Optical Waveguide Market Size, Share & Growth

Updated on : October 22, 2024

Optical Waveguide Market Size & Growth

Global Optical Waveguide Market size is expected to reach USD 9.5 billion by 2028 from USD 6.6 billion in 2023; it Growing at a Compound Annual Growth Rate (CAGR) of 7.3% from 2023 to 2028.

Rising number of data centers worldwide, technological advancements in photonic integrated circuits (PICs), and surging demand for high bandwidth are the factors driving the growth of the optical waveguide industry.

Optical Waveguide Market Forecast to 2028

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Optical Waveguide Market Growth Dynamics

Driver : Technological advancements in photonic integrated circuits (PICs)

A photonic integrated circuit (PIC) is a chip that contains photonic components, which works on the principle of data transmission through photons or light. In PICs, photons travel through optical components such as waveguides, polarizers, and phase shifters, which are equivalent to resistors, transistors, capacitors, and electrical wires. PICs offer high-end features such as miniature footprints, low-loss transmission, large bandwidth, freedom from electric short circuits, and immunity from electromagnetic interference (EMI). These PICs are witnessing high adoption among emerging use cases such as data center interconnect (DCI), telecommunication, high-performance computing (HPC), and optical computing. Several companies are emphasizing developing technically advanced PIC solutions to cater to emerging use cases in the market. For instance, in December 2022, OpenLight (US) developed a new 800G DR8 photonic integrated circuit (PIC), which is targeted for data center interconnect (DCI) applications. The newly developed PIC is fully validated for applications in transceivers for DCI applications. Such technological advancements will amplify the growth of optical waveguide market.

Restraint: Issues associated with designing and fabricating optical waveguides

The major factor restraining the adoption of optical waveguides is issues faced in the design and fabrication process. The designing of optical waveguides requires expertise in physics and engineering as they are designed to meet unique requirements and mainly rely on a specific set of waveguide transmission protocols. The optical waveguides are fragile, expensive, and prone to transmission losses. They are tested and manufactured with the help of customized equipment and require significant capital investment. Also, due to the miniaturized footprint, there are several challenges to integrating optical waveguides into microchips and integrated circuits (ICs). The requirements like miniaturization and ruggedness for such components without compromising performance characteristics lead to additional design and fabrication expenses. Thus, the high cost and time required for manufacturing and deploying the optical waveguides prove to be a restraint in the optical waveguide market growth.

Opportunity : Rising investments in augmented/mixed reality (AR/MR) market

Investments in the augmented/mixed reality (AR/MR) market have witnessed massive growth over the past few years. Companies such as Intel Corporation (US), Meta Platforms, Inc. (US), Qualcomm, Inc. (US), Alphabet, Inc. (US), and Samsung Electronics Co., Ltd (South Korea) are heavily investing in AR/MR market. These players are extensively investing in the development of near-eye devices (NEDs) such as smart glasses and head-up displays. In near-eye devices (NEDs), the optical waveguides help bend and combine light to direct it into the eye and create virtual images, which can be observed by the wearer and are overlaid onto the environment. They propagate a light field via the mechanism of total internal reflection, bouncing light between the inner and outer edges of the waveguide layer with minimal light leakage.

Private firms are funding several research institutes, and venture capitalists and governments are funding some. Industries such as enterprise, retail, healthcare, military & defense, industrial, and consumer electronics are embracing the benefits of augmented/mixed reality (AR/MR) technologies. Enterprises are emphasizing implementing inorganic growth strategies such as partnerships and collaborations to develop AR/MR technologies. For instance, in October 2022, Dispelix Oy (Finland), ColorChip (Israel), and Maradin (Israel) announced a partnership to further advance Laser Beam Scanning (LBS) solutions for AR glasses. The collaboration integrates Dispelix diffractive waveguide displays, Color Chip PLC (Planar Light Circuit) beam combiner, and Maradin MEMS projection technology for Laser Beam Scanning (LBS).

