USD 3.1 billion
VCSEL Market Size, Share, and Growth Analysis
VCSEL Market By Type (Single Mode, Multi-Mode), By Wavelength (Red, Near Infrared (NIR)), By Material (Gallium Arsenide (GAAS), Indium Phosphide (INP)), By Application, By Data Rate, By Vertical, By Region - Industry Forecast 2025-2032
Report ID:
SQMIG45A2482 |
Region:
Global |
Published Date: November, 2024
Pages:
184
|Tables:
0
|Figures:
0
Format -
VCSEL Market Insights
VCSEL Market size was valued at USD 3.1 billion in 2023 and is poised to grow from USD 3.79 billion in 2024 to USD 18.7 billion by 2032, growing at a CAGR of 22.1% during the forecast period (2025-2032).
The VCSEL market is anticipated to grow strongly during the forecast period due to several factors such as increasing requirements for transmitting data over long distances with high speed and power, increasing demand for these lasers in automotive lidar applications.
Over the past few years, optical interconnections in data centers have advanced from 100 Gbit/s to next-generation 400 Gbit/s data rates. This is primarily due to the rapid market growth of emerging technologies such as AI, VR/AR, and the Internet of Things (IoT), as well as the ever-increasing data density in data centers due to 5G and mobile network infrastructure.
The increasing availability of VCSELs in smartphones for 3D sensing or proximity sensing applications by smartphone manufacturers is one of the major factors driving the VCSEL market growth. The growth in 3D sensing was driven by the introduction of face ID module in iPhones. Since then, there have been major advances in 3D sensing. Gradually, there was a shift in 3D perception from the front-end facial ID modules to the rear side for photography applications.
Market snapshot - 2025-2032
Global Market Size
Largest Segment
Multi-mode
Fastest Growth
Single-mode
Growth Rate
22.1% CAGR
Global VCSEL Market ($ Bn)
Country Share for Asia Pacific Region (%)
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VCSEL Market Segments Analysis
Global VCSEL Market is segmented by Type, Wavelength, Material, Application, Data Rate, Vertical and region. Based on Type, the market is segmented into Single Mode and Multi-Mode. Based on Wavelength, the market is segmented into Red, Near Infrared (NIR) and Short Wave Infrared (SWIR). Based on Material, the market is segmented into Gallium Arsenide (GAAS), Indium Phosphide (INP) and Others. Based on Application, the market is segmented into Sensing, Data Communication, Industrial Heating and Laser Printing and Emerging and Other Applications. Based on Data Rate, the market is segmented into Up to 10 Gbps, 10.1 to 25 Gbps and Above 25 Gbps. Based on Vertical, the market is segmented into Consumer Electronics, Data Center, Automotive, Commercial and Industrial, Health Care and Military. Based on region, the market is segmented into North America, Europe, Asia Pacific, Latin America and Middle East & Africa.
Analysis by Wavelength
As per VCSEL market analysis, the near infrared (NIR) wavelength segment accounted for the largest share in 2023. This growth is driven by the increasing adoption of smartphones for 3D sensing applications, including gesture and facial recognition, automotive in-cabin sensing, etc. Also, NIR VCSELs are widely used in medical devices for non-invasive diagnostics. It is used in devices to monitor blood oxygen levels, heart rate and other vital signs. NIR light can effectively penetrate the skin and tissues, allowing for accurate measurements without patient disturbance.
The red wavelength segment is expected to grow at the highest CAGR during the forecast period. Pico projectors and augmented reality (AR) displays use a red vertical cavity surface emitting laser. The ability to produce a sharp, bright red light is essential to high-quality images. This is especially important for devices like smart glasses, heads-up displays (HUDs), and portable projectors. Moreover, in laser printers and scanners, red Vertical Cavity Surface Emitting Lasers are well-suited for reading and writing data on optical media, such as CDs and DVDs.
Analysis by Type
As per the VCSEL market outlook, the multi-mode segment accounted for the largest market share in 2023. The demand for high data transmission rates in data centers is driving the adoption of multi-mode VCSELs, which are used in short-range optical interconnects. Multi-mode VCSELs can support high data rates with relatively low power consumption, making them suitable for large data processing centers. These types of VCSELs tend to be more cost-effective than their monomodal counterparts due to simpler fabrication processes. This cost advantage makes it very attractive for applications where high volume and low cost are important.
