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Photonic IC Market size is estimated to grow significantly from 2023-2032 owing to the advantages of the components such as cost-effectiveness and enhanced functionalities.
The miniaturization of devices and the increase in the level of integration are the key factors driving market growth. These circuits host complex circuit configurations and feature power efficiency and cost reduction due to miniaturization. Photonic components enable efficient electrical-to-optical conversion and allow devices to work at high temperatures. High-speed data transmission facilitated by these circuits makes them suitable for a wide range of applications across the aerospace, industrial, telecommunication, utilities, and energy sectors.
However, the lack of digitalization and awareness of advanced packaging techniques in several economies are restraining the photonic IC market growth. In addition, factors such as thermal effect issues, the need for high initial investments, and the lack of skilled technicians to run the fabrication units are also restricting the industry's growth. Moreover, supply chain issues caused by the Russia-Ukraine war and rising inflation rates add to the constraints.
Mounting pressure due to an exponential increase in data has led to the growing demand for data centers globally, consequently raising the demand for high-speed and efficient data transmission in data centers is providing attractive growth opportunities for the photonic IC market. In addition, the need for improved communication and computation needs will provide significant growth potential. The rising need for flexible, miniaturized, and power-efficient circuits is a major factor that provides growth opportunities for the photonic integrated circuit (IC) market. There is a growing need for these circuits from automation providers and cloud & network service providers.
The laser photonic IC market amassed a significant revenue share in 2022 and is foreseen to grow at a steady CAGR owing to its wide usage in applications such as telecommunication and data center domains. Companies, such as Intel, are focusing on implementing technologies such as hybrid silicon lasers. Lasers being one of the essential components of these ICs, the demand for the segment is expected to increase over 2023-2032.
Photonic integrated circuit (IC) market from the indium phosphide segment generated substantial revenue in 2022 and is anticipated to grow at a rapid pace through 2032 owing to the rising need for high-speed data transmission. The ability to integrate both passive and active devices and the capability of cost-effective mass production has led to a rise in demand. The silicon-based photonic IC market is anticipated to grow at a fast rate owing to the advantages such as the small size of components and high efficiency. Moreover, ease-of-fabrication offered by these ICs is projected to propel their demand over the forecast timespan. Enhanced computational and processing capacities of silicon-based components will further boost segment growth.
North America photonic IC market held a sizable revenue share by 2032 owing to the presence of advanced electronics and telecom sectors in the region and its tendency to adopt the latest advanced technologies. The need to upgrade the existing infrastructure coupled with the growing adoption of the components in sensing and communications applications is driving industry growth.
Major players operating in the photonic IC market include Infinera Corporation, JDS Uniphase Corporation, Agilent Technologies, Alcatel-Lucent, Finisar Corporation, Intel Corporation, Ciena Corporation, Avago Technologies, Hewlett-Packard Enterprise, Luxtera, Inc., and Huawei Technologies Co., Ltd. The Photonic integrated circuit (IC) market is competitive and fragmented. Major players are investing in R&D and are competing based on technology differentiation and product innovations to consolidate their share in the thriving market.