Silicon Photonics Market

Market Definition

The market involves the design and fabrication of photonic systems that integrate optical components with silicon-based semiconductors. Using standard CMOS processes, it enables high-density, energy-efficient optical data transmission, particularly suited for data centers, telecommunications, and high-performance computing.

The technology leverages silicon’s optical properties to create waveguides, modulators, and photodetectors on a single chip. Its formulation supports dense integration of optical and electronic components, reducing latency and power consumption.

Beyond data communication, silicon photonics is applied in biosensing, LiDAR, and quantum computing, where precision and speed are critical. The report outlines the primary drivers of market growth, along with an in-depth analysis of emerging trends and evolving regulatory frameworks shaping the market trajectory.

Silicon Photonics Market Overview

The global silicon photonics market size was valued at USD 2,253.6 million in 2023 and is projected to grow from USD 2,732.3 million in 2024 to USD 12,404.1 million by 2031, exhibiting a CAGR of 24.13% during the forecast period.

The market is primarily driven by the rising demand for high-speed data transmission, especially within data centers and AI computing environments. Additionally, the ongoing deployment of 5G networks and next-generation optical infrastructure is accelerating the need for compact, high-bandwidth, and energy-efficient silicon photonic components across telecom and cloud sectors.

Major companies operating in the silicon photonics industry are Intel Corporation, Cisco, IBM, MACOM, GlobalFoundries Inc., Lumentum Operations LLC, Coherent Corp., STMicroelectronics N.V., Rockley Photonics, Sicoya GmbH, Hamamatsu Photonics K.K., Broadcom Inc., NVIDIA, Infinera Corporation, and Juniper Networks Inc.

Deployment of 5G networks and next-generation optical infrastructure directly supports the growth of the market. Telecom operators require optical transceivers and integrated photonic circuits capable of handling large volumes of data traffic with low power consumption.

Silicon photonics addresses these demands through compact form factors and high signal integrity, enabling efficient network upgrades and long-term cost optimization across metropolitan and long-haul communication systems.

Key Highlights:

1. The silicon photonics industry size was valued at USD 2,253.6 million in 2023.
2. The market is projected to grow at a CAGR of 24.13% from 2024 to 2031.
3. North America held a market share of 36.72% in 2023, with a valuation of USD 827.5 million.
4. The active optical cables (AOCs) segment garnered USD 870.1 million in revenue in 2023.
5. The optical modulators segment is expected to reach USD 5,611.0 million by 2031.
6. The IT & telecommunications segment secured the largest revenue share of 34.96% in 2023.
7. The market in Asia Pacific is anticipated to grow at a CAGR of 25.66% during the forecast period.

Market Driver

"Rising Demand for High-speed Data Transmission"

The growth of the silicon photonics market is strongly influenced by the increasing need for high-bandwidth, low-latency data transmission in hyperscale data centers and enterprise networks.

Silicon photonic components support rapid data transfer with improved energy efficiency, addressing bottlenecks in traditional electrical interconnects. The shift toward 400G and 800G optical modules in cloud computing and AI-driven environments makes silicon photonics essential for reducing operational costs while maintaining scalability and network performance.

• In October 2024, researchers at University College London (UCL) set a new world record in wireless data transmission, marking a major advancement in high-speed wireless communication. They achieved an over-the-air data transfer rate of 938 Gbps across an unprecedented frequency range of 5–150 GHz. This speed is approximately 9,380 times faster than the UK’s current average 5G download speed of 100 Mbps. The total bandwidth used—145 GHz—is more than five times greater than that of the previous world record in wireless transmission.

Market Challenge

"Complex Integration with Existing Semiconductor Processes"

A major challenge hindering the growth of the silicon photonics market is the complex integration of photonic components with traditional CMOS semiconductor processes.

Aligning optical and electronic functionalities on a single chip requires precision engineering, specialized manufacturing, and strict thermal control, which increases cost and limits scalability.

Companies are investing in co-packaged optics, heterogeneous integration, and advanced photonic design automation (PDA) tools. Strategic partnerships with foundries and the development of standardized platforms also aid in streamlining production, reducing integration barriers, and accelerating the transition of silicon photonics from prototyping to high-volume manufacturing.

