Datacom to overtake mobile as driver of VCSEL market
The market for vertical cavity surface emitting lasers (VCSELs) is set to be worth $1.6 billion in 2022 and then grow strongly at average annual growth rate of nearly 20 percent, according to Yole Group.
VCSEL revenues for datacom are expected to be $782 million in 2022 and rise to reach $2.1 billion in 2027, a CAGR of 22.2 percent. VCSEL revenue for mobile and consumer is the largest share in 2022 at $840 million but will grow more slowly at CAGR of 15.7 percent to reach a market size of $1.9 billion.
VCSEL market forecast 2022 to 2027. Source: Yole Group.
The VCSEL market is now a duopoly dominated by Lumentum and II-VI with 80 percent combined share.
In 2017 Lumentum was the only supplier qualified by Apple. Other players were involved with other smartphone makers or supplying tiny VCSELs for proximity sensors. Then, Coherent (formerly II-VI) acquired Finisar. These two players, Lumentum and II-VI, are still the only players qualified by Apple for 3D sensing. At the same time, the leaders also acquired other companies, such as Oclaro and Coherent, amongst several others. This reinforced their positions in the optical communication market, vertically integrating from the VCSEL device to the entire transceiver module.
Two major changes are expected in the coming years. In May 2022, IQE demonstrated its first 200mm-diameter wafers based on germanium instead of GaAs. These new wafers may not be needed to answer a sudden rise in VCSEL demand but to make possible the integration of photonics devices with CMOS technology. It also gives a potential roadmap toward 300mm wafer manufacturing in the long term. The second major change expected is a shift in wavelength from 940 to 1,380nm using dilute nitride active layers. This shift is needed to enable the integration of VCSELs behind OLED displays, which are transparent at this wavelength.
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