Summary

Silicon cannot emit light efficiently, so every optical link in an AI cluster depends on a compound-semiconductor laser. This report analyses the InP and GaAs photonics that underpin AI data-centre optics—the lasers, photodiodes, modulators and InP/GaAs wafers—from substrate through epiwafer to bare die, and the way exploding AI interconnect demand is reshaping this supply chain.

It forecasts the market from 2021 to 2037 across device types, materials, network architectures, value-chain levels and regions of manufacture, and covers supply constraints, investment and M&A, China, critical minerals and export controls, the competitive landscape and a technology roadmap, with profiles of 65 companies.

Report contents include:

• Executive summary: key findings, market size and growth 2027–2037, where the value goes across devices and architectures, supply constraints, recent developments 2025–2026, scenario summary and strategic imperatives.
• Introduction, scope and methodology, why compound semiconductors, and the device technologies covered.
• AI infrastructure demand drivers: bandwidth per accelerator and the interconnect wall, network tiers (scale-up, scale-out, scale-across), reach, the lane-rate roadmap, laser content per link (pluggables, LPO, CPO, optical I/O), and drivers and restraints.
• InP device technologies: the InP platform, EML, DML, CW-DFB lasers for silicon photonics, high-power CW lasers for NPO/CPO, DWDM laser arrays and multi-wavelength sources, coherent components, SOAs, photodiodes, monolithic PICs and a device benchmark.
• GaAs device technologies: the GaAs platform, 850 nm VCSELs, VCSEL arrays, photodiodes, quantum-dot lasers on GaAs, and GaAs vs InP vs silicon photonics for short reach.
• Integration with silicon photonics and competing platforms: hybrid flip-chip, heterogeneous III-V-on-silicon, micro-transfer printing and monolithic growth, and competing modulator platforms.
• Substrate, wafer and epitaxy technology: InP crystal growth (VGF, VB, LEC), wafer-diameter roadmap, epitaxy (MOCVD, MBE), and device fab and test bottlenecks.
• Market forecasts 2021–2037: bare-die market by device technology, volumes and ASPs, by network architecture, InP vs GaAs, epiwafer and substrate markets, total value chain, by region of manufacture, and scenario analysis.
• Supply chain and capacity, investment/M&A and strategic partnerships, China/critical minerals/export controls, competitive landscape, technology roadmap and outlook, 65 company profiles and appendices.

Companies profiled include: Accelink Technologies, Aixtron, ams OSRAM, Applied Optoelectronics, Avicena, AXT Inc., Ayar Labs, Broadcom, Coherent Corp., DOWA Electronics Materials, EFFECT Photonics, Enlightra, Eoptolink, Everbright Photonics, Freiberger Compound Materials, Furukawa FITEL Optical Components, GCS (Global Communication Semiconductors), HiSilicon, HyperLight, Innolume, Intel, IntelliEPI, iPronics, IQE, JX Advanced Metals, Korea Zinc, LandMark Optoelectronics, Lightmatter, Lumentum, Lumilens, NVIDIA, Coherent, Sumitomo Electric, Nokia, Yuanjie, Everbright, Vertilite, Source Photonics, and more.