The single-mode segment is expected to grow at the highest CAGR during the forecast period. These VCSELs are widely accepted in telecommunications because of their ability to monitor high-quality signals remotely. They provide narrow spectral width and low divergence, reducing spread and increasing transmission reliability. These are important in fiber optic communications, where it is important to maintain signal integrity over long distances. These devices are used in high-speed networks such as 5G, which require low latency and high data throughput. Thus, these factors boost the VCSEL market significantly.
Global VCSEL Market By Type (%)
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VCSEL Market Regional Insights
Asia-Pacific is expected to dominate the market in 2023 and will post the highest CAGR during the forecast period. The growth can be attributed to the large-scale production of electricity in major countries such as China, South Korea and Japan. China is one of the major consumer electronics manufacturers in the region, followed by South Korea, which is a leader in consumer products manufacturing. The region has manufacturers like Xiaomi, Samsung, OPPO, etc. already manufacturing VCSELs in their smartphones to add to the deployment of 5G connectivity technology in the region. Thus, Asia Pacific holds the largest market share owing to the increasing growth in this region.
North America is expected to witness the highest CAGR during the forecast period owing to increasing use of modern advanced technology and data connectivity. The rise in wireless connectivity and infrastructure in the region will fuel the market growth. Major manufacturers in North America, such as Lumentum Operations LLC, Coherent Corp., Broadcom and MKS Instruments, offer VCSELs for several applications. Furthermore, the U.S. is the key country contributor to market growth in this segment. Moreover, North America's focus on autonomous vehicle technology has accelerated the adoption of VCSELs in LIDAR systems, further enhancing its market position.
Global VCSEL Market By Geography
- Largest
- Fastest
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VCSEL Market Dynamics
Drivers
Increase in Demand for Generative AI in Vertical Cavity Surface Emitting Laser Applications
- Generative AI models require greater computing power and faster data processing, increasing investment in data centers. Vertical cavity surface-emitting lasers play a key role in high-speed optical interconnections in data centers. So generative AI can improve 3D sensing and imaging technologies to support the growing need for AI-powered infrastructure. Existing applications.
Advances In Visual Communication and Adoption in Consumer Electronics
- The VCSEL market is driven by the increasing demand for high-speed optical applications in data centers and telecommunications networks. As the digital economy evolves, VCSELs must manage the flow of data and high-speed efficiency handling. Additionally, the rising adoption of VCSELs in consumer electronics, particularly in smartphones for facial recognition and 3D sensing, is a significant growth driver. Companies like Apple and Huawei are integrating VCSELs into their devices, fueling mass production and innovation in this technology.
Restraints
Increased Construction Costs
- One of the most important constraints in the VCSEL market is the high cost of production. The process requires precision, advanced manufacturing technology, and high-quality materials, leading to significant cost increases. These factors make the VCSELs less accessible in low-cost industries and SMEs, limiting their adoption. Furthermore, improving quality and scalability for mass production further increases operating costs, slowing down market growth.
Limited Range and Power Output
- VCSELs are inherently designed for long-range optical communications and low-power applications, limiting their use to applications that require high-voltage or remote solutions. These limitations make them unsuitable for specific telecommunication and industrial processes that rely on high-energy lasers or extended range. The inability to meet these needs limits market potential in these segments, affecting overall adoption rates.
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VCSEL Market Competitive Landscape
The VCSEL market is highly competitive, with a mix of well-established players and innovative startups driving growth in optical communication, consumer electronics, automotive and healthcare. VCSEL market is shaped by strategic partnerships and mergers. For example, II-VI's acquisition of Finisar enhanced its manufacturing capabilities, while partnerships between TRUMPF and automotive manufacturers enhanced the use of VCSELs in LIDAR systems. This role is key to market expansion, as companies aim to strengthen their technological innovation and global footprint.
Top Players in VCSEL Market
- Lumentum Holdings Inc. (USA)
- Coherent (USA)
- Broadcom Inc. (USA)
- ams OSRAM AG (Austria)
- Thorlabs, Inc. (USA)
- TRUMPF Photonic Components (Germany)
- USHIO America, Inc. (USA)
- Princeton Optronics, Inc. (USA)
- Vertilas GmbH (Germany)
- Leonardo Electronics US Inc. (USA)
- Laser Components GmbH (Germany)
- Santec Corporation (Japan)
- IQE plc (UK)
- JENOPTIK AG (Germany)
- Sony Corporation (Japan)
- Hamamatsu Photonics K.K. (Japan)
- Excelitas Technologies Corp. (USA)
- Innolume GmbH (Germany)
- Focuslight Technologies Co., Ltd. (China)
Recent Developments
- October 2023 - TRUMPF Photonic Components, a global manufacturer of high-speed VCSEL and photodiode solutions for data communications, launched the first 980nm multi-gigabit interconnection system for car systems.
