VCSEL for Data Communication Market

Market Overview

The global VCSEL for data communication market size was valued at USD 156.5 million in 2021. It is projected to reach USD 525.23 million by 2030, growing at a CAGR of 14.40% during the forecast period (2022-2030).

A specialized laser diode called a vertical cavity surface emitting laser (VCSEL) has the potential to revolutionize fiber optic communications by boosting transmission speed and efficiency. At 850 and 1300 nanometers (nm), VCSELs emit energy. These wavelengths correspond to electromagnetic radiation from the spectrum's near-infrared (IR) region.

VCSELs are replacing edge-emitting lasers as the standard technology for local and short-range data communications networks because they are more dependable and have lower production costs. In particular, for situations where the bulk of the data carried across a network is quite extensive, data centers frequently use 850nm-emitting VCSELs. Demand for VCSEL technology is rising as large corporations regularly deploy data centers.

Market Dynamics

Global VCSEL for Data Communication Market Drivers

Rising Demand for VCSELs in Data Centers

A specialized laser diode called a vertical cavity surface emitting laser (VCSEL) has the potential to revolutionize fiber optic communications by boosting transmission speed and efficiency. At 850 and 1300 nanometers (nm), VCSELs emit energy. These wavelengths correspond to electromagnetic radiation from the spectrum's near-infrared (IR) region. VCSELs are replacing edge-emitting lasers as the standard technology for local and short-range data communications networks because they are more dependable and have lower production costs. Data centers typically use 850nm-emitting VCSELs, particularly in cases where the majority of the data transported via a network is relatively substantial. Demand for VCSEL technology is rising as large corporations regularly deploy data centers.

Leveraging Data Communications for Utility Operational Effectiveness

Data communications infrastructure has developed into a powerful strategic asset that may strengthen core competencies and open new market prospects for VCSEL technology. Expanding current telecommunications capabilities and the strategic development of data communication can assist power utilities in increasing reliability, lowering operating expenses, maximizing operating efficiencies, and creating new revenue sources. Data communications and telecommunications, when used effectively, allow utilities to deal with many of the significant issues of the day more successfully, including grid modernization, outage management, security, advanced metering, mapping and staking, mobile workforce management, and managing customer and vendor relationships. In addition, technical proficiency, cutting-edge VCSEL technology, and tried-and-true success tactics are needed for successful data communications initiatives. These aspects should encourage market expansion for VCSEL used in data communication.

Global VCSEL for Data Communication Market Restraint

Lack of Standardization between Equipment Manufacturer Companies

The market for VCSEL for data communication may not expand as quickly as it could due to a lack of uniformity across equipment maker businesses. Lack of standardization in terms of their design and use is one of the primary challenges faced by many electronic devices and pieces of equipment. There are now a sizable number of vendor-specific data communication protocols available on the market. Many of the existing databases experience incidents of a mismatch as a result of this. The communication industry uses a variety of communication protocols, and a few other companies offer communication modules that can support most of these protocols. As a result, depending on their needs, the various verticals may find it challenging to convert to different protocols.

Global VCSEL for Data Communication Market Opportunities

Surging Demand for Wireless Connectivity

The market for VCSEL for data communication is experiencing new development potential because of the sharp increase in demand for wireless technologies. Numerous companies are using the improvements in wireless communication technology, particularly cellular technologies, to track their assets globally. For many applications, these technologies make efficient and global communication possible. The wireless device makes it easier to record data from distant stations and field equipment that would otherwise be inaccessible for process and infrastructure applications.

Wireless networks are also popular among industries because they can be installed quickly and efficiently to support M2M communication even in harsh situations. These elements have helped the market for VCSEL for data communication expand, particularly in highly industrialized areas. Future VCSEL for data communication market growth is anticipated to be profitable because of these factors.

Regional Analysis

North America Dominates the Global Market

The global VCSEL for data communication market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.

North America is the largest shareholder in the global VCSEL for data communication market and is expected to grow at a CAGR of 12.8% during the forecast period. The main drivers of this market's profitable expansion in North America include VCSELs' lower cost, improvement of optoelectronic device performance, and wavelength range from 480 to 1300 nm. Due to the advent of new data transmission technologies and their predicted faster expansion during the projection period, there will be a noticeable increase in the use of VCSEL. II-VI introduced new high-speed vertical-cavity surface-emitting lasers (VCSELs) on its vertically integrated 150 mm gallium arsenide (GaAs) technology platform on January 30, 2020, to meet the growing demand for optical high-definition multimedia interface (optical HDMI) cables in consumer electronics.

Europe is expected to grow at a CAGR of 13.90%, generating USD 160.89 million during the forecast period. Due to the rising demand for VCSEL in data communications for short-distance connections in intra-data centers, Europe is predicted to see a high growth rate for the VCSEL market during the forecast period. It has never been done previously to connect cities using these infrared lasers for long wavelength and high capacity communications. The project VCSEL Pilot Line for Illumination, Datacom, and Power Applications has been completed, according to Philips Photonics, which is working on VCSEL technology solutions for data communications and other applications (VIDaP).

