Vertical Cavity Surface Emitting Laser (VCSEL) Market Size, Trends and Growth Analysis by 2027

The VCSEL (Vertical-Cavity Surface-Emitting Laser) market is anticipated to expand significantly, with projections indicating an increase from US$ 1.4 billion in 2022 to US$ 4.7 billion by 2030. This growth trajectory suggests a compound annual growth rate (CAGR) of 17.0% from 2023 to 2030.

A key driver of this market expansion is the increasing utilization of VCSEL technology in 3D sensing applications, particularly in smartphones that incorporate gesture control and facial recognition capabilities. Additionally, the deployment of VCSELs in data communication and LiDAR systems for automotive applications further fuels market growth. The rising integration of Internet of Things (IoT) technologies across diverse sectors, including healthcare, automotive, and construction, necessitates the adoption of fiber optic communication technologies, thereby enhancing the demand for VCSELs.

According to the International Organization of Motor Vehicle Manufacturers, 2022 saw a notable surge in vehicle production in countries such as India, China, Indonesia, South Korea, and Thailand. Furthermore, both regional and global automotive manufacturers are making substantial investments to establish new vehicle production facilities. For example, in March 2022, Triton Electric Vehicle LLC announced the inauguration of a new production plant in Gujarat, India. Similarly, in June 2022, BMW revealed plans to open a new electric vehicle production facility in China, backed by an investment of US$ 2.2 billion. Such investments in the automotive sector are driving the demand for advanced sensing technologies in newly manufactured vehicles. Within the automotive industry, VCSEL technology is employed for various sensor applications both inside and outside vehicle cabins, thereby contributing to the regional demand for VCSELs.

The COVID-19 pandemic had a detrimental impact on numerous industries in North America, leading to a decline in overall spending. The Center for Strategic and International Studies reported that the pandemic resulted in a contraction of the US GDP during the second quarter of 2020. The pandemic caused temporary shutdowns of manufacturing facilities across North America, leading to manufacturing delays and shortages of components, which posed challenges in sourcing raw materials. These disruptions adversely affected the availability and delivery of VCSEL products, negatively influencing the market size.

However, the pandemic also accelerated the adoption of various technologies, including advancements in 5G, artificial intelligence, and the Internet of Things. For instance, in October 2020, the Federal Communications Commission established the 5G Fund for Rural America, allocating up to $9 billion from the Universal Service Fund to support carriers in deploying advanced 5G mobile wireless services in rural areas, including $680 million designated for Tribal lands. The fund also earmarked at least $1 billion for deployments aimed at enhancing precision agriculture. This technological growth has spurred demand for VCSELs in the North American market.

The VCSEL market is categorized based on several parameters, including type, material, data rate, wavelength, application, and end-use industry. In terms of type, the market is divided into single mode and multi-mode VCSELs. The material segmentation includes Gallium Arsenide (GaAs), Indium Phosphide (InP), and other materials. Regarding data rates, the market is classified into categories of up to 10 Gbps, 10.1 to 25 Gbps, and above 25 Gbps. Wavelength categories include red, near-infrared (NIR), and short-wave infrared (SWIR). Applications of VCSELs encompass sensing, data communication, industrial heating and printing, among others. The end-use industries for VCSELs include mobile and consumer electronics, telecommunications and infrastructure, industrial applications, defense and aerospace, medical fields, and automotive and mobility sectors. Geographically, the VCSEL market is segmented into North America, Europe, Asia Pacific, the Middle East and Africa, and South America.

Key players in the VCSEL market include Lumentum Holdings, Coherent Corp, Trumpf, Broadcom Inc., and Ams-Osram AG, all of which are profiled in this market analysis.

The overall size of the VCSEL market has been determined through a combination of primary and secondary research methodologies. Extensive secondary research has been conducted using both internal and external sources to gather qualitative and quantitative data related to the VCSEL market. This process aids in providing a comprehensive overview and forecast of the market across all segments. Additionally, numerous primary interviews have been carried out with industry stakeholders to validate the data and gain deeper analytical insights. This includes discussions with industry experts such as vice presidents, business development managers, market intelligence managers, and national sales managers, as well as external consultants like valuation experts, research analysts, and key opinion leaders specializing in the VCSEL market.