Vcsel Market By Type (Singlemode, Multimode), By Application (Data Communication, Industrial Heating, Infrared Illumination, Pumping And Sensing), End-User (Data Centers, Consumer Electronics, Others), By Region And Companies - Industry Segment Outlook, Market Assessment, Competition Scenario, Trends, And Forecast 2023-2032

Report Overview

VCSEL Market size is expected to be worth around USD 9.9 Bn by 2032 from USD 2.2 Bn in 2022, growing at a CAGR of 16.6% during the forecast period from 2023 to 2032.

Considering the world of optical technology, it is evident that the VCSEL market is booming. In this dynamic field, VCSELs, or vertical cavity surface emitting lasers, are having a significant impact on a broad range of industries.VCSELs are a type of laser that stands upright on a surface, as opposed to lying flat. These minuscule but extraordinarily potent devices have a beam diameter of just a few micrometres and offer unparalleled efficacy in converting electrical energy into light energy. In addition, VCSELs are highly tunable, meaning they can be altered to emit light at a variety of wavelengths, making them ideal for a vast array of applications.

VCSELs have been around for several decades, but it's only recently that the technology has begun to acquire traction in the broader market. There are numerous reasons for this, but the relatively modest cost of VCSEL technology is a significant advantage. Due to the fact that VCSELs can be mass-produced using standard semiconductor fabrication techniques, the unit cost is remarkably low. In addition, VCSELs are extremely dependable and have a long longevity, which makes them an extremely attractive option for any company seeking to incorporate them into its products.

VCSELs have a wide range of applications, and the market is only expected to grow in the future years. The use of VCSELs in 3D sensing systems, which have already found a home in everything from facial recognition technology to autonomous vehicles, is one of the most thrilling developments we've witnessed. Elsewhere, VCSELs are increasingly utilised in data centre communications, thereby enhancing the pace and efficacy of data transfers globally. In addition, VCSELs are beginning to appear in medical applications, including endoscopy devices and photodynamic therapy.

As more and more businesses recognise the true potential of VCSEL technology, substantial investments are saturating the market. This is exemplified by Apple, which has made significant advancements in incorporating VCSELs into its innovative iPhone facial recognition system. In addition to Lumentum, Finisar, and II-VI Incorporated, there are a plethora of other essential players involved in this exciting field. All of these businesses intend to integrate VCSELs into a vast multitude of products and services, from data centre equipment to cutting-edge automotive sensors.

There are several significant factors at play here. First, there is the increasing demand for 3D sensing systems, especially in the constantly evolving consumer electronics industry. The need for increasingly efficient data centre communications is where VCSELs can truly make a difference. Lastly, VCSELs are increasingly being utilised in the emerging field of LiDAR, which will play a crucial role in the development of autonomous vehicles. Undoubtedly, it is a thrilling time to be involved with VCSELs.

Driving factors

3D Sensing Demand Is High

3D sensing technology demand is a major market driver. This industry has grown because VCSELs enable 3D sensing technology in applications including facial identification, gesture recognition, and augmented reality. As VCSELs are increasingly used in consumer electronics, market demand for these devices is expected to soar.

Fast Data Transfer

VCSELs are suited for high-speed data transmission, which is driving market expansion. VCSEL manufacturing processes have improved production efficiency and reduced costs, which has helped this market flourish.

Health Monitor Demand

VCSEL-based health monitoring devices for glucose and pulse oximetry sensing are in high demand. Due to their real-time vital sign monitoring and early disease detection, these devices have become very popular in the healthcare industry.

Market Restraints and Regulation

Despite promising growth, regulatory changes may affect the VCSEL business. Export rules could restrict VCSEL exports to certain nations, limiting the market.

VCSEL Technology Disruptions

New VCSELs technology will change the market and competitive landscape. Gallium nitride (GaN) VCSELs with improved performance could change market dynamics.

Restraining Factors

Raw Material Scarcity

Small-scale VCSEL manufacturers face a constant lack of raw materials and rising prices due to increasing demand. Thus, small manufacturers struggle to compete with large companies that have supplier relationships and monopolise the market.

Small-scale businesses must explore alternate raw material sources, such as local suppliers and overseas markets, to maintain a steady supply at a fair cost. To meet market expectations, this strategy involves a shift towards unusual solutions.

Expensive Start-up

Small-scale VCSEL manufacturers must invest much to launch and operate a manufacturing unit. Infrastructure, equipment, and human resources require significant funding.

Small-scale producers should partner with existing enterprises or investors for financial support to overcome this obstacle. Starting small and ramping up operations helps save startup costs and ensure long-term sustainability.

Competitive Existing Players

Small-scale manufacturers struggle to enter the VCSEL market since established firms dominate the industry. Smaller producers have disadvantages due to economies of scale, brand awareness, and client relationships.