Market Trend

"Development of Co-packaged Optics for Next-gen Computing"

Continuous research in co-packaged optics is shaping the future of the silicon photonics market. Researchers are focusing on integrating optical interconnects directly onto silicon chips to address the growing power and bandwidth demands of generative AI workloads.

This R&D effort leverages polymer waveguides and silicon photonic components to enable ultra-dense, energy-efficient data transmission at chip-level proximity. The innovation represents a major step toward scaling high-performance computing systems and enhancing the practicality of photonic integration in commercial AI infrastructure.

• In December 2024, IBM Research introduced a breakthrough in chip-to-chip communication through co-packaged optics, which integrates optical connections directly onto silicon chips. Using polymer optical waveguides, this approach significantly reduces energy consumption by over 80% and boosts data transfer bandwidth, directly supporting the growing demands of generative AI. By coupling these waveguides with silicon photonics, IBM advances toward ultra-dense optical interconnects that can scale with AI model complexity.

Silicon Photonics Market Report Snapshot

Segmentation	Details
By Product Type	Transceivers, Active Optical Cables (AOCs), Optical Multiplexers, Optical Attenuators
By Component	Optical Waveguides, Optical Modulators, Photodetectors, Others
By Application	IT & Telecommunications, Consumer Electronics, Healthcare & Life Sciences, Commercial, Others
By Region	North America: U.S., Canada, Mexico
	Europe: France, UK, Spain, Germany, Italy, Russia, Rest of Europe
	Asia-Pacific: China, Japan, India, Australia, ASEAN, South Korea, Rest of Asia-Pacific
	Middle East & Africa: Turkey, UAE, Saudi Arabia, South Africa, Rest of Middle East & Africa
	South America: Brazil, Argentina, Rest of South America

Market Segmentation:

• By Product Type (Transceivers, Active Optical Cables (AOCs), Optical Multiplexers, Optical Attenuators): The Active Optical Cables (AOCs) segment earned USD 870.1 million in 2023, due to their high-volume adoption in data centers and high-performance computing environments.
• By Component (Optical Waveguides, Optical Modulators, Photodetectors, and Others): The optical modulators segment held 39.72% share of the market in 2023, due to its critical role in enabling high-speed data transmission and signal integrity across advanced data center and telecom infrastructure.
• By Application (IT & Telecommunications, Consumer Electronics, Healthcare & Life Sciences, and Commercial): The IT & telecommunications segment is projected to reach USD 4,260.7 million by 2031, owing to its high demand for energy-efficient, high-bandwidth optical interconnects that support data-intensive applications, 5G deployment, and hyperscale data center expansion.

Silicon Photonics Market Regional Analysis

Based on region, the market has been classified into North America, Europe, Asia Pacific, Middle East & Africa, and Latin America.

North America silicon photonics market share stood at around 36.72% in 2023, with a valuation of USD 827.5 million. The strong presence of global players like Intel, IBM, Cisco, and NVIDIA, all with active photonics R&D programs in North America, has been instrumental in pushing forward the commercial applications of silicon photonics.

Their internal use cases, acquisitions, and product innovations continuously expand the growth of the market. Moreover, the presence of mature semiconductor ecosystems in regions like Silicon Valley significantly accelerates the growth of the market.

Access to world-class foundries, fabrication partners, and a skilled workforce enables rapid development and commercial deployment of silicon photonic chips, especially for networking and AI applications.

• In October 2024, Silicon Valley-based startup Xscape Photonics secured USD 44 million in Series A funding to advance its energy-efficient silicon photonics solutions for AI data centers. With backing from Nvidia and Cisco, this round brings the company’s total funding to USD 57 million. The capital will accelerate the development of its proprietary “ChromX” platform, designed to address the escalating power demands of AI-driven infrastructure through next-generation optical interconnect technology.

The silicon photonics industry in Asia Pacific is poised for significant growth at a robust CAGR of 25.66% over the forecast period. The region, particularly Singapore, India, and Australia, is registering rapid growth in hyperscale and edge data center construction.

These facilities are adopting silicon photonics to manage power consumption and support scalable bandwidth. The regional need for AI-ready infrastructure is pushing photonic solutions into mainstream deployment.

