Silicon photonics chip sales to reach US$3 billion by 2029 – report

Created May 30, 2024
News and Business

LightCounting has updated its forecast for silicon photonics, LPO and CPO, and forecasts that sales of silicon photonics chips will increase from US$0.8 billion in 2023 to just above US$3 billion in 2029. Sales of PICs with Thin Film Lithium Niobate (TFLN)  modulators will grow from almost zero now to US$0.75 billion by 2029. Sales of bulk LiNbo3 modulators used in legacy DWDM transceivers will continue to decline, becoming negligible by 2029.

It says surging demand for optical connectivity in AI Clusters has reversed a decline in market share of GaAs VCSELs. Nvidia purchased close to 2 million 400G SR4 and 800G SR8 transceivers and plans to buy 4 million more this year. These modules use 100G VCSELs, which many experts expected not to be reliable enough for deployment. It is a true comeback story for VCSELs, but it will not last. Nvidia is prioritising silicon photonics technology for its next generation transceivers.

The Figure below shows sales data of lasers and photonic integrated circuits (PICs) used in optical transceivers, sorted by technology. LightCounting expects gradual declines in market shares of GaAs and InP based transceivers, while silicon photonics (SiP) and TFLN PICs will gain share. Adoption of LPO and CPO will also contribute to the market share growth of SiP and possibly even TFLN devices.

LightCounting notes that companies manufacturing TFLN products are joining forces in accelerating supply chain development. Advanced Fibre Resources (AFR), HyperLight, Fujitsu Optical Components (FOC), Liobate and Ori-Chip as well as their partners organised a special workshop on TFLN at OFC 2024, which was very well attended. It expects that more companies will invest into an infrastructure needed to scale up production of TFLN wafers and PICs. Silicon photonics will provide an integration platform for TFLN and if it is included in a broader definition of silicon photonic PICs, sales of these products will reach close to US$3.8 billion by 2029.

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This article was written
by Peter Dykes

Peter Dykes is a independent telecoms and technology journalist who has over that last 30 years written for a wide range of B2B publications and companies. A former BT engineer, he specialises in networks and associated support systems. He is currently Editor of Optical Connections.