Photonic integrated circuits (PICs) are tiny optical systems manufactured with technology used in the electronic integrated circuit industry. PICs enable everything from complex optical designs that allow billions of bits of information to be sent and received in a package the size of a candy bar to artificial noses that can detect different compounds and molecules in the air around them.
The importance of PICs in high speed communication within artificial intelligence (AI) data centers is leading to rapid growth in demand for PIC-enabled transceivers to help machine learning models grow ever larger. Anticipation of the skyrocketing requirement for AI data centers is the key to IDTechEx‘s prediction in its latest report, “Silicon Photonics and Photonic Integrated Circuits 2025-2035: Technologies, Market, Forecasts,” that the PIC market would hit a staggering US$54 billion in 2035.
By leveraging the billions of dollars in investment in CMOS chip manufacturing, PICs can unlock new processing scaling potential beyond Moore’s law. However, there are still significant challenges for the PIC market, such as material limitations, integration complexity and cost management. Large demand volumes are required to offset the initial cost of designing and manufacturing PICs, and production lead times can take months. IDTechEx’s new PIC report thoroughly investigates the PIC market and has identified photonic transceivers for AI as an emerging segment that will soon be the largest source of demand for PICs.
What are the PIC materials of the future?
There is a wide variety of future PIC materials. Most of the current market uses silicon and Silica-based PICs for light propagation. However, as an indirect bandgap semiconductor, silicon is not a practical light source or photodetector. Therefore, silicon is usually combined with III-V materials for light sources and photodetection. Leveraging the enormous existing integrated circuit manufacturing industry and generally taking advantage of mature node processes, silicon’s market dominance is set to continue.
However, thin film lithium niobate (TFLN), with its moderate Pockels effect and low material loss, is emerging as a strong contender for applications that require high performance modulation, such as quantum systems or potentially high performance transceivers in the future. Monolithic indium phosphide (InP) continues to be a major player due to its ability to detect and emit light. Innovative materials like barium titanite (BTO) and rare-earth metals are also being explored for their potential in quantum computing and other cutting-edge applications.
How AI is changing the demand for silicon photonics and PICs
The rise of AI has spurred an unprecedented demand for high performance transceivers capable of supporting the massive data rates required by AI accelerators and data centers. Silicon photonics and PICs are at the forefront of this revolution, with their ability to transmit data at speeds of 1.6 Tbps and beyond. As shown by Nvidia’s latest H200 server units, which, according to IDTechEx’s research, require approximately 2.5 800G transceivers per GPU, the need for efficient, high bandwidth communication is becoming more critical for AI, positioning silicon photonics and PICs as essential components in the AI-driven future. The biggest driver of the development of PIC transceivers is AI, as higher performance AI accelerators will require higher performance transceivers, with 3.2Tbps transceivers expected to arrive by 2026.
What are the future applications?
Other silicon photonics and PICs applications vary, from high bandwidth chip-to-chip interconnects to advanced packaging and co-packaged optics; these technologies are paving the way for next-generation computing.
Photonic Engines and Accelerators: Using certain photonic components such as Mach-Zehnder Interferometers and controlling these components through electro-optical interconnects, high performance processors and programmable PIC devices can be designed and manufactured, unlocking higher performance than what is possible with electronic accelerators alone.
PIC-based Sensors: Certain PIC materials, such as silicon nitride, can used for a range of different sensors, from gas sensors to ‘artificial noses’. The healthcare sensor industry may be able to take advantage of the miniaturization of optical components into PIC devices, which could see applications in point-of-care diagnostics or wearables.
PIC-based FMCW LiDAR has the potential to transform the automotive and agricultural industries with applications in drones and autonomous vehicles.
Quantum Systems: Companies investing in trapped ion and photon-based quantum computing are looking to PICs for more stable and scalable quantum systems. The challenge lies in achieving the precise control of photons necessary for quantum computation.
The silicon photonics and PICs market is experiencing robust growth, driven by the surge in AI and datacom transceiver demand. Key players in the industry, such as Intel/Jabil, Coherent, and Infinera, are actively using PICs in their transceivers. Innolight, a China-based transceiver company, hit 1.6 Tbps of transfer speed in their latest transceivers in late 2023. Coherent, which has its own InP wafer fab facilities, is also developing higher performance transceivers for 1.6T+ applications. Intel Silicon Photonics, which has transferred its transceiver business to Jabil, announced it had shipped over 8 million PICs since 2016, showing the maturity of the technology. IDTechEx forecasts that PIC technology will continue dominating the high performance transceiver market, further solidifying its position as a critical component in the modern technological landscape.
What is in this report?
“Silicon Photonics and Photonic Integrated Circuits 2025-2035: Technologies, Market, Forecasts” includes a detailed examination of the latest innovations in silicon photonics and PICs, key technical trends, analysis across the value chain, major player analysis and granular market forecasts.
The report covers the following topics
- Key Player Analysis for the high performance PIC-based transceiver market
- A breakdown of co-packaged optics and its key concepts
- Analysis of PICs for quantum systems
- Benchmarks and comparisons of photonic materials, with an industry breakdown by material. It also includes an insight into emerging materials such as TFLN and barium titanite (BTO)
- Photonic integrated circuit fundamentals and key concepts, including important components and underlying principles
- An analysis of how AI is changing demand for PIC-based transceivers, including a look at how Nvidia’s recommended server architecture requires large numbers of transceivers
- An overview of PIC manufacturing techniques
- A look into future applications of PICs such as interconnects, LiDAR, biosensors and gas sensors.
The report is based on extensive research and interviews with industry experts and provides valuable insights for anyone interested in the future of PICs. It includes 32 company profiles, many from first-hand interviews, and summaries from events, including SPIE Photonex 2024 and SPIE Photonics West 2024.
Market Forecasts
- 10-year Total Photonic Integrated Circuit Market Forecast
- 10-year PIC Transceivers for AI, Data Centers and HPC (Datacom) Unit Shipments Forecast
- 10-year PIC Transceivers for Datacom Cost per Gbps Forecast
- 10-year PIC Transceivers for Datacom Market Forecast
- 10-year AI Accelerator Unit Shipments Forecast
- 10-year PIC Transceivers for 5G Market Forecast
- 10-year PIC Transceivers for 5G Unit Shipments Forecast
- 10-year Quantum PIC Market Forecast
- 10-year PIC-based LiDAR Market Forecast
- 10-year PIC-based Sensor Market Forecast.