Photonics-Electronics Convergence Technology Market to Cross USD 104.26 Billion by 2032 as Data, AI, and Defense Systems Hit the Limits of Conventional Electronics
AUSTIN, Texas and TOKYO, Feb. 4, 2026 /PRNewswire/ -- 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.
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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 & 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 & defense accounts for approximately 15%, or USD 3.23 billion, leveraging photonic-electronic systems for radar, electronic warfare, secure communications, and sensing.
Automotive & 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 & telecom will remain the dominant end-user, while defense and automotive will deliver outsized growth rates.
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Regional Analysis
United States
The United States holds the largest share of the global photonics-electronics convergence technology market, accounting for approximately 39% of total revenue, or USD 8.40 billion in 2024.
This leadership is driven by:
- Hyperscale data center concentration
- Advanced semiconductor R&D ecosystems
- Strong defense and aerospace spending
- Early adoption of AI-centric architectures
By 2032, the U.S. market alone is expected to exceed USD 40 billion, maintaining global dominance.
Asia-Pacific
Japan
Silicon Photonics:
In the silicon photonics market - which is a core technology enabling photonics-electronics convergence - Japan accounted for about 5.5% of global revenue in 2024.
- Japan's silicon photonics segment growing strongly
Independent market outlooks indicate Japan's silicon photonics market is expanding rapidly, projected to grow at a high CAGR through the next decade as demand for low-latency, high-bandwidth communication (e.g., 5G/6G, AI, data centers, HPC) rises. - Photonics-electronics convergence contributes to energy-efficient systems
Convergence devices (e.g., optical interconnects co-packaged with electronics) are increasingly recognized in R&D and industry reports for enabling significant power reductions and higher speed communications - essential drivers for next-generation computing and telecom infrastructure.
Competitive Landscape
The market is shaped by semiconductor leaders, networking giants, and photonics specialists with deep R&D investment.
Intel Corporation remains a central force in silicon photonics, integrating optical interconnects into data center and AI architectures. Intel invests tens of billions of dollars annually in R&D, with photonics forming a strategic pillar of its data-centric roadmap.
NVIDIA Corporation is accelerating photonic-electronic convergence to address AI interconnect bottlenecks, aligning optical technologies with its high-performance computing platforms.
STMicroelectronics leverages compound semiconductors and integrated photonics across industrial, automotive, and defense applications.
Cisco Systems and Ciena Corporation are advancing optical interconnects and coherent photonics to support next-generation networks.
Marvell Technology focuses on high-speed interconnects and custom silicon, increasingly integrating photonics for data infrastructure.
Ayar Labs is emerging as a key innovator, developing optical I/O solutions designed specifically for AI and HPC systems.
IPG Photonics, NTT, and TDK Corporation further strengthen the ecosystem across materials, devices, and network integration.
Collaboration & Global Showcases
- NTT group to exhibit at global event (MWC Barcelona 2026)
The NTT Group (NTT, DOCOMO, and NTT DATA) confirmed it will showcase advanced tech at Mobile World Congress Barcelona 2026, signaling global outreach for converged photonic/electronic solutions and partnerships. - Cross-regional collaboration to enhance distributed data centers
Earlier partnership activities involving NTT, Chunghwa Telecom, and Edgecore/Accton aim to enhance distributed data center architecture using photonics-enriched networks - demonstrating convergence tech beyond Japan's borders with application in distributed cloud systems.
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What will Define the Market by 2031–2032
By 2031, the photonics-electronics convergence technology market is expected to exceed USD 90 billion, driven by:
- AI and high-performance computing scale-out
- Replacement of electrical interconnects in data centers
- Expansion of photonics in defense and sensing systems
- Maturation of silicon photonics manufacturing
According to DataM Intelligence analysis:
- PICs will remain the largest component segment
- Silicon photonics will dominate material adoption
- IT & telecom will anchor demand
- The U.S. will retain the largest regional share
By 2032, photonics-electronics convergence will be recognized as foundational infrastructure for the digital economy, not a peripheral technology.
Executive Takeaway
For technology leaders and system architects, photonics-electronics convergence is no longer optional-it is the enabling technology for the next decade of computing and communications.
Organizations that win will be those that:
- Architect systems around optical data movement
- Integrate photonics early into AI and networking roadmaps
- Invest in scalable manufacturing and ecosystem partnerships
- Align photonics strategy with long-term energy and performance goals
Related Report:
- Photonics Market to Surge from USD 642.58 Billion in 2024 to USD 1,292.43 Billion by 2032 at an 8.7% CAGR - DataM Intelligence.
- Silicon Photonics Market to Grow from USD 3.68 Billion in 2024 to USD 12.57 Billion by 2032 at a 16.2% CAGR - DataM Intelligence.
- Japan Electronics Market to Grow from USD 116.15 Billion in 2024 to USD 162.66 Billion by 2032 at a 4.3% CAGR - DataM Intelligence.
- Japan Electrical Digital Twin Market to Grow from USD 238 Million in 2024 to USD 872 Million by 2032 at a 17.8% CAGR - DataM Intelligence.
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SOURCE DataM Intelligence 4 Market Research LLP
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