Photonic integrated circuits (PICs) are the monolithic integration of two or more integrated optical circuits (IOCs) on a single substrate. They are the photonic equivalent of microelectronic chips, which integrate two or more transistors on a chip to form an electronic integrated circuit (IC). However, instead of guiding electricity, a photonic integrated circuit routes lightwaves. In PICs, waveguides (usually made of silica or polymers) act as the photonic analog of copper circuits, serving as interconnects among various discrete components on a chip. The market for these devices has reached a critical commercial threshold. Since the introduction of PICs in 1997, the optical component industry has slowly been migrating from the manual assembly of discrete optical devices to automated, semiconductor wafer-processing techniques and single-chip solutions.
According to a soon-to-be-released study from Business Communications Company, Inc, RGB-256: Photonic Integrated Circuits: New Directions, the market for photonic integrated circuit (PIC) subsystems and components is currently estimated at $4.3 billion. It is expected to grow at an AAGR (average annual rate) of 20.5% to reach almost $11 billion by 2006.
Separately, the market for discrete devices or integrated optical circuits will grow at an AAGR of 18.5% to $9.5 billion, growth held back somewhat by an established optoelectronics market. These products, comprising 88% of overall PIC subsystem and component sales in 2001, include laser diodes (pump and source) and photodiodes growing at a combined AAGR of 18%. Although sales in this segment more than doubled in the five years prior to this reporting period, negative growth in 2001 and a slowdown in telecommunications spending will result in healthy but more modest growth.
The market for subsystems or photonic integrated circuits will grow at a much higher AAGR of 42.2% to $1.5 billion. Put another way, optical systems-on-a-chip (SoC) will grow from 4.7% to 11.4% of the overall market for PIC subsystems and components, or 6.4% of the estimated $20.2 billion worldwide optical component market by 2006.
The preponderance of growth for photonic chips will take place in 2003 and beyond. At that time, simultaneous upgrades to both network architecture and bandwidth -- specifically, the all-optical and 40-Gbps networks -- will establish sizeable end markets for advanced optical components. Both are conspiring to eliminate the optical-electronic-optical (OEO) bottleneck, a necessary step to enabling the dynamic routing of photons at higher speeds. The wide-scale commercialization of photonic switches and subsystems, optical add-drop multiplexers, and optical crossconnects will help accomplish this. These next-generation devices, from PLCs to MEMS, are predominantly based on chip architectures.
