high although it is more affordable to produce the items on mass levels thus adding to the market limitations.

Silicon Photonics Market: Opportunities

Autonomous driving industry will provide the market with extensive growth opportunities

The global silicon photonics market is expected to generate high growth opportunities due to the growing use of the technology in the autonomous driving industry. Silicon photonics are used for Light Detection and Ranging (LiDAR) production and its solid-state variant has become widely popular in autonomous vehicle production. A self-driving car or a vehicle does not require human assistance for driving and operates by sensing the environment around it including nearby vehicles, pedestrians, and other objects. LiDAR systems are considered important to autonomous vehicles since they are used for a safer driving experience and silicon photonic elements of such vehicles such as optical switches, detectors, and modulators can improve vehicle efficiency. Moreover, silicon photonics is compatible with other modern communication technologies such as vehicle-to-infrastructure (V2I) and vehicle-to-vehicle (V2V) which allows components on roads to communicate with each other.

Surging construction of new silicon photonics research and development centers will help the industry prosper

During the last decade, commercial-scale production of silicon photonics has become a reality and this has led to more companies and research centers investing in improving the technology performance and manufacturing devices for industrial applications. In October 2023, the Indian Institute of Madras (IIT) witnessed the launch of the Silicon Photonics Research Centre of Excellence and during the next five years, the center is expected to become self-sufficient. The financial support for the center was provided by the Ministry of Electronics and Information Technology (MeitY) thus promoting the global silicon photonics market growth in the country.

Silicon Photonics Market: Challenges

Lack of standardization policies may challenge the market expansion rate during the projection period

The global industry for silicon photonics is expected to be challenged due to the lack of standardization policies regulating the production and implementation of the technology across sectors. This leaves room for compatibility and interoperability issues among products available in the market. Moreover, the industry faces additional challenges due to competition from other alternatives that have been long present in the market.

Silicon Photonics Market: Segmentation

The global silicon photonics market is segmented based on product, component, application, and region.

Based on product, the global market segments are active optical cables, transceivers, optical attenuators, optical multiplexers, and others. In 2023, the highest demand was observed in the active optical cables segment. It dominated nearly 36% of the total share. These products are used for sharing data at higher rates as compared to the alternative solutions. Moreover, they have higher cost efficiency and allow scope for more streamlined storage applications.

Based on components, the global silicon photonics industry is divided into photodetectors, optical waveguides, wavelength-division multiplexing (WDM) filters, optical modulators, and others.

Based on application, the global market segments are defense & security, healthcare & life sciences, consumer electronics, IT & telecommunications, and others. In 2023, the highest demand was registered in the IT & telecommunications segment which led to over 43.5% of the overall revenue. The rising adoption of silicon photonics across data centers will fuel the segment demand during the forecast period. Moreover, the digital world is expanding at an exponential rate with the growth in investments related to artificial intelligence, cloud computing, and big data analytics.

Silicon Photonics Market Report Scope

Silicon Photonics Market: Regional Analysis

North America will witness the highest growth rate during the forecast period

The global silicon photonics market will witness the highest growth rate in North America. In 2023, it dominated nearly 48% of the global revenue as the region registered higher investments in silicon photonics technology. The increasing partnership between technology companies and research centers along with the presence of a massive IT sector contributed to the regional revenue. North America is home to massive data centers spread across the US and Canada regions.

In March 2024, Exaion, a subsidiary of EDF Group that specializes in the development of ‘eco-responsible digital services platforms’ launched a new data center in Canada spread across 4,000 sq ft and a total capacity of 780kW. In the same month, another technology company under the brand name OVHcloud® US invested over CAD 145 million for the opening of its second data center site in Canada. Europe is expected to draw significant revenue from the industry. The rising use of silicon photonics in the regional healthcare sector and the growing demand for high-performance bioimaging tools are driving the regional market demand. In 2023, Europe’s digital health market was valued at over USD 20 billion and is projected to generate higher revenue during the forecast period.

Silicon Photonics Market: Competitive Analysis

The global silicon photonics market is led by players like:

• NeoPhotonics Corporation
• Fujitsu Limited
• IBM Corporation
• Intel Corporation
• Ayar Labs
• Inphi Corporation
• Mellanox Technologies (now part of NVIDIA)
• Cisco Systems
• Hewlett Packard Enterprise (HPE)
• Juniper Networks
• Luxtera (acquired by Cisco)
• Acacia Communications (now part of Cisco)
• GlobalFoundries
• Lumentum Holdings Inc.
• Broadcom Inc.

The global silicon photonics market is segmented as follows:

By Product

• Active Optical Cables
• Transceivers
• Optical Attenuators
• Optical Multiplexers

By Component

• Photodetectors
• Optical Waveguides
• Wavelength-Division Multiplexing (WDM) Filters
• Optical Modulators

By Application

• Defense & Security
• Healthcare & Life Sciences
• Consumer Electronics
• IT & Telecommunications

By Region

• North America
  • The U.S.
  • Canada
• Europe
  • France 
  • The UK
  • Spain
  • Germany
  • Italy
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • Southeast Asia
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East & Africa
  • GCC
  • South Africa
  • Rest of Middle East & Africa