Photonic Integrated Circuit Market Expected to Grow 27.5% by 2022

August 09, 2017

WELLESLEY, Mass., Aug 9, 2017 – A revolutionary all-optical network of photonic integrated circuits promises a future of stronger, more economical, and more flexible communication, sensing, biophotonic, and optical signal processing systems, according to a report by BCC Research. These new circuits are expected to help boost the global market for optical communications to $1.4 billion by 2022, a 26.5% increase.

While challenged by high initial investment, application of silicon photonics is increasing daily. They are most commonly found in mobile devices and radios, and are expected to soon be found in high-end RF and sensing operations, according to the report, Silicon Photonics: Technologies and Global Markets.

Silicon photonics use laser light to transfer data among computer chips for so-called “computing at the speed of light.” Optical rays can carry more data and do so faster than electrical semiconductors can.

“For computation and communications purposes traditional silicon approaches are beginning to falter. There is an unmet need for something better,” said report author Sinha G. Gaurav. “Many believe it is silicon photonics.”

The global market for photonic integrated circuits is expected to top $1.8 billion by 2022, a 27.5% jump. Need for the new technology is being driven by the desire for high speed data transfer, including rapid industrialization, last mile connectivity, and improved efficiency with real-time data availability. A newly-developed laser modulator can encode optical data at the rate of 40 billion bits per second.

Demand for photonic integrated circuits, particularly for use in smart gadgets, is expected to increase significantly in the coming years both in the Asia-Pacific region and in the United States, where regulatory changes will encourage small and medium size companies to expand.

Research Highlights

The lack of low-cost labor in the United States is a major setback for small and medium size companies looking to manufacture PICs.
The leading components in PICs are lasers – the global market share is about 26.5%. The primary raw material used in lasers is indium phosphide – sales in 2022 are expected to be $366 million, a 25% jump from 2017.
Prices for PICs are likely to decline in the next five years thanks largely to competition from India and China.

The global market for PICs in optical communication applications is led by the Asia-Pacific region, with the market estimated to reach $426 million by 2022, a 41.2% increase from 2017. North America’s market share is expected to rise 22.6% in the same period and surpass the market share of Europe, which will grow by 18.8% to $284 million.
Return on investment for PICs is difficult to determine – the technology is not highly developed and it requires skilled workers to run the fabrication units.

PIC makers leading the industry include Infinera (12.3% market share, $66.3 million market revenue), Huawei (9.9%, $53.4 million), Broadcom (7.6%, $41 million), and Intel (6.7%, $36 million). California-based Infinera offers optical networking systems based on photonic integration technology. China-based Huawei is incorporating photonic integrated circuits in its optical networking systems.

Factors Impacting Growth

The PIC industry is complex – there are few manufacturing hubs and manufacturers require a workforce with industry expertise. Because the life cycle of these products is short, companies only consider manufacturing if replacement technology is at least five years out. The lack of competition has created a static market, and while companies with money can enter the field, it is difficult for them to sustain their position.

Editors/reporters requesting analyst interviews should contact steven.cumming@bccresearch.com.

Photonic Integrated Circuits: Global Markets with Special Focus on Silicon Photonics( PHO007B )
Publish Date: Aug 2017

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