The global photonic integrated circuit (IC) market size (PIC market size) was estimated at USD 300.9 million in 2015. PIC is an integrated circuit that utilizes photons for the transfer of information signals in the visible or near infrared spectrum of light. Though similar to electronic integrated circuits the PICs use of optical wavelengths gives it the added benefits of greater speed, enhanced functionalities and higher integration. Photonic ICs owe their genesis to the need to develop and deploy high-speed data transmissions that the traditional copper based transmissions and electronic ICs fail to adhere to.
In addition to the silicon, the photonic ICs are made from materials such as Indium Phosphide (InP), Gallium Arsenide (GaAS) and Lithium Niobate (LiNbO3). The ability to leverage the mass manufacturing, coupled with fabrication of highly integrated circuits that can support hundreds of functions is anticipated to help the PIC adoption in a diverse set of industries. PICs find their use in transmitters, receivers, tunable lasers, modulated lasers, and waveguides among others. Photonic ICs are being used extensively in sensing, optical communications, optical signal processing and biophotonics and may witness adoption in the novel and innovative industry applications in coming years. They have been in use in diverse industry verticals including telecommunication networks, Internet connections, data transmission, and high-speed computing.
Global photonic IC market, 2014 - 2024 (USD Billion)
Characterized by superior attributes such as small size, low-power consumption, higher efficiency, and scalable functionality, the PICs have been the rational replacement for electronics in numerous systems and devices that need optimum performance and miniaturization. The superior features of these ICs have led to their integration in mobile phones, laptops and other mobile devices and peripherals which in turn is anticipated to increase its adoption in consumer electronics segment. Embedded computing capabilities, high level of integrated functionalities, low weight, power efficiency and hyper-scale performance are expected to fuel the demand for photonic ICs in foreseeable future.
Data center and network service providers, telecommunication, high-speed Internet and cloud services providers, as well as automation and instrumentation solutions providers are expected to be the prime beneficiaries of the PIC industry advancements. With their exceptional speed, efficiency, and functionality, they may positively affect the structural engineering, transport and aerospace, chemical sensors, and energy and utilities industry over the span of next eight years.
The laser component segment held the largest share in the photonic integrated circuit market, owing to its widespread use in drilling, welding, cutting, marking, and engraving. The MUX/DEMUX component segment held the second-largest share. The extensive use of fiber optics in communication is expected to boost the share of PIC in the coming years with optical amplifiers leading the way in the highest growth.
The integration segmented is comprised of three types, which include monolithic, hybrid, and module. Of these, the monolithic integration type was dominant as it offers significantly reduced size, weight, and power. The hybrid and module integration types together account for the remaining share.
The Indium Phosphide (InP) segment leads the market in terms of share in the overall raw materials segment. The growing necessity for high data speed and transmission speed is fueling the demand for the Indium Phosphate based photonic ICs. It is closely followed by the Silica-on-Silicon segment. Over the forecast period, the silicon-based PIC is expected to grow the fastest.
Optical communication dominated the PIC industry segmented on the basis of applications. The recent years have witnessed a tremendous increase in the data traffic which the traditional copper based electronic mediums fail to carry. PIC-based optical communication provides a cost-effective and efficient alternative to data transmission which is anticipated to drive the segment growth in coming years. Optical signal processing segment is estimated to grow at a rapid rate over the forecast period, owing to the growing adoption of PICs in lasers, multiplexers and DE multiplexers, modulators, and optical amplifiers. PICs increasing demand may also be attributed to innovative applications in biophotonics and diagnostics especially the Indium Phosphide (InP) based ICs.
The North America region held the largest market share in the with about 41% share of the global industry. An increasing adoption of PICs in communications and sensing applications and the necessity to upgrade existing infrastructure is driving the industry growth in the region. Asia Pacific region is predicted to showcase a strong growth as the region experiences a major spur in data centers, long haul and transport networks and energy and utilities industry. It is estimated to gain a substantial market share over the forecast period owing to an increasing demand from the developing information technology industry in economies such as China and India in the region.
NeoPhotonics Corporation (U.S.), Viavi Solutions, Inc. (U.S.), and Broadcom Limited are some of the chief industry participants in this domain. Other key vendors include Ciena Corporation, Emcore Corporation, Finisar Corporation, Infinera Corp., Kaiam Corp, Luxtera Inc., and Oclaro, Inc.
Partnerships and strategic merger & acquisition are anticipated to be the most effective ways for industry players to gain a competitive advantage over other players and enhance the technological capability.
New product development is also an extensively adopted strategy by key industry players to gain a significant share. The key players in the PIC have also been focusing towards R&D activities for new product developments and expansion of the existing product line. For instance, in 2015, NeoPhotonics Corporation invested USD 44.5 million towards R&D to improve the existing product line and introduce new products. The company has also been focusing on merger & acquisition in the past few years in order to expand its product offering.
Moreover, in March 2016, Finisar introduced the 25G Ethernet optics that are being used for high-speed data centers. This helped the company to expand its product portfolio in the optical technology sector. On the other hand, in January 2014, Viavi acquired Network Instruments (U.S.) that helped it emerge as a solution provider to the enterprise, data center, and cloud networking markets.
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The exponential spread of COVID-19 worldwide has had an adverse impact on the semiconductor industry with manufacturing facilities temporarily shut, leading to a significant slowdown in the production. The outbreak could result in disruption across the ecosystem with several supply chain participants shifting their production facilities outside China, thereby reducing their over-reliance on China. Lockdowns imposed by the governments in the wake of the Covid-19 outbreak has not only affected manufacturing but also hauled consumer demand for semiconductor devices. Our analysts predict a decline in semiconductor revenue by over 1% in 2020 as compared to that in 2019. The report will account for Covid19 as a key market contributor.