Small-scale producers must focus on specialised markets ignored by established competitors to overcome this obstacle. Differentiating products by features, quality, or pricing can help establish a niche and generate a devoted consumer base.

Government rules

Small-scale VCSEL manufacturers must follow strict government requirements to ensure product safety and consumer trust. Small manufacturers may find rules difficult and expensive to execute.

Small manufacturers require regulatory specialists to help them comply. Manufacturers can also stay competitive by investing in regulatory compliance technology.

Product Reliability/Performance Concerns

Small-scale manufacturers may lack the resources and knowledge to match customer requirements for VCSEL reliability and performance. Failure to achieve these expectations can affect brand reputation and consumer happiness.

Small-scale firms must spend in quality control and testing to meet quality standards and perform properly. Product development and testing professionals can help meet customer expectations, establishing trust and loyalty.

By Type Analysis

The multimode segment dominates the VCSEL market due to its high-speed data transfer capabilities, lower power consumption, and cost-effectiveness. The former wins due to its high data transfer speeds, low power consumption, and low cost. VCSELs are increasingly used in automotive, aerospace, and medical systems, so it's important to monitor their modes.

Emerging economies' economic transformation has had a major impact on multi-mode VCSEL usage. China, India, Brazil, and Indonesia are improving their infrastructure and communication networks, which requires high-speed data transfer technology like VCSELs.

As technology evolves, consumers' appetite for high-speed data transfer technologies grows, with multi-mode VCSELs being a consumer favourite. Consumers like its high sensitivity, large bandwidth, and low cost.

Automotive, aerospace, and medical device industries are rapidly adopting multi-mode VCSELs, which will drive market expansion. The multi-mode segment's high-speed data transfer attracts consumers, solidifying its VCSEL market position.

By Application Analysis

Data transmission dominates the VCSEL market because to its rising use in data centres, telecom, and enterprise networks. High-speed data transfer technologies are in high demand, making VCSELs the best choice for data communication applications.

Data transmission is entering the VCSEL industry thanks to booming economies. India, China, and Brazil's communication infrastructure is about to explode, driving demand for high-speed data transfer technologies like VCSELs.

Due to their ability to enable high-speed data transfer, massive bandwidth capacity, and cost-effectiveness, consumers with a predilection for speed have developed an insatiable demand for data communication applications.

With its eyes on the future, the data communication sector is set to grow rapidly. Telecom, data centres, and enterprise networks are impressed with data communication and using it more. Data transmission has flourished in the VCSEL industry due to the insatiable demand for high-speed data transport technology.

By End-User Analysis

Data centres dominate the VCSEL industry due to its widespread use in cloud computing, high-performance computing, and storage. VCSELs are being used in data centres for high-bandwidth, low-latency data transport, processing, and storage applications.

Emerging economies' economic growth is also driving data centre use in the VCSEL industry. Notably, emerging economies like China and India are on the cusp of a technological revolution, which has led to a focused approach to building their cloud computing infrastructure, boosting demand for high-speed data transfer technologies like VCSELs.

Due to cloud computing, huge data, and connectivity, data centres are now crucial. End-users like data centres for their high bandwidth, low latency, and scalability. VCSELs' high-speed data transport and low power consumption have made them suitable for data centres.

Due to rising demand for high-bandwidth, low-latency data transfer technologies, the data centres segment of the VCSEL market is expected to rise rapidly. Cloud computing, big data, and connectivity will boost data centre demand, which will boost the VCSEL data centre segment.

By Type

• Singlemode
• Multimode

By Application

• Data Communication
• Industrial Heating
• Infrared Illumination
• Pumping And Sensing

End-User

• Data Centers
• Consumer Electronics
• Automotive
• Industrial
• Healthcare
• Others

Growth Opportunity

Increasing demands for VCSELs

As industries become aware of the limitless potential of VCSELs, demand for this cutting-edge technology increases. VCSELs are being incorporated into devices such as facial recognition, 3D sensing cameras, and augmented reality devices by the consumer electronics industry. The automotive industry has discovered VCSELs to be a valuable asset for advanced driver assistance systems (ADAS), LiDAR systems, and interior and exterior illumination applications. VCSELs have also been adopted by the medical industry for surgical and dental apparatus, while the aerospace and defence industries use them for aerospace communication systems, missile guidance systems, and infrared countermeasure systems.

Opportunities for growth and expansion

In the form of the anticipated 3D sensing market, VCSELs have unlocked numerous opportunities for growth and expansion. It is believed that VCSELs are the primary technology propelling this market. The automotive industry is also catching up to the VCSEL trend, with the LiDAR market expected to expand at a phenomenal CAGR. Moreover, the need for high-speed data transmission in cloud computing and data centres is driving the expansion of VCSEL-based transceivers.

