SILICON PHOTONICS MARKET ANALYSIS

The global silicon photonics market size was valued at US$ 1,584.8 million in 2022 and is anticipated to witness a compound annual growth rate (CAGR) of 23.03% from 2023 to 2030. One of the drivers driving the growth of global Silicon Photonics market is the increased use of cloud-based services, which require a high-speed data transmission. Moreover, the increasing adoption of 5G technologies is also a major factor driving growth of the market. The rising demand for miniaturized electronic devices also drives the market for silicon photonics. 

Global Silicon Photonics Market: Regional Insights

North America is anticipated to show increasing growth in the global silicon photonics market over the forecast period. This can be attributed to the availability of advanced electronics and telecom sectors. Moreover, the early adoption of novel advanced technologies need for upgrading existing infrastructure, along with rise in demand for components in sensing and communication applications is also expected to fuel growth of the global silicon photonics market over the forecast period.

Furthermore, Asia Pacific is also expected to exhibit major growth in the global silicon photonics market over the forecast period, owing to factors such as presence of emerging and leading players in the market, rise in adoption of internet services in telecommunications and data center sector, growing use of silicon photonics transceivers with smartphones, and development of novel emerging technologies.

Figure 1: Global Silicon Photonics Market Share (%), By Region, 2022

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Global Silicon Photonics Market Drivers:

Reduced power consumption offered by silicon photonics-based transceivers to boost market growth

The use of silicon photonic optical transceivers majorly require the reliability of a laser source. On the other hand integration of reliable light sources is a complicated part of silicon photonic optical transceivers. The three basic alternatives for optical sources are an integrated laser, a board-mounted sources, which is external to the transceiver, and a front-pluggable laser. The laser has to be incorporated onto or into the silicon transceiver device for reducing consumption of power as well as reducing the cost. These benefits of silicon photonics based transceivers are boosting the demand these devices, which in turn is expected to augment growth of the global silicon photonics market over the forecast period.

Increasing need for high-speed connectivity and high data transfer capabilities in data centers to drive the market growth

Due to continuous penetration of the 200GbE and 400GbE switch ports, funds injected into the market are increasing continuously. Major players, such as Microsoft and Amazon are focusing on adoption of 200Gbps technology and 400GbE for adoption of next-generation data center in the U.S. As the use of better switches offers faster speeds of data transfer, network connection technologies, such as Ethernet switches are becoming a priority of market vendors. These factors are therefore anticipated to propel growth of the global silicon photonics market over the forecast period.

Global Silicon Photonics Market Opportunities:

Growing emphasis on healthcare and data communication services is anticipated to create growth opportunities in the global silicon photonics market over the forecast period. The silicon photonics industry is transforming from conventional approaches to focusing on incorporation of innovative and advanced technologies in order for ensuring better operation levels. The product design and manufacturing processes in the industry are thus witnessing continuous innovations as companies are finding newest industrial solutions for attracting consumer as well as to ease business operations.

Increasingly advancing communication technology and need for cross-industrial applications are also expected to generate business opportunities in the global silicon photonics market during the forecast period. Over the past few years, the integration complexity and implementation of photonic component has enhanced as well as broadened majorly. Due to this, the research and commercialization of silicon photonics is increasing. It supports several applications including, telecom, datacom, and sensors such as light detection and ranging (LIDAR), spectrometers, biosensors, and gyroscopes, among others. This is in turn is likely to benefit the players in the global market.

Global Silicon Photonics Market Trends:

Technological developments in light-based technologies is a recent trend

The use of LiDAR technology has become crucial for autonomous driving to analyze the distribution of pollutants and gases in the atmosphere. Due to increasing technological developments in light-based technologies, there is an upsurge of innovation by offering sustainable solutions to global challenges. The market is likely to continue witnessing this trend over the coming years, which in turn is acting as a major driver in the global silicon photonics market.