- June 2023 - AMS Osram, the world's most important provider of optical solutions, enhanced its portfolio of infrared laser modules and announced the launch of Vertical Cavity Surface Emitting Lasers (VCSELs).
- November 2023 - The Japanese government announced will allocate about 2 billion japai (USD 13 billion) to support efforts to boost its chip industry. The major provider has been missing its growth in production in recent decades and now offers subsidies to chip manufacturers to running.
VCSEL Key Market Trends
- Increasing Adoption of Vertical Cavity Surface Emitting Laser in Medical Imaging Biomedical Applications: Vertical cavity surface-emitting lasers offer many advantages such as high beam quality, precise wavelength control, and compact size, making them ideal for biomedical and medical applications. These lasers offer great advantages in medical imaging applications for biomedical sensing, mostly in nerve and tissue oximetry. Traditionally, LEDs at specific wavelengths have been used to estimate blood oxygenation.
- Integration in Automotive LIDAR and Healthcare Applications: In the automotive industry, VCSELs are gaining popularity, especially in light detection and remote sensing (LIDAR) systems for autonomous vehicles. Their compact size, reliability, and energy efficiency make them ideal for accurate mapping and object detection, ensuring the safety and efficiency of autonomous vehicle systems. Another emerging VCSEL market trend is the application of VCSELs in healthcare applications, including medical imaging and biosensors.
VCSEL Market SkyQuest Analysis
SkyQuest's ABIRAW (Advanced Business Intelligence, Research & Analysis Wing) is our Business Information Services team that Collects, Collates, Correlates, and Analyses the Data collected by means of Primary Exploratory Research backed by robust Secondary Desk research.
According to SkyQuest analysis, the VCSEL market is experiencing robust growth owing to its important role in visual communication and increasing adoption in consumer electronics. But challenges such as high and advanced manufacturing costs prevent its power. Vehicle LiDAR and its emerging applications in healthcare applications are expanding the reach of the technology and driving future innovation and adoption. With improvements in productivity and wider integration across industries, VCSELs are poised to play a transformational role in next-generation technologies.
| Report Metric | Details |
|---|---|
| Market size value in 2023 | USD 3.1 billion |
| Market size value in 2032 | USD 18.7 billion |
| Growth Rate | 22.1% |
| Base year | 2024 |
| Forecast period | 2025-2032 |
| Forecast Unit (Value) | USD Billion |
| Segments covered |
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| Regions covered | North America (US, Canada), Europe (Germany, France, United Kingdom, Italy, Spain, Rest of Europe), Asia Pacific (China, India, Japan, Rest of Asia-Pacific), Latin America (Brazil, Rest of Latin America), Middle East & Africa (South Africa, GCC Countries, Rest of MEA) |
| Companies covered |
|
| Customization scope | Free report customization with purchase. Customization includes:-
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Table Of Content
Executive Summary
Market overview
- Exhibit: Executive Summary – Chart on Market Overview
- Exhibit: Executive Summary – Data Table on Market Overview
- Exhibit: Executive Summary – Chart on VCSEL Market Characteristics
- Exhibit: Executive Summary – Chart on Market by Geography
- Exhibit: Executive Summary – Chart on Market Segmentation
- Exhibit: Executive Summary – Chart on Incremental Growth
- Exhibit: Executive Summary – Data Table on Incremental Growth
- Exhibit: Executive Summary – Chart on Vendor Market Positioning
Parent Market Analysis
Market overview
Market size
- Market Dynamics
- Exhibit: Impact analysis of DROC, 2021
- Drivers
- Opportunities
- Restraints
- Challenges
- Exhibit: Impact analysis of DROC, 2021
- SWOT Analysis
KEY MARKET INSIGHTS
- Technology Analysis
- (Exhibit: Data Table: Name of technology and details)
- Pricing Analysis
- (Exhibit: Data Table: Name of technology and pricing details)
- Supply Chain Analysis
- (Exhibit: Detailed Supply Chain Presentation)
- Value Chain Analysis
- (Exhibit: Detailed Value Chain Presentation)
- Ecosystem Of the Market
- Exhibit: Parent Market Ecosystem Market Analysis
- Exhibit: Market Characteristics of Parent Market
- IP Analysis
- (Exhibit: Data Table: Name of product/technology, patents filed, inventor/company name, acquiring firm)
- Trade Analysis
- (Exhibit: Data Table: Import and Export data details)
- Startup Analysis
- (Exhibit: Data Table: Emerging startups details)
- Raw Material Analysis
- (Exhibit: Data Table: Mapping of key raw materials)
- Innovation Matrix
- (Exhibit: Positioning Matrix: Mapping of new and existing technologies)
- Pipeline product Analysis
- (Exhibit: Data Table: Name of companies and pipeline products, regional mapping)
- Macroeconomic Indicators
COVID IMPACT
- Introduction
- Impact On Economy—scenario Assessment
