Photonic IC

Global Photonic IC Market to Reach US$22.0 Billion by 2030

The global market for Photonic IC estimated at US$19.2 Billion in the year 2024, is expected to reach US$22.0 Billion by 2030, growing at a CAGR of 2.2% over the analysis period 2024-2030. Optical Lasers, one of the segments analyzed in the report, is expected to record a 1.5% CAGR and reach US$6.1 Billion by the end of the analysis period. Growth in the Modulators segment is estimated at 2.3% CAGR over the analysis period.

The U.S. Market is Estimated at US$5.1 Billion While China is Forecast to Grow at 2.2% CAGR

The Photonic IC market in the U.S. is estimated at US$5.1 Billion in the year 2024. China, the world`s second largest economy, is forecast to reach a projected market size of US$3.5 Billion by the year 2030 trailing a CAGR of 2.2% over the analysis period 2024-2030. Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at a CAGR of 2.0% and 1.8% respectively over the analysis period. Within Europe, Germany is forecast to grow at approximately 1.9% CAGR.

Global Photonic IC Market – Key Trends & Drivers Summarized

How Are Data Center Bottlenecks and Internet Backbone Pressures Creating a Photonic Revolution?
The exponential growth in global internet traffic, driven by video streaming, cloud computing, IoT, and AI workloads, is pushing the limits of traditional electrical interconnects. As data centers scale to exabyte capacities and fiber-optic backbones operate near saturation, Photonic Integrated Circuits (PICs) have emerged as a crucial enabler for high-speed, high-density data transmission. By integrating multiple photonic functions—such as lasers, modulators, detectors, and waveguides—on a single chip, PICs eliminate the latency, power inefficiency, and space consumption associated with discrete optical components. This makes them exceptionally suited for intra- and inter-data center optical transceivers, reducing thermal load and improving bandwidth utilization in dense server environments. Furthermore, hyperscale data centers owned by tech giants are increasingly favoring PIC-based solutions due to their superior signal integrity and lower bit error rates at 100G, 400G, and even 800G optical interconnect speeds.

Telecommunications infrastructure is also undergoing rapid photonic transformation as 5G and emerging 6G technologies demand ultra-low-latency fiber transport with minimal signal degradation. PICs are integral to Dense Wavelength Division Multiplexing (DWDM) and coherent optical systems, enabling higher spectral efficiency and reduced cost per bit. Unlike legacy systems, where each function was handled by a separate device, photonic integration minimizes packaging complexity and failure points while supporting more compact and modular network equipment. In submarine and metro fiber networks, where physical space and power budgets are constrained, PIC-based transceivers are being increasingly deployed for long-haul, energy-efficient transmission. These foundational shifts in data and communication infrastructure are creating a pull-through effect across the photonics supply chain—from foundries and design software to wafer-scale testing platforms.

What Fabrication Challenges and Material Trends Are Shaping PIC Design?
The evolution of Photonic ICs is deeply intertwined with advances in semiconductor materials and fabrication ecosystems, as the field navigates the trade-offs between performance, scalability, and cost. While Indium Phosphide (InP) has long dominated PIC development due to its ability to support active optical functions (like light emission and modulation), the industry is witnessing a growing momentum towards Silicon Photonics. Silicon-based PICs offer the advantage of leveraging mature CMOS fabrication processes and existing 200mm/300mm foundries, allowing for cost-efficient mass production and better electronic-photonic integration on a single substrate. However, the lack of native light-emitting capability in silicon has pushed researchers to hybrid integration models, combining silicon waveguides with bonded InP or GaAs-based lasers to achieve functional completeness.

Material compatibility, thermal matching, and optical loss control remain key challenges in scaling photonic ICs. Recent innovations focus on low-loss silicon nitride platforms, which enable ultra-low propagation losses for applications in optical sensing and quantum photonics. Heterogeneous integration methods, including wafer bonding and flip-chip assembly, are gaining traction to blend disparate material systems without compromising wafer throughput. Another major material trend is the use of Lithium Niobate on Insulator (LNOI), which offers superior electro-optic properties and is being increasingly considered for next-gen modulators and frequency shifters in quantum communication. Furthermore, the adoption of advanced lithography and etching techniques allows sub-wavelength patterning, critical for polarization control and dense photonic circuit design. These fabrication-centric advances are not only overcoming key scalability constraints but are also opening doors for novel functionalities in photonic chips.

