The global photonic integrated circuits (PIC) market is witnessing exponential growth as industries increasingly shift toward high-speed, energy-efficient, and compact communication solutions. Valued at US$ 10.2 Bn in 2022, the industry is projected to expand at an impressive CAGR of 29.2% from 2023 to 2031, reaching nearly US$ 98.7 Bn by 2031. This surge is being fueled by rising demand for high-speed communication, rapid adoption of photonics in the space sector, and the integration of photonics into high-reliability computing devices.

What Are Photonic Integrated Circuits (PICs)?

Photonic integrated circuits are advanced chips that integrate multiple photonic components such as lasers, modulators, detectors, and waveguides onto a single substrate. Unlike electronic integrated circuits that rely on electrons, PICs use photons (light particles) to transmit and process information.

The result is a compact, energy-efficient, and high-performance platform that supports applications ranging from data centers and telecommunications to aerospace, healthcare, and quantum computing. With silicon photonics leading the way, PICs are transforming how data is transmitted and processed across industries.

Market Drivers

1. Rising Demand for High-Speed Communication

The IT & telecommunications sector is undergoing massive transformation, driven by growing data traffic from streaming platforms, cloud computing, and IoT devices. Businesses are under pressure to build faster, more robust networks. PICs offer superior performance and bandwidth compared to conventional circuits, making them indispensable for next-generation telecom infrastructure.

2. Space Exploration and Defense Applications

Space agencies and defense organizations are increasingly adopting photonic integrated circuits for satellite communications, interplanetary exploration, and secure data transmission. PICs are inherently resistant to ionizing radiation and offer compact form factors, which makes them reliable in harsh environments. Their high precision sensing and low power consumption add further advantages in space applications.

3. Adoption in Computing and Data Centers

With thousands of data centers operating worldwide, especially in the U.S., demand for photonic ICs is on the rise. Cloud computing, artificial intelligence, and edge devices require efficient, high-bandwidth solutions. PICs reduce power consumption while enhancing processing speed, making them a natural fit for data-intensive environments.

Key Market Trends

Hybrid Integration Leads Adoption

In 2022, hybrid integration accounted for 53.6% of the market share. This method combines different semiconductor materials and optical components to deliver performance that cannot be achieved with a single material system. Hybrid PICs enable greater flexibility, making them suitable for telecommunications, sensing, and enterprise solutions.

Silicon Photonics on the Rise

The silicon raw material segment is projected to expand at a CAGR of 34.1% during 2023–2031. Silicon photonics offers scalability, cost-effectiveness, and compatibility with the semiconductor industry’s existing infrastructure. This has made it a popular choice for large-scale production of photonic ICs, particularly for cloud computing and long-haul communication.

Quantum Computing and Biophotonics

Emerging applications such as quantum optics, biophotonics, and lab-on-a-chip systems are expected to drive the next wave of growth. These applications rely heavily on the precision, speed, and energy efficiency that PICs provide. From medical diagnostics to quantum data processing, the possibilities are vast.

Regional Insights

• North America: Expected to maintain the largest market share, driven by the strong presence of data centers in the U.S. (around 2,700 facilities, nearly 33% of the global total). The region also benefits from early adoption of advanced technologies in IT, defense, and aerospace.
• Asia Pacific: Emerging as the fastest-growing region, fueled by expanding electronics manufacturing in China, Japan, and South Korea. The region’s dominance in computing device production, coupled with investments in photonics R&D, is projected to significantly boost demand.
• Europe: Strong demand from aerospace, defense, and telecom sectors continues to support market growth. Initiatives in quantum technologies are also expected to create new opportunities.

Competitive Landscape

The market is highly competitive with both established corporations and innovative startups. Major players include:

• Broadcom Inc.
• Ciena Corporation
• Cisco Systems, Inc.
• Intel Corporation
• Huawei Technologies Co., Ltd.
• Lumentum Holdings, Inc.
• Nokia Technologies

These companies are focusing on product innovation, mergers and acquisitions, and strategic partnerships to strengthen their global footprint. For example, in December 2022, Intel Labs unveiled a prototype combining photonics and CMOS technologies, demonstrating the potential for integrated optical computing. Similarly, Cisco announced predictive technology integration in May 2022 to boost performance in enterprise networks.

Future Outlook

Looking ahead, the global photonic integrated circuits market is expected to be one of the fastest-growing technology segments of the decade. Key opportunities lie in:

• High-bandwidth applications in data centers and telecom.
• Radiation-resistant communication for space and defense.
• Energy-efficient systems for sustainable technology adoption.
• Next-generation computing including quantum computing and biophotonics.

With a nearly tenfold increase in market size expected between 2022 and 2031, photonic integrated circuits are set to reshape how industries communicate, compute, and innovate.