Silicon Photonics Market Trends, Forecast and Competitive Analysis 2018-2024

The segmentation of the industry by product comprises transceivers, variable optical attenuators, optical multiplexers, switches, optical cables, and sensors. The transceivers segment is anticipated to dominate the silicon photonics market as these are ideally suited for high-speed communication systems owing to the advantages such as low power consumption and compact packaging. Transceiver modules have a wide range of applications and are used for telecommunications, computing, and data centers. The sensors segment is anticipated to witness a substantial growth during the forecast timeframe owing to its ability to be compact in design and consume low energies. These systems find applications in detecting trace gases in the surroundings and for health and environmental monitoring.

Silicon Photonics Market size is expected to grow at a fast rate owing to the advantages offered to the users such as lower power consumption and reduced overall costs. These components allow devices to work at higher temperatures and enable efficient electrical to optical conversion, thereby reducing the need for cooling. This is a major factor anticipated to boost the silicon photonics market growth over the forecast timespan. The industry is gaining impetus as it enables optical devices to be manufactured at low costs using semiconductor fabrication procedures that are integrated with electronic chips. The small size, cost-effectiveness, and its ability to facilitate high-speed data transfer with the use of tiny optical components are projected to propel the silicon photonics market growth over the coming years.

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Increasing adoption in data centers is a major factor anticipated to drive the silicon photonics market. High integration capabilities coupled with a high density of interconnects are escalating their demand in data centers. These components enable the chips to use light pulses instead of electrical signals to transfer data, enhancing the processing speeds and cloud computing performance. There is a substantial increase in the number of SMEs across the world facilitated by government support initiatives such as Made in China 2025 and Make in India, fueling the demand for sophisticated data storage requirements. Various organizations in emerging economies are investing in enhancing the data centers, which is aiding the silicon photonics market to gain traction during the forecast timeframe.

Rapid industrialization in emerging countries owing to the availability of low-cost resources, such as labor and raw materials, is leading to the strong growth in the number of businesses in emerging economies. This is placing a high focus on silicon photonics market players developing data centers with enhanced features to satisfy the increasing data requirements. Additionally, there is an increasing need for enhanced energy-efficient data storage techniques. Rising need for fast data transfer speeds, the need for enhanced computational and processing capabilities, and the increasing requirements for low-power consumption devices are anticipated to provide attractive growth opportunities for the silicon photonics market.

Silicon photonics market players are required to develop their own computer-aided design or computer-aided engineering software to develop these components, which escalates the initial manufacturing costs. Thermal effect issues that hamper the performance of devices coupled with high initial costs are further hampering the industry growth. The availability of substitute technologies such as Vertical-Cavity Surface Emitting Laser (VCSEL) that increases the data speed and improves the efficiency is anticipated to hamper silicon photonics market growth. Furthermore, VCSEL is available at a low cost, which makes it a preferred alternative for companies that have severe budgetary constraints, primarily SMEs. The thermal dissipation within the material makes silicon photonics ineffective for lasing applications.

The segmentation of the silicon photonics market by component comprises photodetectors, modulators, and lasers. The market for laser components is projected to grow at a high rate owing to their applications in data centers and telecommunications. The use of lasers in silicon photonics ensures high optical power, wide operating temperature range, and spectral purity. Increasing focus of companies, such as Intel on hybrid silicon lasers, on the development of such technologies is anticipated to boost the laser silicon photonics market.

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By application segmentation, silicon photonics market includes telecommunications, defense, medical & life sciences, military, data center & high-performance computing, and sensing. The data center & high-performance computing segment is projected to dominate the industry owing to the increase in data traffic and technological advancements in data centers. There is a growth in the implementation of optics using silicon photonics. The increasing investments in the improvement of data transmission technologies and the high funding for the development of advanced defense technologies are driving the demand in the defense and government sector.

Countries across Europe and North America are the principal markets for silicon photonics market as there is a high level of advanced technology implementation in these countries. For instance, in December 2017, the USD 10 million EU PASSION project was initiated by 12 partners to develop photonic technologies supporting the development of the future metropolitan communications network. Asia Pacific is expected to witness the highest growth over the forecast time span owing to the increase in the number of data centers. Emerging economies in Asia Pacific including China, India, and Japan are concentrating on adopting advanced technologies in electronics for the miniaturization of circuits and the reduction of energy consumption.

Key players in the silicon photonics market include Juniper, Hamamatsu, STMicroelectronics, Intel, Cisco, Acacia, Broadcom, Finisar Corporation, IBM Corporation, Mellanox Technologies, Texas Instruments, Teraxion, Oracle Corporation, and 3S Photonics. The compatibility of the technology with the prevailing fabrication techniques is making major players in the region to adopt silicon photonics technology. Increasing competition among major players to offer technologically-advanced solutions is driving the silicon photonics market. In December 2017, Globalfoundries announced a strategic partnership with Ayar Labs to develop silicon technology solutions.

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