Why Are Non-Telecom Applications Unlocking New Frontiers for Photonic ICs?
While the PIC market initially revolved around telecom and data center domains, it is now rapidly expanding into non-traditional sectors such as automotive, healthcare, defense, and sensing. One of the most transformative developments has been the adoption of PICs in Light Detection and Ranging (LiDAR) systems used in autonomous vehicles. Unlike traditional LiDAR systems that rely on bulky and moving optical components, PIC-based LiDAR enables chip-scale integration of beam steering, signal modulation, and photodetection—delivering compact, reliable, and cost-effective solutions for real-time 3D mapping and navigation. Companies developing solid-state LiDAR solutions increasingly turn to silicon photonics to miniaturize their devices and bring them closer to automotive-grade deployment.

In the biomedical and life sciences domain, photonic ICs are facilitating advancements in compact spectrometers, lab-on-chip diagnostics, and real-time biosensing systems. By manipulating light at the microscale, these chips enable label-free, highly sensitive detection of biological markers, toxins, and pathogens in bodily fluids. Their ability to function without the need for bulky optics or complex sample preparation makes them ideal for point-of-care applications. Moreover, PICs are being explored in quantum computing and photonic neural networks as a means to perform high-speed, low-power computation beyond the limits of conventional electronics. Their use in optical gyroscopes, RF photonic filters, and defense-grade sensing systems underscores the growing strategic importance of photonic ICs in domains demanding speed, stealth, and miniaturization. These emerging end-use avenues are reshaping investment patterns and R&D priorities across global photonic semiconductor ecosystems.

What Forces Are Powering the Global Expansion of the Photonic IC Market?
The growth in the global photonic IC market is driven by several factors spanning application diversification, cost economics, and performance gains across next-gen connectivity infrastructure. A primary driver is the surge in global data consumption and the transition of enterprise computing to cloud-native and AI-accelerated platforms. These architectures require ultra-high bandwidth and low-latency optical interconnects, fueling the adoption of PIC-based optical transceivers and signal processors in data centers and hyperscale network backbones. Another major growth catalyst is the industry shift toward silicon photonics for economies of scale, design standardization, and integration with existing CMOS ecosystems. This has enabled commercial feasibility for PICs even in price-sensitive applications such as telecom aggregation nodes and last-mile fiber deployments.

The growing need for compact and energy-efficient LiDAR sensors in autonomous driving and industrial robotics is accelerating demand for PICs with integrated beam steering and ranging functions. Government-led investments in photonics research, particularly in the U.S., EU, and China, are bolstering supply chain localization and encouraging IP development in areas such as design automation, hybrid integration, and wafer-scale testing. The availability of open-access photonic foundries and packaging platforms is further lowering the entry barrier for fabless startups and academic labs, thereby expanding innovation density. Moreover, the proliferation of photonics in biosensing, defense, and quantum computing is increasing the addressable market opportunity, encouraging diversification beyond traditional fiber-optic applications. These demand-side and supply-side drivers together position photonic ICs as a foundational technology in the ongoing digital, automotive, and sensing revolutions.

SCOPE OF STUDY:

The report analyzes the Photonic IC market in terms of units by the following Segments, and Geographic Regions/Countries:

Segments:
Component (Optical Lasers, Modulators, Detectors, Transceivers, Attenuators, Multiplexer / Demultiplexer, Optical Amplifiers); Raw Material (Silicon, Indium Phosphide, Gallium Arsenide, Lithium Niobate, Silica-on-Silicon); Integration Type (Hybrid Integration, Monolithic Integration, Module Integration); Application (Optical Communications, Sensing, Optical Signal Processing, Biophotonics)

Geographic Regions/Countries:
World; United States; Canada; Japan; China; Europe (France; Germany; Italy; United Kingdom; and Rest of Europe); Asia-Pacific; Rest of World.

Select Competitors (Total 36 Featured) -

• Agilent Technologies, Inc.
• Aifotec AG
• Broadcom Inc.
• Ciena Corporation
• Cisco Systems, Inc.
• Coherent Corp.
• EMCORE Corporation
• Enablence Technologies Inc.
• Finisar Corporation
• Hewlett-Packard Company
• Huawei Technologies Co., Ltd.
• Infinera Corporation
• Intel Corporation
• Juniper Networks, Inc.
• Lumentum Holdings Inc.
• NeoPhotonics Corporation
• Nokia Corporation
• POET Technologies Inc.
• Source Photonics, Inc.
• TE Connectivity Ltd.

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