Photonic IC Market

Photonic IC Market Size

The global photonic integrated circuit market garnered substantial valuation in 2024 and shall expand at an impressive CAGR between 2025 and 2034, due to the skyrocketing need for high-speed data transmission, energy-efficient devices, and miniaturization in next-generation communication, sensing, and computing systems. Market growth is being backed by advancements in photonic technologies and their marriage with mainstream applications, like data centers, 5G, quantum computing, and AI platforms.

Photonic ICs, where many photonic functions can be combined on a single chip, offer many advantages when compared to standard electronic ICs - higher bandwidth, less power infiltration, and reduced complexity of systems. As we see continuing progression with digital transformation in many industries, companies are leaning on photonic automated solutions to help address the overall issues of larger data volumes and bottlenecks in performance.

Around the world, governments are investing heavily in photonics research, prototyping facilities for pilot scales, and even commercialization activities, which are adding momentum to the already growing PIC technology development.

Also, funding programs, R&D tax breaks, collaboration or engagement between industry and academic institutions, and local photonic centers make up a firm and extensive photonics ecosystem. These elements are allowing start-ups and some established companies to move from prototype to commercially marketable photonic products.

But some of these challenges still hold back commercialization at full scale. These are low awareness of sophisticated packaging techniques, insufficient trained manpower for PIC fabrication, thermal management issues, and huge initial investments for photonic foundries and testing equipment. Despite these challenges, persistent innovations, maturing of fabrication processes, and growing areas of application are likely to counter these limitations and lead the way to sustainable market growth.

Photonic IC Market Trends

The increasing amount of international data traffic caused by cloud computing, artificial intelligence workloads, Internet of Things devices, and video streaming is putting unprecedented stress on communication networks and data centers. Photonics-based circuits and interconnects are now becoming the preferred remedies to deliver ultra-fast, efficient, and low-energy data transmission, particularly in hyperscale data centers.

The increasing need for reconfigurable and scalable photonic architectures is encouraging vendors to move away from discrete optical components and towards integrated photonic platforms. This development is pushing the technology for heterogeneous integration, which facilitates the integration of various material platforms such as indium phosphide (InP), silicon photonics, and lithium niobate (LiNbO₃) on a single chip, resulting in better optical performance.

Another trend is the increasing application of photonic ICs for artificial intelligence and machine learning acceleration. AI applications demand high-speed data transport and low-latency communication among processing units—needs where photonic technology excels over conventional electronics. Optical AI accelerators are being developed more often by researchers using photonic ICs to perform matrix-vector multiplication in deep learning algorithms, which saves orders of magnitude in energy.

Besides, quantum photonics is also picking up momentum with governments and technology firms investing in quantum computing and quantum-secure communication. Photonic ICs are central enablers of quantum light sources, entangled photon processing, and detection, enabling the development of integrated quantum photonic chips for next-gen computing.

Photonic IC Market Analysis

Of the important segments, the laser photonic IC segment held the largest market share in 2024 and is expected to increase constantly during the forecast period. Such on-chip integrated lasers are essential to support on-chip optical sources for telecommunication, sensing, and data communication applications. Prominent companies like Intel and Cisco are concentrating on using hybrid silicon lasers—a mixture of III-V material and silicon—to enhance integration and cut down on system complexity.

The employment of integrated lasers not only reduces the physical space occupied by communication modules but also helps achieve energy savings, reduced thermal complexity, and increased speed. As advancements in vertical-cavity surface-emitting lasers (VCSELs), distributed feedback (DFB) lasers, and quantum cascade lasers grow, the laser PIC segment is poised to witness greater adoption in data centers, aerospace & defense, and biomedical applications.

The indium phosphide (InP) segment had a significant revenue share in 2024 and is expected to grow strongly through 2034. InP has the best performance in high-frequency and high-speed optical applications owing to its direct bandgap characteristics and is best suited for laser integration, high-speed modulators, and coherent detection systems.

In contrast to silicon, InP has the capability to emit light directly and is compatible with passive and active devices, and it is therefore an ideal material for next-generation transceivers as well as WDM (Wavelength Division Multiplexing) systems. Growing needs for 100G/400G/800G optical modules and coherent optical technology in data center networks and telecom are driving up the adoption of InP-based photonic ICs.

Furthermore, the integration of InP with silicon photonics through hybrid or heterogeneous platforms is expected to enable mass production of high-performance, cost-effective PICs, boosting their use in both commercial and research settings.

North America is expected to dominate the worldwide photonic IC market during the 2025 - 2034 timeframe due to the developed semiconductor ecosystem in the region, robust government initiatives, and availability of leading players and research organizations. The U.S., specifically, remains the powerhouse in photonics patents, investments, and photonics R&D at a university level.

Key players such as Intel, Cisco, Infinera, and OpenLight are leading innovations in data center optics, AI-accelerated photonic computing, and silicon photonics. For instance, in October 2023, OpenLight joined hands with Spark Photonics to offer greater access to design and consulting capabilities across several PIC platforms, such as silicon nitride, lithium niobate, and indium phosphide.

The strategic interest of the region in updating telecom infrastructure, protecting semiconductor supply chains, and promoting photonic chip foundries is likely to amplify the use of photonic ICs in defense as well as commercial environments.

Photonic IC Market Share

The photonic IC industry is dominated by top-tier global players and new startups emphasizing product differentiation and high-volume integration. Market leaders are aggressively investing in R&D, foundry collaboration, and advanced packaging technology to enhance their market foothold.

Leading companies in the market:

• Infinera Corporation
• JDS Uniphase Corporation
• Agilent Technologies
• Alcatel-Lucent
• Finisar Corporation
• Intel Corporation
• Ciena Corporation
• Avago Technologies
• Hewlett-Packard Enterprise
• Luxtera, Inc.
• Huawei Technologies Co., Ltd.

Collaborations between design, simulation, and fabrication are enabling firms to shorten time-to-market and deliver innovative PIC solutions according to end-user requirements.

Photonic IC Industry News

• In May 2025, the Centre Suisse d'Electronique et de Microtechnique (CSEM) in Neuchâtel, Switzerland, launched a spin-off firm specializing in the manufacturing of photonic integrated circuits (PICs) based on thin-film lithium niobate (TFLN) technology.
  
• In July 2025, U.S. military scientists started soliciting industry feedback on innovative approaches for producing optical integrated circuits on large-format wafers. The aim is to enable power-efficient computing systems that require little thermal management relative to current high-performance processors. The Defense Advanced Research Projects Agency (DARPA) in Arlington, Virginia, released a Request for Information (RFI), titled DARPA-SN-25-88, under its Very Large-scale Photonic Integration (VLPI) program.