The Silicon Photonics Market size exceeded USD 600 million in 2019 and is poised to grow at over 30% CAGR between 2020 and 2026.
Silicon photonics comprises the application of photonic systems that deploy silicon as an optical medium. Lasers are an important aspect, and the silicon photonics market will expand across data centers and telecommunication businesses.
Silicon photonics technology is paving its way toward the automotive sector with growing demand for safety technologies such as optimal vision in vehicles. Market leaders are continuously focusing on integrating the technology into LiDAR chips, increasing their growth opportunities in the automotive sector.
The proliferation of 5G technology and increasing bandwidth demand will add an opportunity for companies to enhance their research initiatives in the photonics industry. In 5G transmission, this technology will help in routing a large amount of data traffic at a lower cost and efficient transformation of the radio access network.
However, the COVID-19 pandemic has affected the overall production capability of the silicon photonics due to lack of a skilled workforce. The declining semiconductor sector in China has majorly restricted the market growth. However, growing work from home scenarios worldwide will increase the demand for high-speed internet connection and 5G technology. These factors will boost the demand for silicon photonics to deliver high bandwidth and high-speed data transfer.
The transceiver product segment held a market share of over 85% in 2019 and is anticipated to register 30% gains through 2026. The device is available in a compact package and delivers high-speed performance in optical communication system. Furthermore, its low-power consumption capability has increased its adoption in applications such as telecommunication, high-performance computing, and data centers.
Market players are focusing on the development of advanced transceiver integrated with silicon photonics technology to increase their business opportunities in high computing applications. Companies are also raising funds from investors to improve their research initiatives in the market. In September 2019, Scintil Photonics raised USD 4.4 million in funding for the development of its GBPS transceiver photonics circuit. This will help the company to increase its market opportunity among the commercial semiconductor foundries and target strategic customers from the data center industry.
The lasers component segment dominated more than silicon photonics market share of 35% in 2019 due to rising development in hybrid Silicon and tunable lasers. Through hybrid approach, companies can fabricate electrically driven lasers on a Silicon wafer that can be integrated with other photonics devices. This will increase their adoption in various data centers and telecommunication applications to improve network capacity in countries such as the U.S., UK, and France.
However, to meet the challenging requirements of next-generation coherent optics, companies are adopting tunable lasers that use high-performance silicon photonics. These lasers power the capability for low-cost fabrication in CMOS foundries, thereby increasing their adoption in high-speed coherent applications. Compact tunable lasers also deliver high-performance in emerging applications such as Optical Coherence Tomography (OCT) in biomedical and LiDAR in autonomous vehicles.
The data centers & HPC applications accounted for over 70% market revenue share in 2019 owing to rising data center traffic and increasing volume in global network. According to Cisco Global Cloud Index, the annual data centers internet protocol traffic is projected to surpass 20 Zettabytes by 2021. This will propel the market demand to deliver high-energy efficiency and high bandwidth capacity for improved transmission in data centers.
Companies cater to demands by innovating technology solutions for high-performance computing and data centers. This will further add an opportunity for the market growth. In March 2020, Ranovus Inc. launched the Odin platform, which includes a 100 GBPS silicon photonics engine. The platform can deliver 50% power consumption reduction and a 75% cost reduction, thus delivering a power-efficient network solution. Additionally, the rising trend to develop hyper-scale data centers in future, which includes a high-speed connection to transfer a large amount of data will further boost the market revenue.
Asia Pacific silicon photonics market size is expected to witness a growth rate of around 35% during the forecast timeline. The market growth is majorly attributed to rising demand for high-speed internet networks and penetration of mobile devices in the region. This will increase the requirement of advanced infrastructure to support high-speed communications, positively impacting the market demand.
The growing optoelectronics industry in China and an increase in data center equipment supply have led companies to establish facilities and increase their R&D activities, driving the silicon photonics industry. For instance, in March 2019, Sicoya GmbH announced to build a silicon photonics packaging factory that will focus on test and assembly line of optical transceiver and engines. The factory will integrate CMOS wafer-level processing, increasing the company’s market opportunity for 5G wireless and various data center applications.
Leading market players include Intel Corporation, Cisco Systems, Inc., Global Foundries, IBM Corporation, Juniper Networks, Inc., STMicroelectronics, Broadcom, and NeoPhotonics Corporation.
Companies engaged in silicon photonics are continuously focusing on innovations and R&D activities to compete in the industry. For example, in March 2019, Sicoya announced the development of its 400G Silicon photonics technology for data center interconnected applications. The 400G EPIC engine consists of four pairs of transmitters and receivers, offering high scalability and cost advantage to manufacturers.