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YG PRESS NEWS – InP and GaAs photonics: fueling growth and competition in the datacom market

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Telecom market uncertainty, datacom expansion, and the resurgence of automotive LiDAR in China: GaAs and InP markets poised for single-digit quarter-on-quarter growth

OUTLINES

  • GaAs photonics, driven by 3D sensing applications, is projected to reach a US$1.9 billion market by 2029, with key developments including Apple’s adoption of VCSELs in their devices and the use of 6-inch GaAs wafers for cost-efficient, high-volume production.
  • InP’s market, valued at US$5.2 billion by 2029, is propelled by high bandwidth and long-range optical transceivers in datacom and telecom, with AI as a significant growth driver since 2023 despite consumer market challenges.
  • The competition in 3D sensing and datacom markets is intensified by key players like Lumentum, Coherent, Sony, and IQE in GaAs, and the evolving opportunities in consumer tech and AI-driven applications for InP.

In its Photonics GaAs and InP Compound Semiconductor Market Monitor Q2 2024, Yole Group announces that as the datacom market continues to grow driven by the increasing demand for InP lasers in AI applications, the telecom market is facing challenges with persistent softness expected in the upcoming quarters. This expansion in the datacom sector was marked by several announcements in Q1-24 regarding new product launches, investments, and expansions. For example, Coherent announced the establishment of the first 6” InP fabs in Sherman (US) and Jarfalla (SE). Additionally, other players are anticipated to transition from 3” to 6” InP. All of that comes also with expected changes in the pricing environment of the InP substrates as competition and demand for high quality substrates continue to grow.

In the GaAs photonics market, datacom players are preparing to ramp up production of lasers for 1.6T pluggables. However, this effort requires the adoption of 200G/lane GaAs VCSELs, which are still in the R&D phase as of Q2-24. Consequently, competition between InP and GaAs in short-reach optical interconnects is expected to intensify in the coming quarters. Additionally, the adoption of GaAs VCSELs in automotive LiDAR is increasing, particularly in China, leading to significant changes in the supply chain for these GaAs VCSELs.

…For more information about the Photonics GaAs and InP Compound Semiconductor Market Monitor Monitor, Q2 2024, do not hesitate to contact us.

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