Market trends and opportunities for VCSELs

Increasing demand for VCSELs in 3D sensing technology is propelling the expansion of the market. There are countless applications for this technology, including gesture recognition, augmented reality, facial recognition, and depth sensing. Integration of VCSELs into ADAS, LiDAR, and interior and exterior illumination applications is also on the rise in the automotive industry. In the healthcare industry, VCSELs are used in surgical and dental apparatus, as well as medical sensing applications such as pulse oximeters.

Future growth potential of the VCSEL market

Increasing adoption of 3D sensing technology in smartphones, tablets, and laptops is anticipated to drive the growth of the VCSEL market. The anticipated expansion of the AR market is anticipated to increase the demand for VCSELs. With the implementation of ADAS and LiDAR systems in autonomous vehicles, the automotive industry is a major growth driver. In addition, the transition to electric vehicles is anticipated to present new lighting application opportunities for VCSELs. The expansion of the market for data centres is another factor fueling the expansion of the VCSEL market. The adoption of VCSEL-based transceivers is a consequence of the growing demand for higher data rates and quicker data links.

Latest Trends

Increasing Augmented Reality Adoption in the Automotive Industry

The exponential development of augmented reality (AR) technology in the automotive industry has revolutionised the driving experience by providing drivers with a vast amount of information and situational awareness. The integration of Vertical-Cavity Surface-Emitting Lasers (VCSELs) has been a game-changer for augmented reality (AR) systems due to their exceptional high performance, low power consumption, and high-speed communication capabilities. VCSELs have enabled augmented reality applications to provide drivers with driving assistance, navigation, and heightened environmental awareness.

Increase in Facial Recognition Technology's Popularity

Diverse sectors, such as security systems and consumer electronics, such as laptops, smartphones, and tablets, have witnessed a surge in the popularity of facial recognition technology. VCSELs have emerged as a crucial component for facial recognition technology, as they offer high precision and dependability. Their use as a light source in facial recognition systems provides an exceptional spectrum of directional, powerful, and uniform illumination, thereby facilitating the process of recognising individual faces.

Demand for VCSELs in Industrial Automation is Growing

Industrial automation applications have been revolutionised by VCSEL technology, which has contributed significantly to the growth of this industry. Utilising VCSELs in factory automation and quality control systems has helped streamline the manufacturing process by accelerating production and decreasing manufacturing costs. Industrial automation applications favour VCSELs because of their high output power, narrow beam angle, and low heat output.

Technological Advances in VCSEL Wavelength Tuning

Numerous industries, including communications, medical technologies, automotive, and consumer electronics, have benefited from the advancements in VCSEL wavelength tuning technology. This technology provides sophisticated capabilities that enable wavelength tuning for a variety of applications, such as spectroscopy, lidar sensing, and optical communications. In automotive lidar applications, where VCSELs can improve the efficacy of autonomous vehicles, it is anticipated that this technology will bring about a paradigm shift.

Increase in Autonomous Vehicles' Adoption of VCSEL-Based LiDAR Systems

Increased adoption of VCSEL-based LiDAR systems will accelerate the transition towards autonomous vehicles. LiDAR technology is indispensable for autonomous vehicles to comprehend and discern their surroundings in real time. VCSEL-based LiDAR systems provide higher resolution, faster scanning, and more accurate measurements than other LiDAR technologies, while utilising less power and being more cost-effective. VCSEL-based LiDAR systems are anticipated to play a crucial role in reshaping the future of transportation as the market shifts towards autonomous vehicles.

Regional Analysis

North America dominates the VCSEL market, which has grown steadily in recent years. VCSEL demand is rising in automotive, telecommunications, consumer electronics, and healthcare industries. This article will discuss North America's VCSEL market supremacy, its current state, and its future.

North America's VCSEL market supremacy has many causes. First, the region's growing automobile industry needs VCSELs. High-performance lasers with precise sensing and imaging are needed for driverless vehicles and ADAS. VCSELs are perfect for this because of their efficiency, wavelength tunability, and cost. North American telecommunications has driven VCSEL market expansion. Google and Facebook's fiber-optic networks have created the world's most advanced telecommunications infrastructure. Efficiency and high data transmission rates make VCSELs popular in fiber-optic communication networks. North American 5G deployment is also driving VCSEL demand and offering new market prospects.

Philips Photonics, Finisar Corporation, and Lumentum Holdings vie for VCSEL market share. VCSEL enterprises for sensing, imaging, and 3D scanning have emerged in recent years. New applications and technological breakthroughs will grow the VCSEL industry. VCSEL demand is expected to rise worldwide, expanding the market. VCSEL market growth is expected from new technologies and applications. Autonomous cars and robots use LiDAR-based technologies for precise sensing and navigation. This application suits VCSELs' excellent efficiency, wavelength tunability, and tiny size.