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Table of Contents

1 EXECUTIVE SUMMARY
1.1 Key Findings at a Glance
1.2 Market Size and Growth, 2027-2037
1.3 Where the Value Goes: Devices and Architectures
1.4 Supply Constraints in Brief
1.5 Recent Developments, 2025-2026
1.6 Scenario Summary
1.7 Strategic Imperatives
2 INTRODUCTION, SCOPE AND METHODOLOGY
2.1 Report Scope
2.2 Methodology
2.3 Comparison With Other Future Markets Forecasts
2.4 Why Compound Semiconductors?
2.5 Device Technologies Covered
3 AI INFRASTRUCTURE DEMAND DRIVERS
3.1 Bandwidth per Accelerator and the Interconnect Wall
3.2 Network Tiers: Scale-Up, Scale-Out and Scale-Across
3.3 Reach Decides the Technology
3.4 Lane-Rate Roadmap
3.5 Laser Content per Link: Pluggables, LPO, CPO and Optical I/O
3.6 Drivers and Restraints
4 INP DEVICE TECHNOLOGIES
4.1 The InP Photonics Platform
4.2 Electro-Absorption Modulated Lasers (EML)
4.3 Directly Modulated Lasers (DML)
4.4 CW-DFB Lasers for Silicon Photonics
4.5 High-Power and Ultra-High-Power CW Lasers for NPO and CPO
4.6 DWDM Laser Arrays and Multi-Wavelength Sources for Optical I/O
4.7 Coherent Components: Tunable Lasers, IQ Modulators and Receivers
4.8 Semiconductor Optical Amplifiers
4.9 InP Photodiodes
4.10 Monolithic InP PICs
4.11 InP Device Benchmark
5 GAAS DEVICE TECHNOLOGIES
5.1 The GaAs Photonics Platform
5.2 850 nm VCSELs for Short-Reach AI Links
5.3 VCSEL Arrays for Slow-and-Wide Scale-Up and NPO
5.4 GaAs Photodiodes
5.5 Quantum-Dot Lasers on GaAs
5.6 GaAs vs InP vs Silicon Photonics for Short Reach
6 INTEGRATION WITH SILICON PHOTONICS AND COMPETING PLATFORMS
6.1 Why Integration Matters for InP Demand
6.2 Hybrid Flip-Chip Integration
6.3 Heterogeneous III-V-on-Silicon
6.4 Micro-Transfer Printing and Monolithic Growth
6.5 Competing Modulator Platforms
7 SUBSTRATE, WAFER AND EPITAXY TECHNOLOGY
7.1 InP Crystal Growth: VGF, VB and LEC
7.2 Wafer Diameter Roadmap
7.3 Epitaxy: MOCVD and MBE
7.4 Device Fab and Test Bottlenecks
8 MARKET FORECASTS 2021-2037
8.1 Forecast Assumptions
8.2 Total Bare-Die Market by Device Technology
8.3 Bare-Die Volumes
8.4 Average Selling Prices
8.5 Market by Network Architecture
8.6 InP vs GaAs
8.7 Epiwafer Market
8.8 Substrate Market
8.9 Total Value Chain
8.10 Market by Region of Manufacture
8.11 Scenario Analysis
9 SUPPLY CHAIN AND CAPACITY
9.1 InP Laser Supply Chain
9.2 GaAs Laser Supply Chain
9.3 Substrate Suppliers
9.4 Epiwafer Suppliers
9.5 Device Makers and Foundries
9.6 Capacity vs Demand: InP Substrates
9.7 Capacity vs Demand: InP Laser Die
9.8 Lead Times and Pricing Indicators
9.9 Geographic Footprint
10 INVESTMENT, M&A AND STRATEGIC PARTNERSHIPS
10.1 NVIDIA and Hyperscaler Investments in Laser Supply
10.2 Fab and Capacity Investments
10.3 Venture Funding for Photonics Start-ups
10.4 Government Support Programmes
10.5 Mergers and Acquisitions
11 CHINA, CRITICAL MINERALS AND EXPORT CONTROLS
11.1 Indium and Gallium Supply
11.2 Export Control Timeline
11.3 Impact on the Substrate Market
11.4 China's Domestic Photonics Chip Industry
11.5 Geopolitical Scenarios
12 COMPETITIVE LANDSCAPE
12.1 Bare-Die Market Shares
12.2 InP Substrate Market Shares
12.3 Strategic Positioning
13 TECHNOLOGY ROADMAP AND OUTLOOK
13.1 Technology Roadmap 2025-2037
13.2 Opportunity Assessment
13.3 Outlook and Conclusions
14 COMPANY PROFILES (65 company profiles)
15 APPENDIX
15.1 Annual Forecast Data, 2021-2037
15.2 Glossary
15.3 Principal Public Sources

