A shift in the balance in the global photonics market
Asia—above all China—is leading the global market for photonics. The EU and the USA share second place in the still growing market, each with a market share of 15%.
According to an analysis by Tematys, the global market for photonics remains on course for growth at annual rates of between six and seven percent. If the forecast is confirmed, the market volume will increase from USD 910 billion in 2023 to USD 1,150 billion in 2027. This means the volume would almost triple within 15 years.
A shift in the balance
However, the balance is shifting in the growing global market as a whole. Europe’s photonics industry remains on a stable growth trajectory at over six percent. However, Tematys is observing a trend in the opposite direction in terms of its global market share. Since 2005, the share of the EU-27 plus the UK, Switzerland and Norway has fallen from 19% to 15%. Europe and the USA are tied for second place.
China has by far the largest market share, which continues to grow. From 2019 to 2022 alone, it rose from 29 to 32 percent. The country has more than tripled its market share since 2005. Asia’s global market share, including Taiwan, Korea and Japan, is as high as 58%. However, these three countries are also recording declining market shares. Apart from China, the French market researchers are only recording growing market shares in the countries subsumed under “rest of the world”; the sector is therefore growing at a higher rate there than the six to seven percent of the overall market.
Strong and weak segments
Overall, photonics remains a growth driver with significantly higher growth rates than the global economy and the gross national products of the OECD countries. In Europe, there are also three market segments—Optical Equipment, Large Appliances & Aerospace and Industry 4.0—with a market share of over 30 percent. So far, Europe’s suppliers have been able to defend their strong market position with an above-average commitment to research and development. However, there is a worrying trend: US early-stage companies recently accounted for more than half of the capital invested worldwide. Asian photonics start-ups were able to secure a good third. In contrast, newcomers from Europe accounted for only a tenth of the total. This investment gap will make itself felt in the long term. The conclusion of the market researchers at Tematys therefore contains an appeal: “With appropriate support, the European photonics industry will be able to face up to the changed competitive and trading conditions”.