Photonic integrated circuits (PICs) are optical devices that incorporate multiple photonic functions and as well as electronic functions on a single chip by using techniques like silicon photonics. PICs can perform functions like optical modulation, switching, multiplexing, signal processing, and sensing. They play a vital role in telecommunications network by enabling the transmission of huge volumes of data at very high speed through fiber optic cables. PIC technology leverages the advantages of both electronics and photonics by merging optical and electronic circuits onto a single silicon chip. They help to overcome bandwidth limitations and enable high-speed data transmission.
The global photonic IC market is estimated to be valued at US$ 3535.23 Mn in 2024 and is expected to exhibit a CAGR of 5.2% over the forecast period 2024 to 2031, as highlighted in a new report published by Coherent Market Insights.
Market Dynamics:
Increasing Demand for High Bandwidth Connectivity: The ever-increasing demand for high bandwidth connectivity in data centers, high-performance computers, and 5G networks is driving adoption of photonic ICs as they help enable transmission of massive amounts of data at very high speeds. PICs allow optical networks to achieve bandwidths in terabits per second (Tbps) range, meeting the connectivity needs of applications with huge data processing requirements.
Growing Adoption of Cloud Computing and Big Data Analytics: The exponential growth of cloud computing and big data analytics is generating unprecedented amount of data worldwide. Processing and transmission of such huge volumes of data through existing electrical connections has challenges and limitations. Photonic ICs are increasingly being adopted as they provide scalable and flexible high-speed connectivity solutions to handle real-time processing and transmission of petabytes of data generated through cloud and analytics applications. Their ability to achieve bandwidths in Tbps range through fiber optics aids in efficient datacenter networking and computing.
Segment Analysis
The global photonic IC market size can be segmented based on material, integration, application and geography. Based on material, the market is classified into indium phosphide, gallium arsenide, silicon, silica-on-silicon and others. Indium phosphide dominates the material segment accounting for over 30% market share owing to its high performance at optical wavelengths and ability to monolithically integrate laser sources, modulators and photodetectors on a single chip.
PEST Analysis
Political: Any policy changes related to the telecommunication industry will impact the photonic IC market. There are also stringent regulations around material procurement and production processes.
Economic: The market is dependent on the spending power of key end use industries like telecommunication, data center, and healthcare. Any fluctuations in the global economy will influence investments in new technology adoption.
Social: Growth in mobile data consumption and emergence of technologies like 5G, IoT are driving demand for high bandwidth communication networks. This is positively impacting the social acceptance and demand for photonic integrated circuits.
Technological: Advanced nodes below 10nm fabrication technology, hybrid integration techniques and advanced laser sources are some key technological developments providing opportunities for photonic IC vendors to develop new innovative products.
Key Takeaways
The global photonic IC market is expected to witness high growth at a CAGR of 5.2% during the forecast period of 2024 to 2031. The market size is projected to increase from US$ 3535.23 Mn in 2024 to US$ 5234.78 Mn by 2031.
Regional analysis: Asia Pacific accounts for the largest share of over 35% in the global photonic IC market led by countries like China, Japan and India. This can be attributed to presence of key semiconductor foundries and telecom giants in the region driving high adoption.
Key players: Key players operating in the photonic IC market are Cargill Inc., Tate & Lyle PLC, Corbion N.V., Firmenich SA, Sensient Technologies, Associated British Foods Plc., Givaudan, Takasago International Corporation, Mane SA, International Flavors & Fragrances Inc. (IFF), Quest Nutrition LLC, Danisco A/S. Tate & Lyle PLC holds the leading market share of over 15% owing to its diversified product portfolio and global production footprint.