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List of Tables/Graphs

List of Tables TABLE 1 InP and GaAs photonics for AI: key market metrics, 2025-2037 (US$ million) TABLE 2 Selected developments in InP and GaAs photonics for AI, 2025-2026 TABLE 3 Bare-die market scenarios, 2027-2037 (US$ million) TABLE 4 Definition of value-chain levels used in this report TABLE 5 Key properties of photonic semiconductor platforms TABLE 6 InP and GaAs device technologies covered in this report TABLE 7 AI network tiers and their compound-semiconductor content TABLE 8 Lane-rate generations and compound-semiconductor implications TABLE 9 Laser configuration by optical architecture TABLE 10 Market drivers and restraints, 2027-2037 TABLE 11 EML generations for AI optics TABLE 12 CW laser power classes and applications TABLE 13 Multi-wavelength source approaches for optical I/O TABLE 14 Benchmark of InP device categories for AI optics (2026) TABLE 15 VCSEL generations for data-centre optics TABLE 16 Short-reach technology comparison (<=100 m) TABLE 17 Laser integration approaches compared TABLE 18 Modulator platforms and impact on InP content TABLE 19 InP and GaAs substrate growth methods TABLE 20 Wafer diameter transitions for InP and GaAs photonics TABLE 21 Epitaxy and process equipment for InP and GaAs photonics TABLE 22 Bare-die market by device technology, 2025-2037 (US$ million) TABLE 23 Bare-die shipments by device technology, 2025-2037 (million units) TABLE 24 Average selling price by device technology, 2025-2037 (US$ per die) TABLE 25 Bare-die market by network architecture, 2025-2037 (US$ million) TABLE 26 Bare-die market by substrate material, 2025-2037 (US$ million) TABLE 27 Epiwafer volume and open-market value, 2025-2037 TABLE 28 Substrate demand and revenue from AI photonics, 2025-2037 TABLE 29 Bare-die revenue by region of manufacture, 2025-2037 (US$ million) TABLE 30 Bare-die market scenarios, 2025-2037 (US$ million) TABLE 31 InP substrate suppliers: capacity and expansion TABLE 32 GaAs substrate suppliers relevant to AI photonics TABLE 33 Open-market epiwafer suppliers for InP and GaAs photonics TABLE 34 InP and GaAs photonic device makers for AI TABLE 35 InP supply-chain lead times and pricing indicators, TABLE 36 Geographic footprint of InP and GaAs photonics manufacturing TABLE 37 Strategic investments by GPU vendors and hyperscalers in photonics supply, 2025-2026 TABLE 38 Device fab expansions for AI photonics, 2024-2026 TABLE 39 Substrate capacity investments, 2025-2026 TABLE 40 Venture funding rounds for photonics start-ups relevant to InP/GaAs photonics for AI, Q2 2025 - Oct TABLE 41 Government programmes supporting InP/GaAs photonics TABLE 42 Selected M&A in compound-semiconductor photonics, 2022-2026 TABLE 43 Chinese export controls relevant to InP and GaAs photonics TABLE 44 Selected Chinese InP and GaAs photonic chip suppliers TABLE 45 Estimated bare-die market shares by supplier, TABLE 46 Strategic positioning of leading players TABLE 47 Technology roadmap milestones TABLE 48 Opportunity and risk assessment by segment TABLE 49 Bare-die revenue by device technology, 2021-2029 (US$ million) TABLE 50 Bare-die revenue by device technology, 2030-2037 (US$ million) TABLE 51 Bare-die shipments by device technology, 2021-2029 (million units) TABLE 52 Bare-die shipments by device technology, 2030-2037 (million units) TABLE 53 Glossary of terms List of Figures FIGURE 1 InP and GaAs photonics for AI: bare-die market, 2021-2037 (US$ million) FIGURE 2 Bare-die revenue by device technology, 2027 vs 2037 (US$ million) FIGURE 3 Share of bare-die revenue by network architecture, 2025-2037 FIGURE 4 InP and GaAs photonics value chain and scope of this report FIGURE 5 Optical modules in AI scale-up and scale-out networks by data rate, 2026-2036 (million units) FIGURE 6 Optical technologies by reach in AI data centres FIGURE 7 Lane-rate and laser-architecture roadmap for AI optics, 2024-2038 FIGURE 8 Typical InP/GaAs laser die per 1.6 Tb/s of link capacity by architecture FIGURE 9 Typical maximum output power of CW lasers for AI optics, 2022-2030 FIGURE 10 Maximum multimode (OM4) reach of 850 nm VCSEL links by lane rate FIGURE 11 Laser integration approaches for silicon photonics: maturity timeline FIGURE 12 Usable wafer area by diameter relative to 3-inch (5 mm edge exclusion) FIGURE 13 Diameter mix of InP wafer starts for AI photonic devices (share of 4-inch-equivalent area), 2021-2037 FIGURE 14 Bare-die market by device technology, 2021-2037 (US$ million) FIGURE 15 Bare-die shipments for selected device technologies, 2025-2037 (million units, log scale) FIGURE 16 ASP index for selected device technologies, 2025-2037 (2025 = 100) FIGURE 17 Bare-die market by network architecture, 2021-2037 (US$ million) FIGURE 18 InP share of bare-die revenue, 2021-2037 FIGURE 19 InP epiwafer starts for AI devices: captive vs open market, 2021-2037 (thousand 4-inch-equivalent wafers) FIGURE 20 InP substrate demand from AI photonic devices by diameter, 2021-2037 (thousand 4-inch-equivalent wafers) FIGURE 21 InP substrate revenue: AI photonics vs other applications, 2021-2037 (US$ million) FIGURE 22 Blended InP substrate ASP, 2021-2037 (US$ per 4-inch-equivalent wafer) FIGURE 23 Total InP and GaAs photonics for AI value chain (bare die + open epiwafers + substrates), 2021-2037 (US$ million) FIGURE 24 Bare-die revenue by region of manufacture, 2025, 2031 and FIGURE 25 Bare-die market scenarios, 2025-2037 (US$ million) FIGURE 26 InP substrates: from nameplate capacity to net sellable supply, 2026 (Future Markets estimate) FIGURE 27 Supply as a percentage of demand: InP laser chips and device-grade InP substrates, 2024-2031 FIGURE 28 Selected announced investments in InP/GaAs photonics capacity, 2024-2026 (US$ million) FIGURE 29 Largest venture rounds in optical interconnect start-ups relevant to InP/GaAs photonics, Q2 2025 - Oct 2026 (US$ million) FIGURE 30 China share of world indium and gallium supply FIGURE 31 Timeline of Chinese export controls affecting InP and GaAs photonics, 2023-2026 FIGURE 32 Estimated bare-die market shares, 2025 (% of revenue, incl. captive at merchant value) FIGURE 33 Estimated InP substrate market shares, 2025 (% of revenue, all applications) FIGURE 34 InP and GaAs photonics technology roadmap, 2024-2038 FIGURE 35 Opportunity map: 2031 market size vs 2027-2037 growth by device technology (bubble size = 2037 revenue)