Growth of laser market IC is another trend

The use of laser technology is become widespread across data center and telecommunications domain applications. The focus of vendors on implementation of technologies, such as, hybrid silicon laser. Due to these factors, the laser market IC is witnessing rapid growth, which in turn is driving the silicon photonics market. Hence, this trend is expected to continue in the global silicon photonics market over the forecast period.

Global Silicon Photonics Market Restraints:

Risk of thermal heat to restrain growth of the market

In applications of silicon photonics, different noise sources and heat can hinder optical communications, which pushes light into frequencies that are generally filtered out. Until these filters are modified, there is a risk of losing data, and the reconstruction could be complicated in the case of streaming data. Moreover, modern data centers have smaller footprints, yet immense computational capabilities. Due to this, keeping the data centers cool becomes a major challenge, which could case higher heat dissipation. Thus, the risk of thermal heat is one of the major factors expected to hamper growth of the global silicon photonics market over the forecast period. However, growing innovation of novel technologies with lesser risk of thermal heating to support the market growth.

Complexity of integrating on-chip laser to limit the market growth

Lasers are capable of creating pure light in terms of color and frequency, due to which lasers are needed for high-performance optical data transmission. Silicon photonics make use of either on-chip or off-chip light sources. However, integration of laser sources on any silicon chip is a complicated process, which adds into the complexity of the whole integration procedure of on-chip lasers. Thus, this factor in turn is likely to hinder growth of the global silicon photonics market over the forecast period.                    

Figure 2: Global Silicon Photonics Market Share (%), By Applications, 2022

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Global Silicon Photonics Market Segmentation:

The global silicon photonics market report is segmented into Application

Based on Application, the market is segmented into Data Center, Telecommunications, and Other Applications. Out of which, Data Center is expected to dominate the global market over the forecast period and this is attributed to the various benefits of using silicon photonics in data centers, such as, reduction in cost, passive components that offer low consumption of energy, and increased capacity. Silicon photonics are mainly utilized in high-bandwidth optical transceivers, and their demand in this application is increasing for gaining impetus in order to support increasing high-performance computing applications as well as larger size of data centers. Thus, the segment is likely to show substantial growth in the global market, over the forecast future.

Telecommunications segment is also expected to witness significant growth in the near future and this is owing to the rise in demand for smartphone products penetrating the global telecommunication sector. Novel technologies in silicon photonics are driving the demand for telecommunication industries, and are enhancing the performance of existing fixed and mobile infrastructures. Hence, the segment is likely to grow with rapid pace in the global silicon photonics market.

Global Silicon Photonics Market: Key Developments

In February 2022, Intel Corporation announced the acquisition of Tower Semiconductors for enabling a global diversified product portfolio to cater the rise in demand for semiconductors. With this acquisition the company will be providing foundry services to a larger customer base.

In March 2021, Cisco System Inc. completed acquisition of Acacia Communications, Inc. a manufacturer of optical, high-speed interconnect technologies. The company committed to optics through this acquisition as a critical building block to enhance the ‘Internet for the Future’ strategy’ of the company.

In February 2021, NeoPhotonics Corporation introduced its extended case temperature QSFP-DO 400G ZR modules that are based on silicon photonics and sophisticated hybrid photonic integrated circuit-based modules, lasers, and subsystems for high-speed, bandwidth-intensive communications networks.

In 2020, IBM formed agreement of acquisition with Instana, an application performance monitoring company for better managing complexities in modern applications that span across hybrid cloud technologies.

Global Silicon Photonics Market: Key Companies Insights

The global silicon photonics market is highly competitive. This is attributed to continuous launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on regional as well as global basis. Some of the key players in the global silicon photonics market are Broadcom Inc., Sicoya GMBH, GlobalFoundries Inc., Intel Corporation, Juniper Networks Inc., Cisco Systems Inc., IBM Corporation, and NeoPhotonics Corporation.

*Definition: Silicon Photonics combines the elements of optics with those of electronic circuits. Photons (light particles) are coupled to electrons in a semiconductor, and the resulting quantum-mechanical interactions generate electric signals. These can be amplified and used for data transmission, signal processing, and control.