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The global photonics market was valued at $576.8 billion in 2019, and it is forecasted to display a CAGR of 6.9% during the forecast period (2020–2030), reaching $1,214.5 billion by 2030. Among all regions, Asia-Pacific (APAC) held the largest share in 2019 and is expected to maintain its lead during the forecast period. Advancements in this technology across developing economies, such as China, Japan, South Korea, and India, are expected to drive the regional market during the forecast period. Moreover, growing consumer electronic industry coupled with rising demand for electronic products like smartphone, tablets, laptops, and wearable devices in the region would drive the market during the forecast period.
Factors Governing Photonics Market
A key trend observed in the photonics market is the rising deployment of silicon photonics in data centers for high-speed transmission systems. It offers higher data transfer rates ranging above 100Gbps and low power consumption. Datacom protocols are shifting toward high-speed signaling which is hampering the growth of copper-based optical cables. The data transferred using conventional copper transmitters have bandwidth limitations, due to which the volume of data transfer is reduced. According to Cisco Systems Inc.’s Global Cloud Index, 73% of data center traffic is coming from within data centers including storage, production, development, and authentication traffic. Therefore, the integration of silicon photonics with Complementary Metal-Oxide Semiconductor (CMOS) technologies meets the data center demand for next-generation performance i.e. a high-speed interconnect.
The growing need for energy-efficient products is one of the prime factors driving the growth of the photonics market. Energy efficiency has become a crucial parameter in the design of high-performance computing systems. This is due to the fact that energy-efficient products consume less energy and work efficiently for long operating hours at low maintenance costs. Several governments are launching renewable energy programs in order to reduce greenhouse gas emissions from sectors such as transport, buildings, and industrial.
In order to meet government regulations, several companies are developing energy-efficient products such as laser, LED, OLED, display, and others, that consume less wattage for the working of a device. Companies like Hamamatsu Photonics KK, Osram Licht AG, and NeoPhotonics Corporation are some of the players are developing energy-efficient products. Therefore, with increasing government regulations toward energy-efficient adoption, the increasing demand for energy-efficient products is driving the growth of the photonics market.
Structural Analysis of Photonics Market
The industrial category contributed the largest revenue to the market and is expected to maintain its lead during the forecast period. This is on account of a large deployment of photonics products like lasers in the manufacturing industries such as oil & gas, automotive, and others. Within all the manufacturing industries, lasers are used for application purposes such as cutting, drilling, welding, laser marketing, and others.
The lighting category is projected to advance at the fastest CAGR during the forecast period. This can be majorly attributed to the surging demand for lighting solutions in general lighting applications such as architectural lighting, entertainment lighting, and retail lighting solutions. Also, the growing construction industry across the globe is expected to drive the general lighting market, which in turn, would drive the market growth in the lighting category.
Global Scenario of Photonics Market
Globally, APAC was the largest market in the photonics market during the historical period. Also, it is expected to be the fastest-growing market during the forecast period as well. The region is credited as the world's largest market for consumer electronics, with demand emerging primarily from countries such as China, Japan, South Korea, Indonesia, Thailand, and India, which has led to a rapid rise in demand for photonics products.
Within APAC, India is projected to exhibit the fastest growth during the forecast period. This can be attributed to the increasing focus of the government toward ‘Make in India’ initiatives due to which, foreign automakers and consumer electronics manufacturers are increasingly setting-up their manufacturing plants in the country. Furthermore, the growth of the photovoltaic (PV) industry is one of the key factors driving the market in the country.
Photonics technology is used in the manufacturing process to build solar cells and solar modules which are comprised of the complete solar panel. The declining cost of the PV panels coupled with government policies like allowing 100% FDI under the automatic route for renewable power generation are supporting the growth of the India PV industry. In 2018, the Ministry of New and Renewable Energy has announced to install 100 GW of solar capacity by 2022 in the country. A target of installing 175 GW of renewable energy capacity by the year 2022 has been set, which includes 100 GW from solar, 60 GW from wind, 10 GW from bio-power, and 5 GW from small hydro-power. Therefore, with the growing PV sector in the country would correspondingly drive the market growth during the forecast period.
Competitive Landscape of Photonics Market
The photonics market is highly fragmented in nature, characterized by the presence of a large number of global and regional players. Major players in the market include Coherent Inc., IPG Photonics Corporation, Hamamatsu Photonics KK, II-VI Incorporated, and NeoPhotonics Corporation. Companies are focusing on expanding the manufacturing facilities in order to meet the growing customers’ demand for opto-semiconductor. For instance, Hamamatsu Photonics KK announced to construct a new building at the Shingai Factory (Shingai-cho, Minami-ku, Hamamatsu City, Japan). Some of the other players operating in the photonics market are Signify N.V., Lumentum Holdings Inc., Infinera Corporation, NEC Corporation, and Innolume GmbH.
Photonics Market Size Breakdown by Segment
The photonics market report offers comprehensive market segmentation analysis along with market estimation for the period 2014–2030.
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