Semiconductor lasers. [Image: Pang Ka Kit, Wikimedia Commons, CC BY-SA 3.0]
In its first-ever report focused on the semiconductor laser industry, the French consultancy Yole Group described a rapidly evolving market expected to reach US$5.3 billion by 2029, up from US$3.1 billion in 2023. And the growth is not expected to stop anytime soon: Another recent report from Research and Markets, Ireland, projected the industry to top US$9 billion by 2035. The Yole Group report was published on 10 December, while the Research and Markets data came out in November 2024.
In characterizing the industry’s growth drivers, both reports point to speedy and significant technological advances across diverse sectors, including communications, industrial sensing, automotive lidar applications, medical diagnostics and more. In addition, experts have seen an overall expansion in the number of applications using lasers, a push toward energy efficiency and compact size, and growth in integration with multiple technology platforms.
“In this dynamic context, the laser market has grown significantly during the last 40 years,” said Yole Group senior analyst Martin Vallo. “At Yole Group, we announce a few millions to few billion dollars! Without doubt, laser technologies represent huge potential.”
Communications will drive demand
The Yole group report, “Semiconductor Laser Industry 2024,” announced a 9% compound annual growth rate (CAGR) for the semiconductor laser industry as a whole between 2023 and 2029, with the most important market segment being telecommunications and infrastructure. Within that sector, the group projected growth from US$927 million to US$2.56 billion, corresponding to a substantial 18% CAGR.
A separate Yole Group report released 12 December about the state of silicon photonics—which integrates semiconductor lasers on a chip to power next-generation high-speed data transmission—predicted a surging CAGR exceeding 40% for that industry in the 2023 to 2029 period. China has made notable strides in silicon photonics and is aiming for global leadership, according to the report.
“This growth will be driven mainly by high-data-rate pluggable modules for increased fiber optic network capacity,” Vallo said.
The sudden skyrocketing in artificial intelligence is undoubtedly adding urgency to the demand for photonics-driven solutions, as semiconductor manufacturers struggle to satisfy the computing industry’s insatiable hunger for processing power.
Automotive to accelerate
In addition to communications, semiconductor lasers are becoming integral to the automotive and mobility sectors, where they are enabling lidar technologies for advanced driver-assistance systems and autonomous driving. As the competition in this sector intensifies between edge-emitting lasers, vertical-cavity surface-emitting lasers and emerging frequency-modulated continuous-wave (FMCW) lidar solutions, manufacturers are striving to deliver higher power, efficiency and wavelength diversity to meet performance requirements, according to the Research and Markets report, which is titled “The Global Market for Semiconductor Lasers 2023-2035.”
Just a couple of weeks ago, on 2 December, Aeva Technologies Inc., USA, announced it will make its first deliveries of FMCW lidar devices to the German company SICK in 2025 as part of a multi-year partnership between the two companies.
Yole's 2029 forecast suggests that the market for semiconductor lasers will top US$5 billion by 2029. [Image: Yole Intelligence]
The Yole Group projected growth of semiconductor lasers in the automotive sector from US$32 million in 2023 to US$191 million in 2029, with a CAGR of 35%.
Consumer to hold steady
On the other end of the spectrum, Yole Group anticipated low growth—from US$1.62 billion in 2023 to US$1.75 billion in 2029—of semiconductor lasers within the realm of consumer applications, as silicon photonics rapidly gains ground as the technology of choice in that arena.
“In the consumer segment, the moderate market growth is due to the volume drop in optical sensing applications in the 2022 to 2024 period due to technology replacement,” said Ali Jaffal, a senior analyst in compound semiconductors. “In the opposite, semiconductor lasers in automotive are anticipated to see significant expansion, with a double-digit CAGR during the same period, mainly [driven] by automotive lidar, especially in China.”
A promising but challenging future
Both Yole Group and Research and Markets also noted increasing market pressure within the substrate industry, as companies look to scale to larger diameters so they can meet rising demands for volume and quality.
Taken together, these reports underscore the vital role that photonics will play in the 21st century, with semiconductor laser technologies remaining core to the industry. As companies look to navigate a fragmented market with diverse, application-specific requirements and a complex regulatory landscape, industry professionals will need to keep their own laser-focus if they want to shine in the years to come.