Challenge: Challenges associated while embedding optical waveguide components into small circuits

Challenges associated while embedding optical waveguide components into small circuits are expected to impact the market growth. Implanting different waveguide components into nanometer (nm) sized integrated circuits is a critical task. Also, due to the thermal effect, it is a big challenge to embed these components at a nanometer scale. Optical/photonic devices are susceptible to waveguide dimensions, requiring nanometer-scale control over a full wafer and having a considerable variation in a refractive index. It is possible to overcome this challenge with active tuning and temperature control, but this can severely impact the power consumption of the optical links. Thus, embedding waveguide components into smaller circuits pose a major challenge to the growth of the optical waveguide market.

Optical Waveguide Ecosystem

Optical Waveguide Market Key Trends :

The optical waveguide market is experiencing robust growth, driven by key optical waveguide market trends such as the increasing demand for high-speed data transmission and advancements in telecommunications infrastructure. Recent trends highlight a surge in the adoption of optical waveguides in data centers, 5G networks, and consumer electronics, propelled by their superior bandwidth and efficiency over traditional copper cables. Innovations in materials and fabrication techniques are further enhancing the performance and integration of optical waveguides in various applications. Additionally, the push towards miniaturization and higher density interconnects is fostering the development of compact and flexible optical waveguide solutions, aligning with the evolving needs of modern technology ecosystems.

Optical Waveguide Market Share:

The optical waveguide market analysis also underscores the importance of continuous innovation and adaptation to emerging technological trends. As the demand for high-speed data communication grows, manufacturers are focusing on developing advanced optical waveguide solutions that offer superior performance and integration capabilities. The rise of smart cities, autonomous vehicles, and advanced healthcare applications are creating new opportunities for optical waveguides. However, manufacturers must navigate challenges such as supply chain disruptions and competitive pressures from alternative technologies like wireless communication and traditional copper cables. By addressing these challenges and leveraging technological advancements, the optical waveguide market is well-positioned for sustained growth and innovation.

Optical Waveguide Market Segmentation :

Channel waveguide segment to dominate market during the forecast period.

The channel waveguide segment is expected to lead the market during the forecast period. The segment’s growth can be attributed to its two-way transverse optical confinement property that delivers better speed and bandwidth. The channel waveguide components, such as active optical cables, optical fibers, and fiber cables, can be bent or curved as per the requirement to change the direction of the guided wave or to give a lateral shift. The rapid adoption of access technologies such as Fiber to the Home/ Fiber to the Building (FTTH/FTTB) will drive the ubiquitous deployment of fiber-rich networks, supporting the channel waveguide market growth during the forecast period.

The glass segment is expected to hold high market share from 2022 to 2028.

The glass segment is expected to hold high market share during the forecast period. The optical waveguides made up of glass material have a higher numerical aperture than those of polymers. The glass material allows more light rays to pass into the system and transfer through a large spectrum, ranging from 200–2,200 nm. The glass-based optical waveguides can withstand corrosive chemicals and extreme temperatures and operate in challenging environments. Their ability to transmit both visible and infrared lights, along with their increasing uptake in augmented reality and mixed reality solutions, are some of the major factors for the growth of this segment.

The single-mode propagation segment to grow at high CAGR during the forecast period

The single-mode segment is projected to be a fast-growing propagation segment during the forecast period. The growth of this segment can be attributed to the high adoption rate of single-mode optical waveguides for long-distance telecom networking applications. Single-mode waveguide components have a much smaller core size of about 9 µm compared to a multi-mode waveguide with a core size of 50 µm or above. Single-mode waveguides can carry signals at a much greater speed and over longer distances than multi-mode waveguides. The increasing developments in 5G network infrastructure, the rising prevalence of optical networks, and the growing adoption of 5G connectivity worldwide are expected to fuel the growth of the single-mode optical waveguide market size during the forecast period.