Asia-Pacific holds a sizeable part of the industry due to increased technological development and growth in the telecommunications industry in developing nations like Japan, China, and India. The VCSEL market is anticipated to experience a significant change in the upcoming year in Asia-Pacific due to rising per capita income and the region's affordability in the automotive industry. Due to their benefits of small size, low power consumption, excellent reliability, and affordable production, VCSELs are frequently used in many different applications.

LAMEA's market share in the global VCSEL market for data communication is considerably smaller. Technological advancements in the telecommunications industry are factors responsible for expanding the VCSEL market in LAMEA. The connectivity in Latin American nations has reportedly reached 56.1% of the entire population, with rates rising in countries like Chile, where the percentage is 71%, according to new research on IMS Mobile in LAMEA.

Segmental Analysis

The global VCSEL for data communication market is segmented by type and material.

Based on type, the global VCSEL for data communication market is bifurcated into single mode and multi-mode.

The multi-mode segment is the highest contributor to the market and is expected to grow at a CAGR of 14.7% during the forecast period. The multi-mode VCSEL is a high-performance and reliable device with low electrical parasitic for data rates up to 25 GB/s. This VCSEL operates in multiple transverse and single longitudinal modes and emits a circularly symmetric beam with low divergence, which can be efficiently coupled into 50/125 and 62.5/125 µm multi-mode fibers. These 850 nm VCSELs are used for short-reach multi-mode fiber applications such as 100 G SR4 optical modules, 25 G SFP28 modules, and active optical cables (AOCs) at 25 G and 100 G.

Most VCSELs that are commercially available operate at 850 nm and are built to strict requirements for super-fast data transmission. The market for VCSEL for data communication is anticipated to see development prospects because of the rising demand for higher data rates. Vertical-cavity surface-emitting lasers (VCSELs) and multi-mode optical fibers have played a significant role in this market's impressive rise over the past ten years.

Around 2000, single-mode VCSELs first became available, and they have since mainly been utilized in optical mouse and other optical guidance applications. Atomic clock manufacturing is further used for single-mode VCSELs. Using few-mode or single-mode VCSELs is a viable solution to the multi-mode VCSEL's encoding bandwidth limitation. According to estimates, the applications for next-generation data transfer would employ extremely high transmission bit rates. Hence it is crucial to reduce chromatic dispersion at 850 nm. This requirement can be met by single-mode VCSELs, extending the range of multi-mode fiber. As a result, single-mode VCSELs are currently being used in applications that include data transfer rather than them.

Based on material, the global VCSEL for data communication market is bifurcated into gallium nitride, gallium arsenide, indium phosphide, and others.

The gallium arsenide is the highest contributor and is anticipated to grow at a CAGR of 13.6% over the projected period. In single-crystalline thin film solar cells and multi-junction solar cells, gallium arsenide (GaAs) is a crucial semiconductor material for high-priced, high-efficiency solar cells. Light-emitting diodes (LEDs), which are utilized in optical communications and control systems, are created using gallium arsenide. Due to their primary benefit, speed, gallium arsenide has seen a rise in demand compared to other materials. Gallium arsenide conducts electrons roughly five times more quickly than silicon. Before being doped with any impurities to create circuit elements, gallium arsenide also has a high impedance to electrical current. These variables are anticipated to generate expansion chances for VCSEL in the data communication market during the anticipated period.

Due to its capacity to fabricate more compact devices for a given resistance value and breakdown voltage compared to silicon devices, gallium nitride (GaN) has emerged as a higher-performing alternative to silicon-based transistors. Vertical-cavity surface-emitting lasers (VCSELs) based on GaN are getting much more attention these days. VCSELs' arraying capability, low threshold current, and high-frequency operation enable GaN-VCSEL applications in optical storage, displays, laser printers, optical communications, projectors, solid-state lighting, and biosensors.

Recent Developments

• August 2022 - The world leader in VCSEL and photodiode solutions, TRUMPF Photonic Components, introduced a brand-new, cutting-edge product platform for its single-mode VCSEL products for commercial and industrial uses. Due to their use in quality and safety monitoring systems, Industrial applications using VCSELs for optical sensing or laboratory test and measurement equipment must be effective and extremely accurate. With the help of the brand-new, cutting-edge VCSEL platform, these needs are met.
• September 2022 - TRUMPF will demonstrate the new Eco Cooler, a green cooling option for laser-cutting equipment, at this year's EuroBLECH trade event. Fluorinated gases, usually referred to as F-gases, are the coolant used in conventional cooling systems. This has several drawbacks, including the energy-intensive cooling procedure and the environmental impact of disposing of these F-gases. In contrast, the Eco Cooler from TRUMPF employs pure water as a coolant. As a result, it eliminates hazardous chemicals and uses up to 80% less energy for refrigeration.