Photonic integrated circuits (PICs) are optical circuits that integrate multiple photonic functions and can reduce the power consumption and size of telecommunication systems. PICs allow the integration of multiple photonic devices and circuits on a single chip, which provides advantages like compact packaging, mass producibility, reliability and reduced power consumption.
The global photonic IC market is estimated to be valued at US$ 3068.77 Mn in 2023 and is expected to exhibit a CAGR of 33% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market key trends:
The development of 5G networks globally has accelerated the demand for PICs in optical communication networks. 5G networks require high bandwidth and speed for supporting data-intensive applications like HD video calling, virtual/augmented reality etc. Photonic integrated circuits play a crucial role in satisfying the growing bandwidth demand of 5G as they allow compact integration of multiple optical components like modulators, lasers, detectors on a single chip. This compact integration increases the bandwidth and throughput of optical communication networks. Furthermore, PICs enable high scalability, reliability and lower power consumption in 5G telecom networks, thus driving their increased adoption.
Segment Analysis
The global Photonic IC market is dominated by the Telecommunication & Datacom sub-segment, which holds around 35% of the total market share. Photonics find wide application in long haul and metro telecommunication networks for signal processing, wavelength division multiplexing/demultiplexing, amplifying signals and other functions. As data traffic continues to rise extensively with 5G rollouts and increasing internet connectivity worldwide, demand for photonic ICs from the telecommunications industry remain high.
Key Takeaways
The Global Photonic IC Market Demand is expected to witness high growth over the forecast period of 2023 to 2030. With increasing investments into optical interconnect technologies, the market size is projected to cross US$ 3068.77 Mn by 2023.
Regional analysis
North America dominates the global Photonic IC market currently, supported by significant R&D spending and early adoption of advanced optical communication networks in the region. Several technology giants based in the US and Canada are intensifying efforts to develop next-gen photonic solutions. However, Asia Pacific is anticipated to emerge as the fastest growing regional market. Thriving semiconductor industries and huge investments by governments in countries like China, India to build 5G infrastructure present lucrative opportunities for photonic IC vendors in the coming years.
Key players
Key players operating in the Photonic IC market are Agilent Technologies, Inc., Intel Corporation, Aifotec AG, Infinera Corporation, Alcatel-Lucent, Hewlett Packard, Avago Technologies, Finisar Corporation, Ciena Corporation, Enablence Technologies Inc., and Emcore Corporation. The market demonstrates a high level of consolidation with the top five companies holding over 50% of the share. Notable M&A activities include Mellanox’s acquisition by Nvidia and International Business Machines Corporation's (IBM) acquisition of Red Hat in recent times.
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