The board-to-board and rack-level optical interconnect segment held high market share in 2022

The board-to-board and rack-level optical interconnect segment held high market share in 2022. The market growth is credited to the increasing adoption of optical interconnect waveguide solutions for data communication applications in cloud computing, high-performance computing, and data centers. Adding to this, the growing adoption of IoT, machine learning, and big data has also contributed significantly to the increased demand for high-performance computing applications and data centers. This is expected to fuel the market growth for the board-to-board and rack-level optical interconnects segment over the forecast period.

Market for telecommunication segment to hold the largest share throughout the forecast period

The telecommunication accounted for a high market share, in terms of value, in 2022. The segment’s growth is driven by the growing number of subscribers for various fixed-point and wireless communication devices, the availability of inexpensive communication devices, low-cost services offered by telecom service providers, and an increasing Internet user base across the globe. According to July 2022 statistics by the International Telecommunication Union (ITU), around 5.9 billion individuals, i.e., 66% of the world’s total population, were using internet services in 2022. Over 1.1 billion individuals were estimated to have come online from 2019 to 2022, with a 24% increase during this period. Also, the increasing deployment of 5G networks worldwide has led to the adoption of optical waveguide components as it helps to interconnect 5G base stations to achieve high-speed data transmission. These factors are driving the demand for optical waveguide solutions in the telecommunication industry.

Optical Waveguide Market Regional Analysis :

Optical waveguide market in Asia Pacific to grow at highest CAGR during the forecast period

The Asia Pacific optical waveguide market share is expected to grow at the highest CAGR during the forecast period. The market growth is driven by favorable government initiatives to support the growth of the photonics and semiconductor industries in the region. For instance, in December 2022, the Chinese government announced to roll out USD 143 billion financial incentive package for the next five years, i.e., by 2027. This financial incentive will provide tax credits and subsidies to boost the region’s research and production of semiconductors and photonics. Similarly, in September 2022, the Government of India announced financial support of 50% CAPEX for the companies setting up silicon photonics, display, and semiconductor fabrication units in the country. Such supportive government initiatives will amplify the growth of the optical waveguide market during the forecast period.  

Optical Waveguide Market Statistics by Region

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Top Optical Waveguide Companies - Key Market Players:

The optical waveguide companies such as

• Corning Incorporated (US),
• Sumitomo Electric Industries, Ltd. (Japan),
• Yangtze Optical Fibre and Cable Joint Stock Limited Company (YOFC) (China),
• Fujikura Ltd. (Japan),
• Prysmian Group (Italy),
• Furukawa Electric Co., Ltd. (Japan),
• Coherent Corp. (US),
• CommScope (US),
• Sterlite Technologies Limited (India), and
• DigiLens Inc. (US).

Optical Waveguide Market Report Scope :

Optical Waveguide Market Size & Highlights

This research report categorizes the optical waveguide market based on type, trends, material, propagation, refractive index, interconnect level, end-user industry, and region.

Recent Developments in Optical Waveguide Industry :

• In March 2022, Sumitomo Electric Industries, Ltd. (Japan) launched a new Z2C fusion splicer featuring its proprietary NanoTune AI (artificial intelligence) programmed fusion technology. Launching the new splicer will help its users significantly improve work efficiency at optical network construction sites.
• In January 2022, Corning Incorporated (US) launched new glass composition to advance the development of augmented and mixed reality (AR/MR) diffractive waveguides for wearable devices. The new 2.0 high-index glass allows users to see more through AR wearables by creating larger, clearer images paired with lighter, sleeker device designs. The new product launch will help the company to accelerate the mass adoption of augmented reality (AR) technology.
• In January 2022, DigiLens Inc. (US) launched the next iteration of its near-to-eye optical technology, the Crystal30 waveguide, built using DigiLens’ Volume Bragg Gratings (VBG) class of technology and has a measured efficiency rating of over 500 nits per lumen (n/L). This makes the new Crystal30 waveguide the most efficient diffractive waveguide and enables DigiLens partners to create XR experiences that are compatible in indoor and outdoor bright environments.

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