AES Semigas


12 March 2021

VCSEL market to reach $5bn by 2027

The proliferation of data centers on globally - coupled with the rising adoption of digital solutions - is generating enormous amounts of data, accelerating the adoption of technologies offering high-speed and efficient data transmission, according to a study from market research firm Global Market Insights. This includes vertical-cavity surface-emitting lasers (VCSELs), which are seeing rising demand across various industry verticals such as healthcare, automobile, defense, aerospace, etc. The VCSEL market is hence forecasted to grow to $5bn by 2027.

For example, in 2020 Lumentum Holdings Inc introduced three new technical breakthroughs in terms of high-speed datacom laser chips aimed at widening its product portfolio for aiding the development of hyperscale data centers as well as 5G wireless applications. One of these is its 50G PAM4 VCSEL, designed especially for high-speed short-reach optical networks.

By material type, the gallium nitride (GaN) segment had a market share of about 6.5% in 2020 but is expected to grow as GaN-based VCSELs are gaining considerable attention due to features such as low threshold current, high efficiency, array formation capability, and lower manufacturing costs. They can hence potentially replace conventional LEDs in projectors, optical storage, laser printers, biosensors, solid-state lighting and several optical communications applications.

In terms of wavelength, VCSELs with wavelengths up to 1050nm are gaining popularity due to their ability to transmit large amounts of data across data centers and enterprise networks. The growing size of data centers has driven demand for higher-wavelength VCSELs for transmitting data over distances of more than 500m. This has boosted the adoption of 1050nm VCSELs for high-speed operation over multi-mode fiber.

Further, VCSEL manufacturers are aiming to develop innovative long-wavelength VCSELs to meet the high consumer demand. In 2020, ThorLabs announced that its 1060nm-wavelength VCSEL is being used in Atria Optical Coherence tomography, which includes scanning electronics, interferometer and control software. Considering these factors, the <1050nm VCSEL segment (which had a market share of 5.5% in 2020) is expected to record a compound annual growth rate (CAGR) of 11.5% through 2027.

By application, the heating & laser printing segment had 9% market share in 2020 and is projected grow at a CAGR of 20.6% through 2027 due to the increasing demand for VCSELs based on the benefits they offer. VCSEL can be used even without additional optics and they provide intense and highly directed infrared light, which has fueled adoption in industrial heating systems.

VCSELs also offer improved optical efficiency and a smaller footprint, and they are cost-effective, which is instigating their application in high-definition and high-speed printing. In addition, growing digitalization in the industrial sector, along with the emerging trend of digital image processing, is favoring the installation of VCSELs in offset printers, as they help in cleaning narrow lines and producing vivid images.

Based on industry vertical, the automotive segment will see a robust CAGR of 15% through 2027, it is forecasted, due to a significant rise in in-cabin sensing applications in vehicles, favoring the development of autonomous technology. Several prominent automotive OEMs are increasingly focusing on the incorporation of autonomous technology in upcoming vehicle models to gain a competitive advantage in the industry.

For example, in 2021 leading automobile manufacturer Honda announced a collaboration with the USA’s General Motors and its spinoff Cruise to accelerate its autonomous vehicle mobility business in Japan. Such strategic initiatives are positively influencing the VCSEL market space. As another example, ams AG has this year launched the TARA2000-AUT series of VCSELs, offering 3D time-of-flight (ToF) sensing in autonomous applications.

In terms of geographic region, the VCSEL market in Europe comprised 18% market share in 2020 and is expected to grow at a CAGR of about 19.5% through 2027, driven by the thriving semiconductor industry in the region and supported by government initiatives. As a result of the COVID-19 pandemic, the region’s supply chain was affected, which has motivated market players to reduce their dependency on Asian countries. This in turn increased investment activities in the region’s semiconductor industry, which is complementing VCSEL business across Europe.

As an example, in 2020 the European Union introduced a joint initiative to augment the processor and semiconductor ecosystem in the region. In addition, government has announced plans to invest $176bn over the next 2-3 years in R&D activities pertaining to semiconductor technology.

Key companies covered in the report include Alight Technologies ApS, ams AG. Broadcom, FLIR Systems Inc, II-VI Inc, Inneos LLC, Inphenix Inc, IQE plc, Leonardo Electronics US Inc, Lumentum Operations LLC, Ophir Optronics Solutions Ltd, OSRAM Opto Semiconductors GmbH, ROHM Co Ltd, SANTEC Corp, TRUMPF, TT Electronics, Ushio America Inc, VERTILAS GmbH, Vertilite, WIN Semiconductors.

Tags: VCSELs



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