Photonic Integrated Circuits: New Directions

Report Highlights

• The market for photonic integrated circuit subsystems and components is estimated to be $4.3 billion in 2001 and is expected to grow at an average annual rate (AAGR) of 20.5% to almost $11 billion by 2006.
• The market for discrete devices or integrated optical circuits will grow at an AAGR of 18.7% to $9.7 billion. This figure is somewhat weighted down by the established optoelectronics market.
• These products, comprising 88% of overall PIC subsystem and component sales in 2001, include laser diodes and photodiodes growing at a combined AAGR of 18%.
• The market for subsystems or photonic integrated circuits (optical systems-ona- chip or SoCs) will grow at a much higher AAGR of 44.1% to $1.3 billion.
• By 2006, this segment will grow from 4.7% to 11.4% of the overall PIC subsystems and components market, or 6.4% of the estimated $20.2 billion worldwide optical component market.

INTRODUCTION

OBJECTIVE OF STUDY

The objective of this study is to identify, measure, and provide growth forecasts for photonic integrated circuits (PICs) deployed in fiber-optic telecommunications systems. The product market is broken down by subsystems, photonic integrated circuits (PICs), and components—integrated optical circuits (IOC), the building blocks of PICs. The market is further segmented by passive and active photonic integrated circuit subsystems and components. Passive devices include arrayed waveguide gratings, variable optical attenuators, switches, and other passive waveguide wavelength management devices. Active devices include lasers, detectors, transmitters, transceivers, and amplifiers. The study also forecasts PIC penetration rates by network segment and geography. Finally, Communications Co., Inc. (BCC) provides forecasts and comparative analyses for both the materials and technologies used in the fabrication of photonic integrated circuits.

REASONS FOR STUDY AND ITS IMPORTANCE

The market for photonic integrated circuits (PIC) has reached a critical commercial threshold. Since the introduction of PICs in 1997, the optical component industry has slowly been migrating from the manual assembly of discrete optical devices to automated, semiconductor wafer-processing techniques and single-chip solutions. Ultimately, each major optical networking function (e.g., amplification, mux/demux, switching, transmitting/receiving) will be performed by a single chip. Until recently, though, factors such as low cost-to-performance ratios, material limitations, and the absence of a large end-market made it difficult to justify the exorbitant capital expenditures of semiconductor processing.

However, with the demand for high-volume, low-cost components in the metro market and compact, advanced components in all-optical and higher-speed networks, the economics now make sense. Together with recent advances in material structures and device geometries, a notable number of companies have new PIC subsystems and/or components slated for commercial deployment over the next 12 to 24 months. The market participants include dozens of new start-ups and spin-offs of larger component makers formed in the last two years; all of these producers churn out photonic chips. This study responds to the need for a detailed analysis of the current and future markets for photonic integrated circuits, an important enabling technology in next-generation networks.

CONTRIBUTION OF THE STUDY AND FOR WHOM

The wide-scale commercialization of photonic integrated circuits over the next few years will have a significant impact on network performance, capacity, and the delivery of advanced customer applications. The attendant benefits will affect all links in the fiber-optics communications supply chain, including optical component manufacturers, communications equipment vendors, and service providers. This report also will be of interest to professionals engaged in optoelectronic, micro-opto-electromechanical systems (MOEMS), and optical coatings and materials research and development. Finally, the detailed market analysis will be of use to senior decision makers, development managers, and investment professionals.

Specifically, the report targets:

• Optical subsystem and component suppliers
• Optoelectronic subsystem and component suppliers
• MOEMS subsystem and component suppliers
• Fiber-optic network equipment vendors
• Incumbent local exchange carriers (ILECs), competitive local exchange carriers (CLECs), interexchange carrier (IXCs)
• Photonic circuit engineers
• Optical/optoelectronic materials engineers
• Optical/optoelectronic researchers
• Semiconductor material suppliers
• Semiconductor equipment vendors
• Optical subsystem/component sales and marketing professionals
• Product development managers
• Network planners
• Merger, acquisition, and investment executives

METHODOLOGY AND INFORMATION SOURCES

Forecasts are based on current industry statistics, opinions from industry experts, and standard technology forecasting methodologies. Information sources include extensive interviews with optical component suppliers, industry analysts, market and scientific researchers, academicians, and purchasers of photonic integrated circuits. In addition, trade magazines and industry reports were consulted.

DEFINITION OF SUBJECT

Photonic integrated circuits (PICs) are the monolithic integration of two or more integrated optical circuits (IOCs) on a single substrate. They are the photonic equivalent of microelectronic chips, which integrate two or more transistors on a chip to form an electronic integrated circuit (IC). However, instead of guiding electricity, a photonic integrated circuit routes lightwaves. In PICs, waveguides (usually made of silica or polymers) act as the photonic analog of copper circuits, serving as interconnects among various discrete components on a chip. The refractive index of an active or core layer, which is sandwiched between two cladding layers with a lower index of refraction, applies total internal reflection to confine and route a wavelength of light. The photons are directed by optical elements, including gratings, lenses, and prisms.

The fabrication of photonic integrated circuits involves building devices in or on a substrate using high-yield, batch semiconductor manufacturing processes, such as deposition, photolithography, and etching techniques. Multiple components or functions can be combined on a single substrate to build multifunctional chips. Notably, both active and passive optical components can be integrated onto one substrate. Passive components are involved in the transport, splitting, and combining of light. Active components have both optical and electrical properties, and require electrical power to emit, receive, and convert light signals. Photonic integrated circuits are also referred to as optical integrated circuits and waveguide circuits. When made from silica glass and, more recently, polymers, they are referred to as planar lightwave circuits (PLC).