Photonic chip market to hit $9.3bn
AI data centres, co-packaged optics and silicon photonics are expected to drive strong growth in the global photonic chip market through 2032.
The global photonic chip market is projected to grow from approximately $4 billion in 2025 to $9.3 billion by 2032, according to a new report from MarketsandMarkets.
The market is expected to expand at a compound annual growth rate of 12.9% between 2026 and 2032, driven by increasing bandwidth requirements in AI data centres, the adoption of co-packaged optics (CPO) and continued commercialisation of silicon photonics.
Optical interconnects are identified as the largest application segment, reflecting growing demand for higher-bandwidth and more energy-efficient connections across AI and cloud infrastructure.
North America currently represents the largest regional market, while thin-film lithium niobate (TFLN) is identified as the fastest-growing material platform.
The report highlights the physical limitations of electrical interconnects in terms of bandwidth, power consumption and signal integrity as an important factor accelerating photonic integration.
Generative AI and the rapid expansion of GPU clusters are further increasing the importance of optical connectivity within and between data centre systems.
Silicon photonics currently holds the largest share among material platforms, supported by its compatibility with CMOS manufacturing and an expanding PDK and foundry ecosystem.
TFLN, meanwhile, is gaining momentum for high-performance electro-optic modulation in areas including coherent communications and microwave photonics.
Hybrid integration remains the leading integration approach by revenue, while heterogeneous integration is forecast to grow rapidly as technologies including flip-chip bonding, wafer bonding and micro-transfer printing mature.
These techniques are becoming increasingly important for integrating III-V active devices with silicon photonic platforms and supporting CPO architectures.
MarketsandMarkets also identifies the transition from 400G towards 800G and 1.6T connectivity, greater availability of photonic PDKs and multi-project wafer services, and the commercialisation of TFLN as significant trends shaping the sector.
Asia Pacific is forecast to be the fastest-growing regional market, while continued investment in photonics manufacturing, AI infrastructure and semiconductor R&D is expected to support expansion across North America and Europe.
