Photonics-electronics convergence technology market to cross USD 104.26 bn by 2032

According to DataM Intelligence, the photonics-electronics convergence technology market reached USD 18,033.07 million in 2023, rose to USD 21,535.09 million in 2024, and is projected to surge to USD 104,265.62 million by 2032, expanding at a strong CAGR of 22.1% during the forecast period 2025-2032.

This acceleration signals a fundamental architectural shift across computing, communications, and sensing systems. As artificial intelligence workloads, hyperscale data centers, 5G/6G networks, and advanced defense platforms push bandwidth, latency, and energy efficiency requirements beyond what electronics alone can support, photonics-electronics convergence is becoming the only viable path forward.

By 2030, converged photonic-electronic architectures will no longer be limited to niche applications. They will form the core technology backbone for next-generation computing, telecom infrastructure, autonomous systems, and military platforms.

Why photonics-electronics convergence has become mission-critical?
The rapid expansion of this market is not incremental, it is structural!

Movement, not computation, is now the primary bottleneck. AI model training, real-time inference, and cloud-native applications require massive data transfer across chips, boards, racks, and data centers. Electronic interconnects are reaching physical and thermal limits, while photonics enables ultra-high-bandwidth, low-latency data transfer with dramatically lower power consumption.

Efficiency has become a strategic constraint. Data centers, telecom networks, and defense systems are under pressure to reduce energy per bit. Photonic interconnects can reduce power consumption by up to an order of magnitude compared to traditional copper-based solutions, making convergence economically and environmentally unavoidable.

System complexity is increasing across industries. From autonomous vehicles to radar, LiDAR, medical imaging, and satellite communications, converged systems allow higher integration density, improved signal integrity, and real-time performance that electronics alone cannot achieve.

Together, these forces are pushing photonics-electronics convergence from R&D labs into mainstream commercial deployment.

Segmentation analysis

By component
Photonics integrated circuits (PICs) represent the largest component segment, accounting for approximately 38% of total market value in 2024, equivalent to around USD 8.18 billion.

PICs enable multiple photonic functions-lasers, modulators, detectors, and waveguides-on a single chip, dramatically improving performance and reducing footprint in data centers and telecom systems.

Optical interconnects follow closely, contributing approximately 26%, or USD 5.60 billion. This segment is expanding rapidly as hyperscale operators replace electrical interconnects to meet AI-driven bandwidth requirements.

Transceivers account for around 21%, or USD 4.52 billion, driven by deployment in high-speed networking, 400G/800G Ethernet, and emerging 1.6T architectures.

According to DataM Intelligence analysis, PICs and optical interconnects will remain the dominant value drivers through 2032.

By material
Silicon photonics is the leading material platform, accounting for approximately 44% of market value, or USD 9.48 billion in 2024. Its dominance stems from compatibility with CMOS manufacturing, scalability, and cost efficiency-making it the preferred choice for data centers and telecom infrastructure.

Indium Phosphide (InP) represents around 23%, or USD 4.95 billion, favored for high-performance lasers and active photonic components where efficiency and wavelength flexibility are critical. Gallium Arsenide (GaAs) accounts for approximately 14%, or USD 3.01 billion, particularly in RF-photonics and defense applications.

From a strategic standpoint, silicon photonics will anchor volume growth, while compound semiconductors will dominate specialized high-performance applications.

By end-user
IT and telecom is the largest end-user segment, accounting for approximately 41% of global market value, or USD 8.83 billion in 2024. This includes hyperscale data centers, optical networking, 5G/6G backhaul, and AI compute infrastructure.

Consumer electronics represents around 17%, or USD 3.66 billion, driven by AR/VR devices, advanced imaging, and high-speed connectivity.

Military and defense accounts for approximately 15%, or USD 3.23 billion, leveraging photonic-electronic systems for radar, electronic warfare, secure communications, and sensing.

Automotive and mobility contributes around 13%, or USD 2.80 billion, supported by LiDAR, autonomous driving systems, and in-vehicle optical networks.

According to DataM Intelligence analysis, IT and telecom will remain the dominant end-user, while defense and automotive will deliver outsized growth rates.