AI data center silicon photonics to reach $14.6 billion by 2034

The forecast comes as AI data centers face rising data volumes from generative AI, large language models, and high-performance computing, driving demand for faster, more power-efficient connections. Silicon photonics, which combines silicon semiconductor technology with optical communication, is positioned as a way to deliver high bandwidth and lower transmission loss compared with electrical signaling. The report also notes that data center power consumption reached about 415 TWh in 2024, accounting for roughly 1.5% of global electricity use, according to the International Energy Agency, underscoring the need for energy-efficient networking. Within the market, optical transceivers are expected to lead in share, while AI inference infrastructure is projected to grow at the fastest rate. Regionally, North America is seen holding the largest share, supported by cloud providers and chipmakers, while Asia-Pacific is expected to grow fastest. Challenges remain, including manufacturing costs and technical complexity, which may affect how quickly adoption proceeds.