The market for Silicon Photonics is forecast to reach $2.5 billion by 2025, growing at a CAGR of 24.6% from 2020 to 2025. Silicon photonics is combination of the integrated circuit and the semiconductor laser and the devices are highly deployed in optical communications. Optical integration platforms with multiple building blocks, including wavelength division multiplexing (WDM), allowing data center operators to upgrade bandwidth over time using the same fiber optic infrastructure.
Report Coverage
The report: “Silicon Photonics Market – Forecast (2020-2025)”, by IndustryARC covers an in-depth analysis of the following segments of the Silicon Photonics market.
By Material: Silicon Photonics (Silicon, InP, SiGe, and Others), Photonic IC
By Product Type: Optical Modulator, Switches, LEDs, Waveguides, Photodetectors, Optical interconnects, Lasers, WDM filters, and Others
By End user: Telecom (FTTH, High-speed modulation, Signal Routers, Optical switching, Free space applications and others), Computing (Consumer Electronics, Industrial Automation, and others)
By Geography: North America, South America, Europe, APAC, and RoW
Key Takeaways
Telecom sector is set to grow at highest rate owing to the outburst of new technologies such as 4G/LTE, 5G, cloud, social networking and smart phones.
APAC is analysed to dominate the market owing to the growing investments in R&D of the Silicon Photonics.
The rising demand for the high speed broadband services is analysed to drive the market growth rate during the forecast period 2020-2025.
Silicon Photonics Market Segment Analysis - By Product Type
Optical technology is poised to revolutionize short-reach modulators. The leading contender technology is silicon photonics, and the workhorse is the optical modulator. Modulators have been improved dramatically in recent years, with a notable increase in bandwidth from the megahertz to the multi gigahertz regime in just over half a decade. The emerging research conducted on silicon photonics has emphasized its potential to utilize low-cost, mature and mass-productive CMOS processes. The goal of integrating photonics together with electronic devices has become one of the major possibilities to provide higher capacity for computation thereby boosting the market.
Silicon Photonics Market Segment Analysis - By Application
The telecommunication sector is one of the largest application segments for silicon photonics which is a communication medium in photonic circuits. The telecommunication sector over the past decade witnessed constant growth due to outburst of new technologies such as 4G/LTE, 5G, cloud, social networking, and smartphones. Due to the growing competition service providers have shifted their focus from technology infrastructure to value-added services and delivery of superior customer experience. The increasing internet penetration rate demands a higher bandwidth for offering uninterrupted service to the users. This is driving the growth in silicon photonics market. Photonics is the backbone of the modern internet. In April 2020, Alibaba Cloud, has announced to invest a $28.2 billion in cloud infrastructure and the construction of data centers over the next three years as it prepares to help digital transformation efforts in a post-pandemic world. Therefore the growing efforts towards the development of data centers, alongside the significant deployment of the silicon photonics technology for high speed connectivity is analysed to boost the market growth rate during the forecast period 2020-2025.
Silicon Photonics Market Segment Analysis - Geography
North America is the dominant region in 2019 followed by APAC and APAC. In the coming years, U.S is expected to continue commanding the silicon photonics market by accounting for the largest market share, as it is the hub of many technology companies and R&D establishments, leading to significant innovations and technological advances. Growing demand for high performance, low cost, and customized components in life sciences, telecommunications and other sectors are creating lucrative opportunities in the evolving silicon photonics market. The significant deployment of 5G in major countries such as US, China, France, and so on are significantly impacting the market growth rate. In 2019, Verizon’s Vestberg announced that half the U.S. will have access to 5G by the end of 2020 with the support from US government. APAC is set to grow at significant rate during the forecast period majorly attributed to the growing government initiatives for the telecom development. With Indian government initiatives like MeghRaj, to accelerate the country's delivery of e-services while optimising government ICT expenditures. Due to the benefits associated with silicon photonics such an initiative is expected to have a positive impact on the market.
Silicon Photonics Market Drivers
Growing demand in high-speed broadband services:
The demand for high-speed broadband services is significantly rising with the high adoption in government agencies, commercial and other applications. In September 2019, IMEC stated that in the next few years, data center optical links will be upgraded to 400Gb/s capacity leading to the aggregate bandwidth to be handled by a single data center switch causing an increase to 51.2Tb/s, requiring ultra-high-density silicon photonics transceiver technology, tightly integrated and co-packaged with the switch CMOS chip. Hence silicon photonics-based devices such as modulators, waveguides, transceivers and so on are highly used in high-speed broadband applications. Therefore the rising demand for the high-speed internet is set to drive the market.
Emerging applications of Silicon photonics:
Silicon photonics are deployed in diverse applications including sensors, high-performance computing, and so on. The significant deployment of the sensors in autonomous vehicles alongside the growing efforts for the development of the autonomous vehicles is analyzed to impact the market. In March 2020, SiLC, a leading startup in silicon photonics chips has announced that it has raised $12M to deliver LiDAR solutions for autonomous vehicles.
Silicon Photonics Market Challenges
Complexity in integration of on-chip laser:
A lot of significant research has been undertaken in Silicon Photonics industry but the efforts have remained disparate with developments happening only at the component level. The real issue lies in the integration of Silicon Photonics devices with complex systems such as High-Performance Computing (HPC). Although, few products have appeared on the horizon but notable R&D investments are yet to be made into the Silicon Photonics. Semiconductor Laser, either through wafer-to-wafer bonding or wafer-to-chip bonding has been the only feasible option available to Silicon Photon Devices manufacturers. Silicon Lasers are yet to be realized that can take several years before it is manufactured in its commercial version, thus restricting the light source integration on chip only. Moreover, laser interconnect pose challenges in the form of alignment with respect to the waveguides; a crucial aspect for high rate transmission rates will hinder market growth.
Market Landscape
Acquisitions, product launches partnerships and R&D activities are key strategies adopted by players in the Silicon Photonics market. Silicon Photonics driver market is expected to be dominated by major companies such as Bell Labs, Intel, Cisco, Huawei, IBM Corp., Fujitsu, Oracle Labs among others.
Acquisitions/Technology Launches/Partnerships
In January 2019, SiLC, a silicon photonics-based provider of integrated 4D vision LiDAR solutions has announced the launch of a new silicon photonics LiDAR chip, an eye-safe LiDAR for various applications including autonomous vehicles, telecom, and others.
In March 2019, Silicon Photonics Group, UK, announced its partnership with CompoundTek, Singapore, a global foundry services provider, to offer silicon photonics design services.
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