The global vertical cavity surface emitting laser (VCSEL) market size was valued at USD 1345 million in 2021. It is predicted to reach an estimated value of USD 6244 million by 2030, registering a CAGR of 18.6% during the forecast period (2022-2030). The use of structured light and time-of-flight (ToF) technologies in many current and upcoming 3D sensor systems depends heavily on vertical cavity surface emitting lasers (VCSELs). Applications span from light detection and ranging (LiDAR) and in-cabin sensing for autonomous driving vehicles to 3D facial identification (front-facing) systems and world-facing smartphone cameras. Although the earliest industrial use of VCSEL technology was in data transmission, 3D sensing modules are now a crucial part of most high-end smartphones. VCSELs are increasingly the manufacturer's first choice.
VCSELs are expected to grow into a booming market for producers of optical chips. Along with its current portfolio of LED semiconductors, Osram, the second-largest lighting business in the world, is also developing a strong VCSEL portfolio.
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Increasing Adoption of VCSEL in Data Centers
Over the past few years, optical interconnect infrastructures in the data centers have advanced to the next-generation 400 Gbit/s data rate from 100 Gbit/s. The ever-increasing data traffic primarily drives this in data centers due to the rapid market growth of emerging technologies, like AI, VR/AR, and the Internet of Things (IoT), and the introduction of 5G mobile network systems.
Further, data rates of single transceivers are pushing beyond 100 Gbps using line rates of 25 Gbps with the help of both wavelength and spatial division multiplexing. The next step is to achieve more than 400 Gbps transceiver data rates and push line rates in excess of 50 Gbps. In such a regard, both PAM4 and NRZ modulation formats are being used due to the advancements in VCSELs and photodiodes for 50 Gbps/channel data links. PAM-4 modulation format is a multi-level modulation type capable of doubling the number of bits in data transmission. Hence, modulating VCSELs with PAM-4 is considered an optimal option, thereby driving market growth.
Data centers have been widely using 850 nm-emitting VCSELs, specifically for applications wherein enormous amounts of data need to be transmitted over a network. Hence, the increasing adoption of data centers worldwide is anticipated to create higher demand for the deployment of VCSEL technology. Within data center applications, the rising need for high data transfer rates that allow high-speed transmission for processing and retrieving results is expected to drive high demand for the VCSEL market.
Growing Demand for 3D Sensing Applications in Smartphones
Due to the growing use of 3D sensing in smartphones and surveillance systems, this technology is anticipated to be highly prominent. The technology's demand is driven by its expanded capabilities and improved accuracy, as well as by the growing adoption of the technology for access control and authentication.
Face ID was a major factor in the development of 3D sensing after it was included in iPhones. Since then, 3D sensing has undergone tremendous advancements. 3D sensing gradually moved from front-side face ID modules to the rear for photographic applications. Over time, there have been a lot more cell phones that use 3D sensing modules. The effect of AR applications has also increased the demand for 3D sensing modules that can handle the futuristic uses of smartphones and still provide high-quality images. Hence, the increasing adoption of VCSELs in smartphones, by smartphone manufacturers, for 3D sensing or proximity sensing applications is one of the primary factors driving the market growth.
Low Penetration of INP-Based VCSELS and Restricted Data Transmission Range
InP-based VCSELs are typically preferred for applications, such as optical communication, due to their low dispersion and low fiber loss. However, InP-based VSCELs cannot provide large Δn DBR mirrors, owing to the high reflectivity and low penetration depth. The effective cavity length limits the tuning range and the confinement factor.
Besides, limited data-transmission range and scalability issues are a few issues that are hampering the VCSEL market's growth. The speed of data transmission is drastically reduced if there is an increase in the distance between locations. Only short-range applications, like optical data communication, LAN, intra-system linkages, and ethernet, are thought to benefit from using VCSEL, which can only carry data over 100 meters. Therefore, it prevents the transfer of data across vast distances. Additionally, the restricted optical power in these devices prevents sensors from sending data over great distances. Such factors will probably limit market expansion during the anticipated timeframe.
Growing Adoption of Advanced Sensors
The growing adoption of advanced sensors across many applications, especially optical, also boosts the studied market growth. Dense traffic and high-speed transmission are critical requirements for advanced sensor applications in data communications or automotive applications, which are enabled by compact and high-speed VCSELs. Hence, such applications provide lucrative opportunities for market growth.
The global vertical cavity surface emitting laser (VCSEL) market is segmented by wavelength, die size, end-user industry, application, and region.
By wavelength, the global vertical cavity surface emitting laser (VCSEL) market is segmented into near-infrared (750-1400 nm), red (650-750 nm), and shortwave-infrared (1400-3000 nm). The near-infrared (750-1400 nm) segment accounted for the largest market share and is estimated to grow at a CAGR of 18.5% during the projected period. Near-Infrared VCSELs considered in the study have applications such as Data communications, 3D Sensing, Gesture Recognition, Laser Autofocus, Proximity sensing, Iris Scan, Depth Camera, ADAS, LiDAR, Driver Monitoring, Infotainment Control, Air Quality Monitoring, and Defense Surveillance cameras. Most VCSELs operate at 850 nm and constitute the most significant volume, with millions of diodes produced/month. The primary applications for these devices are short-range optical data links (multi-mode optical fiber in data centers and computer clusters) (up to 300m), high-speed, high-capacity, and remotes, security cameras, fiber telecom—such applications fuel segment growth.