VCSELs may also succeed in healthcare. Photodynamic treatment, photobiomodulation, and therapeutic laser surgery use VCSELs because they can accurately control their light output and wavelength. VCSELs are being developed for intraocular pressure detection and wearable health monitors.

Key Regions and Countries

North America

• US
• Canada
• Mexico

Western Europe

• Germany
• France
• The UK
• Spain
• Italy
• Portugal
• Ireland
• Austria
• Switzerland
• Benelux
• Nordic
• Rest of Western Europe

Eastern Europe

• Russia
• Poland
• The Czech Republic
• Greece
• Rest of Eastern Europe

APAC

• China
• Japan
• South Korea
• India
• Australia & New Zealand
• Indonesia
• Malaysia
• Philippines
• Singapore
• Thailand
• Vietnam
• Rest of APAC

Latin America

• Brazil
• Colombia
• Chile
• Argentina
• Costa Rica
• Rest of Latin America

Middle East & Africa

• Algeria
• Egypt
• Israel
• Kuwait
• Nigeria
• Saudi Arabia
• South Africa
• Turkey
• United Arab Emirates
• Rest of MEA

Key Players Analysis

Utilisation of VCSELs (Vertical-Cavity Surface-Emitting Lasers) has gained significant traction in various fields, including but not limited to data centres, fibre optics, automotive, and sensing, in the current era of cutting-edge technological advancements. And as the world develops, so does the market for VCSELs. Excitingly, this market segment is anticipated to develop exponentially over the next few years, as the potential for exponential expansion looms large. As the market expands, so does competition; with that in mind, let's examine some of the key players in the VCSEL market who are endeavouring to distinguish themselves.

The Finisar Corporation is listed first. They are renowned for their superior optical communication products, and they have made strides in VCSEL technology. Their extensive selection of VCSEL products is extensively employed in 3D sensing and facial recognition technologies.

The following company is II-VI Incorporated. They are a world leader in engineered materials and optoelectronic components. Their superior VCSEL components are dominating the market. With a vast selection of VCSEL-based products, they serve a multitude of domains, including but not limited to 3D sensing, industrial, automotive, and consumer applications.

Lumentum is another market leader that has distinguished itself in the world of optical and photonic products. They have been recognised for providing high-performance VCSELs for use in smartphone face recognition technology.

Broadcom, on the other hand, is a semiconductor company renowned for offering a variety of communication solutions. They have become a ubiquitous name due to their high-speed optical communication, wired and wireless infrastructure, and RF components. And there's more! They also provide remarkable VCSEL products for smartphone 3D sensing applications.

Last but certainly not least is NeoPhotonics Corporation. They are an innovator in the field of innovative optical connectivity solutions. In addition to sensing applications, their VCSELs are also extensively used in data communication applications.

These are only a few of the major VCSEL market participants. And as the demand for VCSEL-based products continues to rise, an increasing number of companies are anticipated to enter the market.

Top Key Players in VCSEL market

• Lumentum Operations LLC
• Hamamatsu Photonics K.K
• Vixar Inc (OSRAM AG)Philips Photonics (TRUMPF Group)
• ams
• Vertilite Coherent
• WIN Semiconductor
• TriLumina

Recent Development

• In May 2022, The captivating VCSEL market has been an arena of tumultuous advancements, with several major participants making pioneering proclamations and forming strategic alliances. ams OSRAM introduced a high-performance infrared laser flood illuminator for the most recent automotive indirect Time-of-Flight (iToF) demonstrator from Melexis, thereby enhancing the safety features of vehicles through enhanced detection and recognition capabilities.
• In April 2022, however, the M Series multi-junction VCSEL arrays for next-generation automotive industrial LiDAR and 3D sensing applications were launched by Lumentum, another formidable player in the VCSEL market. This product was designed strategically to meet the rising demand for high-performance, high-reliability, and cost-effective solutions in the automotive industry, primarily to empower autonomous vehicles with a futuristic perspective.
• in July 2022, The Electronics and Telecommunications Research Institute (ETRI) and the Korea Advanced Institute of Science and Technology (KAIST) will partner with Coherent Corp. To advance global collaboration as the VCSEL market continues to expand. By bringing together prominent experts from around the world to develop advanced electronic and photonic devices that will boost the VCSEL market, the collaboration is anticipated to stimulate innovation and growth.
• In December 2022, II-VI Incorporated acquired Coherent Inc., a globally renowned materials networking and laser provider, causing a seismic upheaval in the VCSEL market. This acquisition has strengthened II-VI's position as a global leader in the VCSEL market, thereby increasing the company's industry presence. The acquisition has increased the company's access to cutting-edge technologies and expertise, elevating its standing.

Report Scope