Furthermore, the region’s strong foothold in electronics production supports the cost-efficient integration of photonic components. Additionally, robust investment in AI, cloud services, and next-gen telecom infrastructure is creating sustained demand for high-speed, low-power optical interconnects, supporting the growth of the market in the region.

Regulatory Frameworks

• The U.S. Department of Commerce's Bureau of Industry and Security (BIS) has implemented stringent export controls targeting advanced computing semiconductors and semiconductor manufacturing equipment, which are pertinent to silicon photonics. In October 2022, BIS updated these controls to restrict China's ability to procure and produce technologies critical for military applications, including advanced semiconductors used in Artificial Intelligence (AI).
• China has implemented export controls on critical materials essential for semiconductor manufacturing, such as gallium and germanium. In December 2024, China imposed export restrictions on these materials, affecting global supply chains and prompting concerns about shortages in semiconductor production. These measures are seen as a response to U.S.-led restrictions on advanced chip sales to China.
• Japan has updated its export control regulations to include high-performance semiconductor manufacturing equipment. Effective July 2023, these controls require exporters to obtain licenses for specific equipment used in semiconductor production, regardless of the destination. This move aligns with efforts by the U.S. and the Netherlands to coordinate export controls on semiconductor technologies.

Competitive Landscape:

Market players are actively adopting strategies such as the launch of advanced silicon photonics solutions tailored for next-generation data center demands. These product introductions are aligned with the shift toward higher bandwidth and energy-efficient optical interconnects.

Companies are reinforcing their competitive position while addressing the technical requirements of evolving network infrastructure by focusing on innovations that support scalable, high-speed connectivity. Such strategic moves are directly contributing to the overall growth of the market.

• In March 2025, Lightmatter unveiled the Passage M1000, an advanced 3D Photonic Superchip engineered for next-generation XPUs and network switches. Delivering an unprecedented 114 Tbps of total optical bandwidth, the M1000 is designed to meet the performance demands of large-scale AI infrastructure. Spanning over 4,000 square millimeters, the reference platform features a multi-reticle active photonic interposer that supports ultra-dense 3D integration—enabling connectivity across thousands of GPUs within a unified computing domain.

List of Key Companies in Silicon Photonics Market:

• Intel Corporation
• Cisco
• IBM
• MACOM
• GlobalFoundries Inc.
• Lumentum Operations LLC
• Coherent Corp.
• STMicroelectronics N.V.
• Rockley Photonics
• Sicoya GmbH
• Hamamatsu Photonics K.K.
• Broadcom Inc.
• NVIDIA
• Infinera Corporation
• Juniper Networks Inc.

Recent Developments (Partnerships/Agreements/Product Launches)

• In March 2025, MACOM introduced four new 200G-per-lane solutions aimed at enabling 1.6T optical connectivity in data centers. The newly launched 100 mW and 75 mW Continuous Wave (CW) lasers are engineered specifically for integration with 1.6T silicon photonics (SiPh) platforms. These lasers are offered in multiple configurations, including single-channel units, as well as 8-channel and 16-channel array formats.
• In March 2025, Lumentum partnered to be a contributor to NVIDIA’s silicon photonics ecosystem. Its high-efficiency, high-power lasers play a vital role in supporting the development and rollout of NVIDIA’s Spectrum-X Photonics networking switches. This collaboration underscores Lumentum’s specialized laser technology and its strategic focus on advancing AI infrastructure through scalable photonic innovations.
• In March 2025, NVIDIA introduced its Spectrum-X and Quantum-X silicon photonics networking switches, designed to power large-scale AI factories by interconnecting millions of GPUs across multiple sites. These switches significantly lower energy consumption and operational expenses. With this launch, NVIDIA has successfully integrated electronic and optical technologies at an unprecedented scale, marking a major advancement in high-performance networking infrastructure.
• In January 2025, GlobalFoundries revealed plans to invest over USD 700 million in building a new silicon photonics facility at its existing site in upstate New York. The new center will enhance the company’s advanced packaging operations, enabling the transformation of bare silicon photonic chips into fully packaged devices. This development will allow GlobalFoundries to offer end-to-end U.S.-manufactured solutions, strengthening domestic production capabilities for its customers.