Global photonics market on course for growth

Based on a forecast by French market research and consulting company TEMATYS, the global photonics market will grow from 820 billion euros in 2022 to around 1.14 trillion euros by 2027. With average growth rates of 6.8 percent, the sector is growing significantly faster than the global economy, which has grown at an average annual rate of two percent over the same period.

Global diversification—Europe loses, China gains market shares

An in-depth review of trends between 2019 and 2022 shows that there were some significant shifts in sales and the regional distribution of market shares: the market researchers report strong growth in the environment, energy and lighting segments (+12.5%) as well as in agriculture and the food sector, which—albeit from a low base value—grew by almost 12%. Industry 4.0, large appliances and aerospace were also among the growth drivers with increases of eight to nine percent. In the competition between regions, Europe has lost four percent of its global market share since 2005—and in 2022 was only on a par with North America at 15 percent. Japan, Taiwan and South Korea also each lost one to two percent of their market share during this period. In contrast, China’s share of global sales rose from 29% to 32%. Supplier countries, which the consultants consider to be part of the “rest of the world”, were also able to increase their share by three percent to 12 percent.

However, Europe’s declining share of the global photonics market goes hand in hand with growth. In the period under review from 2005 to 2022, annual growth rates were above six percent for most of the time. It was only between 2011 and 2015 that growth remained moderate at three percent per annum. In absolute figures, sales in the European photonics industry rose from 47 billion euros in 2005 to 125 billion euros in 2022. Even during the crisis years from 2019 to 2022, when the pandemic, supply chain problems and high inflation slowed down the economy, Europe's photonics industry proved to be extremely resilient with annual growth of around 6.5 percent. While it grew by a good fifth in these three years—and still clearly in double digits when adjusted for inflation, gross domestic product and production in the EU lagged well behind with growth rates of five percent.

Advanced consolidation in Europe

The distribution of sales in Europe is striking. TEMATYS counts around 5,000 companies in the photonics industry, 73 percent of which are small and medium-sized enterprises with up to 50 employees. They account for only ten billion of the total sales of 125 billion euros. In contrast, companies with 50 to 250 employees generate around 25 billion euros and groups with over 250 employees generate 90 billion euros. Almost two thirds of these sales are attributable to the three largest supplier countries Germany, France and the UK. This is also where 71 percent of all employees in Europe’s photonics industry work. Surprisingly, the industry created 33,000 new jobs across Europe during the crisis years. The market analysis underpins this signal of a new beginning with a positive outlook until 2027. By then, TEMATYS predicts that the photonics industry in Europe will have grown to 175 billion euros. This would be an increase of around 50 billion euros compared to 2022.