By die-size, the global vertical cavity surface emitting laser (VCSEL) market is segmented into 0.06 - 0.4 mm2, 0.02 - 0.06 mm2, 0.4 - 1.3 mm2, and 10 - 75 mm2. The 0.02 - 0.06 mm2 segment accounted for the largest market share and is estimated to grow at a CAGR of 15.7% during the forecast period. The 0.02-0.06 mm2 dies come in single-mode and multi-mode options and have power ranging from 3 to 40 mW. Vicar, a manufacturer of VCSEL, dies, offers single-mode to multi-mode low-power die with maximum peak power ranging from 0.2 mW to 10 mW. Depending upon the peak power offered, these dies differ in applications. The dies of 0.02-0.06 mm2 are easily manufactured due to their small sizes, a smaller number of cavities, and power output—such benefits fuel market growth.
By end-user industry, the global vertical cavity surface emitting laser (VCSEL) market is segmented into telecom, mobile and consumer, automotive, medical, industrial, and aerospace and defense. The mobile and consumer segment accounted for the largest market share and is estimated to register a CAGR of 20.2% during the projected period. The rise in smartphone usage and data communication applications is the primary factor impacting the VCSEL market. The growth in markets such as data centers, cloud computing, and edge computing, and the increase in the number of smartphones and IoT device subscribers are forcing the telecom sector to invest in high-end optical and photic devices, which is also expanding the scope of the studied market.
By application, the global vertical cavity surface emitting laser (VCSEL) market is segmented into datacom, optical mouse, gesture recognition, facial recognition and depth camera, laser autofocus, proximity sensing, iris scan, medical, ADAS LiDAR, industrial applications, and other applications. The proximity sensing segment accounted for the largest market share and is estimated to grow at a CAGR of 17.3% during the forecast period. Just like laser autofocus, the usage of proximity sensing has increased in smartphones for object detection, positioning, and counting. Apart from consumer electronics, proximity sensors are used for industrial conveyor systems and collision detection robots.
By region, the global vertical cavity surface emitting laser (VCSEL) market is segmented into Asia-Pacific, Europe, and North America.
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Asia-Pacific dominated the market and is estimated to grow at a CAGR of 20.2% during the forecast period. China exhibited a robust growth rate among the Asia-Pacific countries, owing to the growing economy and the worldwide electronics market share. China is one of the strong electronics producers and consumers. The manufacturing industry is rapidly growing in the region and is witnessing the continuing deployment of various manufacturing and telecommunications technologies, which is expected to aid in the market's growth. The consumption of semiconductors is rapidly increasing in China compared to other countries, owing to the continuing transfer of global, diverse electronic equipment to China. The product is a necessary component. The country is home to prominent smartphone companies globally, posing tremendous semiconductor adoption opportunities. To track and control its 1.4 billion population, the Chinese government is also attempting to establish a techno-authoritarian state supported by sensors and artificial intelligence. As these programs grow, the demand for the studied market in the country will likely increase. Additionally, the Chinese government's initiative of Made in China 2025 aims to make its semiconductor industry output reach USD 305 billion by 2030 and meet 80% of domestic demand. Such instances are likely to boost the market growth in the country.
North America is the second largest region. It is estimated to reach a predicted value of USD 990 million by 2030, registering a CAGR of 18.%. North America is an early adopter of new technology in manufacturing, design, and research in the semiconductor industry. The region's prominence drives the demand for exporting electronics equipment with growing end-user industries that are significant consumers of semiconductors, such as consumer electronics, the automotive industry, etc. In addition, the North American region is home to many VCSEL producers, supporting the market's overall expansion. Major producers include II-VI Inc., Lasertel, and Lumentum, among others. The datacom VCSELs would also aid in pushing television and computer displays toward more excellent resolution, larger sizes, and thinner profiles to meet the demand for optical high-definition multimedia interface (HDMI) cables in consumer electronics. High-speed data lines that link screens to far-off driver electronics are made possible by the technology. Participants make market investments as a result.
Europe is the third largest region. The European region is home to some of the most crucial tech hubs globally and a significant driver and adopter of modern technology. The growing penetration of advanced technologies and the increasing adoption of semiconductors in various industries drive the VCSEL market's growth. VCSELs are vital components driving and enabling the advancement of numerous fast-growing digital technology markets. Thus, increasing the involvement of the regional government to promote the technology and the prominent players further augments the market growth. Moreover, the rising usage of electrical systems in automobiles is another factor aiding the growth of VCSEL. The technology is expected to be utilized in the automotive sector for applications such as gesture recognition, driver monitoring, or autonomous driving sensors. The automotive sector is growing at a steady rate in the region. The region is witnessing an increase in demand for customized semiconductors and sensors. Thus, VCSEL technology is expected to play a significant role in the region.