Optoelectronics Market Analysis

The global optoelectronics landscape has undergone a profound transformation over the past five years, evolving from a fragmented industry to a cornerstone of strategic economic and technological sovereignty across major economies. Photonics21, the European industry-led Technology Platform, formally handed over its new Strategic Research and Innovation Agenda (SRIA) to the European Commission in June 2026, carrying an urgent warning: photonics underpins 20% of Europe's economy, yet over 50% of EU photonics companies remain dependent on Chinese suppliers. Major European industry players including Bosch, Volkswagen, Mercedes-Benz, Nokia Bell Labs, ZEISS, TRUMPF, and EssilorLuxottica have jointly called for a €2 billion stand-alone photonics programme under Framework Programme 10, described as non-negotiable. The United States, through the CHIPS and Science Act of 2022, has appropriated approximately $52.7 billion over five years to strengthen semiconductor manufacturing, research, and workforce development. The U.S. Department of Commerce has awarded more than US$30 billion in funding to bolster chip production and increase supply chain resilience. China's 14th Five-Year Plan (2021–2025) has placed photonics and quantum technologies at the forefront of national priorities, with quantum information referenced three times more frequently than in the previous plan. The region serves every major optoelectronic vertical from telecommunications and data centers to automotive LiDAR, industrial manufacturing, and defence applications, yet faces persistent challenges including supply chain vulnerabilities, critical raw material dependencies, and intensifying geopolitical tensions that reshape manufacturing footprints across continents. According to the research report, “Global Optoelectronics Market Overview, 2031” published by Actual Market Research, the Global Optoelectronics market is expected to cross USD 83.12 Billion market size by 2031, with 9.23% CAGR by 2026-31. GlobalFoundries (NASDAQ: GFS) announced the acquisition of Advanced Micro Foundry (AMF), a silicon photonics foundry based in Singapore, in November 2025, leveraging over 15 years of AMF's manufacturing expertise to become the largest silicon photonics pure-play foundry by revenue. The acquisition expands GF's silicon photonics technology portfolio and production capacity in Singapore, complementing existing U.S. capabilities, with plans to scale from 200mm to 300mm as market needs grow.

GF also acquired InfiniLink, a Cairo-based startup specializing in advanced optical data connectivity chips. ams OSRAM AG received European Commission approval for an investment grant up to €227 million under the European Chips Act, with total investment reaching €567 million by 2030 for a new semiconductor manufacturing facility in Premstaetten, Austria, expanding cleanroom space by 1,800 square meters. The facility will produce next-generation optoelectronic sensors for medical technology and automotive applications. AIXTRON SE achieved revenues of €556.6 million in fiscal year 2025, recording a significant recovery in the optoelectronics segment driven by surging demand for laser and photonics solutions for AI applications and high-speed data transmission. The G10-AsP platform established itself as the leading solution, receiving repeat orders from multiple blue-chip customers globally. Coherent Corp. announced a major milestone in its next-generation 300mm silicon carbide (SiC) platform to address increasing thermal efficiency demands in AI datacenter infrastructure. The Chips Joint Undertaking mobilised €2.57 billion in co-investment by the end of 2025, generating 759 peer-reviewed publications, 58 patent applications, and supporting more than 6,100 full-time equivalent jobs..

Market Dynamic

OptoelectronicsSegmentation

Laser diodes represent the fastest-growing component segment globally driven by surging AI data center demand, telecommunications infrastructure investment, and the technology's versatility across automotive LiDAR, consumer electronics, and industrial applications.

• AIXTRON recorded a significant recovery in optoelectronics during 2025 driven by surging demand for laser and photonics solutions for AI applications and high-speed data transmission. • The G10-AsP platform established itself as the leading solution for laser and photonics applications, receiving repeat orders from multiple blue-chip customers in all regions of the world. • GlobalFoundries' acquisition of AMF and InfiniLink positions the company to address growing optical communication demands of AI datacenters through advanced laser-based silicon photonics solutions. • Mitsubishi Electric plans to triple production capacity for optical semiconductor devices used in data centers and communications base stations, stepping up investment as AI-driven demand continues to grow. • Dexerials Corporation reported photonics revenue surged 33% in FY2025, more than doubling its optical semiconductor sales target for FY2028 to 32.5 billion yen. • Laser diodes serve as the foundational component for 800GbE optical transceiver modules, with global shipments projected to reach 16-20 million units in 2025. • The technology enables co-packaged optics and pluggable transceivers essential for next-generation AI infrastructure, with GF's acquisitions accelerating the roadmap for both applications.

Telecommunications and data communication applications represent the fastest-growing segment globally as AI workloads, 5G deployment, and data center expansion drive unprecedented demand for high-speed optical connectivity.

• Global 800GbE optical transceiver shipments are projected to reach 16-20 million units in 2025, growing 60-100% year-over-year from 10 million units in 2024. • AIXTRON projects optical data communication for AI applications as the main source of revenue in 2026, with AI data centers potentially becoming the largest single application for GaN power semiconductors. • GlobalFoundries' silicon photonics acquisitions directly target the optical communication demands of AI datacenters, with traditional copper connections reaching physical limits and light-based data transfer delivering ultra-fast, energy-efficient performance. • The silicon photonics market is experiencing rapid expansion driven by increasing demand for high-bandwidth and low-latency data communication systems. • Coherent's networking revenue in Q2 2025 was up 39% year-over-year, with continuing strength in spending of leading cloud companies boding well for optical transceiver sales. • Access networks, both fixed and mobile combined, will consume over 200 million optical devices worth more than $1.3 billion in revenue in 2025. • The STARLight project, selected for EU CHIPS funding, plans to develop silicon photonic devices specifically designed for the telecoms industry, targeting data centers, AI clusters, telecommunications, and automotive markets.

Silicon carbide emerges as the fastest-growing device material driven by superior thermal efficiency, energy-saving potential for AI data center power supplies, and aggressive manufacturing capacity expansion across major global markets.

• Coherent announced a major milestone in its next-generation 300mm silicon carbide platform to address increasing thermal efficiency demands in AI datacenter infrastructure. • The platform's conductive SiC substrates provide low resistivity, low defect density, and high homogeneity, enabling low-dissipation, high-frequency applications with superior thermal stability. • AIXTRON secured significant large-volume orders for the G10-SiC system in China and celebrated delivery of its 100th G10-SiC system less than three years after its market launch. • GaN and SiC are emerging as new materials for power semiconductors in AI data center power supplies due to their significant energy-saving potential, with numerous customers announcing specific projects in this new application space. • Coherent's 300mm platform delivers new levels of thermal efficiency that translate directly into faster, more power-efficient AI datacenters. • The transition to 300mm allows more devices per wafer and reduces cost per chip, supporting applications such as electric vehicles, renewable energy systems, and industrial automation. • AIXTRON's power electronics applications based on SiC and GaN accounted for 57% of total equipment revenue in 2025, up from 55% in 2024.

Telecommunications stands as the fastest-growing vertical for optoelectronics globally driven by 5G/6G network deployment, AI data center interconnect demand, and massive subsea cable infrastructure investment across all major regions.

• Global 800GbE optical transceiver shipments are projected to reach 16-20 million units in 2025, with telecom operators and cloud providers driving adoption. • AIXTRON projects optical data communication for AI applications as the main revenue source in 2026, with AI data centers potentially becoming the largest single application for GaN power semiconductors. • GlobalFoundries' acquisitions of AMF and InfiniLink position the company as the largest silicon photonics pure-play foundry, addressing long-haul optical communications, computing, LiDAR, and sensing. • Mitsubishi Electric plans to triple production capacity for optical semiconductor devices used in data centers and communications base stations. • The STARLight project, selected for EU CHIPS funding, plans to develop silicon photonic devices specifically designed for the telecoms industry. • Nokia's Medusa submarine cable system connecting multiple regions will deliver tens of terabits per second, driving demand for optical transceivers and amplifiers. • The telecommunications sector benefits from coordinated national initiatives including the U.S. CHIPS Act, European Chips Act, and China's 14th Five-Year Plan, all prioritizing advanced optical communications infrastructure.

Optoelectronics Market Regional Insights

Asia-Pacific dominates the global optoelectronics market through unparalleled semiconductor manufacturing infrastructure, massive government investment, and the world's largest telecommunications and consumer electronics markets.

• Asia-Pacific captured approximately 45% of the global photonics market share in 2025, driven by semiconductor manufacturing bases spread across China, Taiwan, Japan, and South Korea. • China's 14th Five-Year Plan prioritises photonics and quantum technologies, while the country's third semiconductor investment fund committed CN¥344 billion (approximately US$47 billion) to boost the chip industry. • Japan's Mitsubishi Electric plans to triple production capacity for optical semiconductor devices, while Dexerials Corporation more than doubled its optical semiconductor sales target to 32.5 billion yen. • Taiwan's semiconductor manufacturing sector sees silicon photonics emerging as the strongest growth engine, with three of the top five fastest-growing semiconductor companies rooted in photonics and compound-semiconductor value chains. • Singapore's GlobalFoundries acquisition of AMF and establishment of a Silicon Photonics Center of Excellence with ASTAR positions the city-state as a silicon photonics hub. South Korea launched its K-Cloud project with approximately 100 billion won in AI semiconductor development funding. • The region's dominance in consumer electronics manufacturing, from smartphones to automotive systems, ensures sustained optoelectronic component adoption across diverse applications. • ASEAN's semiconductor market revenue is dominated by integrated circuits that consistently make up over 85% of total market revenue due to the large presence of IC assembly and testing facilities, majorly in Vietnam, Malaysia, Singapore, and the Philippines.