- Exhibit: Data on GDP - Year-over-year growth 2016-2022 (%)
- Revised Market Size
- Exhibit: Data Table on VCSEL Market size and forecast 2021-2027 ($ million)
- Impact Of COVID On Key Segments
- Exhibit: Data Table on Segment Market size and forecast 2021-2027 ($ million)
- COVID Strategies By Company
- Exhibit: Analysis on key strategies adopted by companies
MARKET DYNAMICS & OUTLOOK
- Market Dynamics
- Exhibit: Impact analysis of DROC, 2021
- Drivers
- Opportunities
- Restraints
- Challenges
- Exhibit: Impact analysis of DROC, 2021
- Regulatory Landscape
- Exhibit: Data Table on regulation from different region
- SWOT Analysis
- Porters Analysis
- Competitive rivalry
- Exhibit: Competitive rivalry Impact of key factors, 2021
- Threat of substitute products
- Exhibit: Threat of Substitute Products Impact of key factors, 2021
- Bargaining power of buyers
- Exhibit: buyers bargaining power Impact of key factors, 2021
- Threat of new entrants
- Exhibit: Threat of new entrants Impact of key factors, 2021
- Bargaining power of suppliers
- Exhibit: Threat of suppliers bargaining power Impact of key factors, 2021
- Competitive rivalry
- Skyquest special insights on future disruptions
- Political Impact
- Economic impact
- Social Impact
- Technical Impact
- Environmental Impact
- Legal Impact
Market Size by Region
- Chart on Market share by geography 2021-2027 (%)
- Data Table on Market share by geography 2021-2027(%)
- North America
- Chart on Market share by country 2021-2027 (%)
- Data Table on Market share by country 2021-2027(%)
- USA
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Canada
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Europe
- Chart on Market share by country 2021-2027 (%)
- Data Table on Market share by country 2021-2027(%)
- Germany
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Spain
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- France
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- UK
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Rest of Europe
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Asia Pacific
- Chart on Market share by country 2021-2027 (%)
- Data Table on Market share by country 2021-2027(%)
- China
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- India
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Japan
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- South Korea
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Rest of Asia Pacific
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Latin America
- Chart on Market share by country 2021-2027 (%)
- Data Table on Market share by country 2021-2027(%)
- Brazil
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Rest of South America
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Middle East & Africa (MEA)
- Chart on Market share by country 2021-2027 (%)
- Data Table on Market share by country 2021-2027(%)
- GCC Countries
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- South Africa
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
- Rest of MEA
- Exhibit: Chart on Market share 2021-2027 (%)
- Exhibit: Market size and forecast 2021-2027 ($ million)
KEY COMPANY PROFILES
- Competitive Landscape
- Total number of companies covered
- Exhibit: companies covered in the report, 2021
- Top companies market positioning
- Exhibit: company positioning matrix, 2021
- Top companies market Share
- Exhibit: Pie chart analysis on company market share, 2021(%)
- Total number of companies covered
Methodology
For the VCSEL Market, our research methodology involved a mixture of primary and secondary data sources. Key steps involved in the research process are listed below:
1. Information Procurement: This stage involved the procurement of Market data or related information via primary and secondary sources. The various secondary sources used included various company websites, annual reports, trade databases, and paid databases such as Hoover's, Bloomberg Business, Factiva, and Avention. Our team did 45 primary interactions Globally which included several stakeholders such as manufacturers, customers, key opinion leaders, etc. Overall, information procurement was one of the most extensive stages in our research process.
2. Information Analysis: This step involved triangulation of data through bottom-up and top-down approaches to estimate and validate the total size and future estimate of the VCSEL Market.
3. Report Formulation: The final step entailed the placement of data points in appropriate Market spaces in an attempt to deduce viable conclusions.
4. Validation & Publishing: Validation is the most important step in the process. Validation & re-validation via an intricately designed process helped us finalize data points to be used for final calculations. The final Market estimates and forecasts were then aligned and sent to our panel of industry experts for validation of data. Once the validation was done the report was sent to our Quality Assurance team to ensure adherence to style guides, consistency & design.
Analyst Support
Customization Options
With the given market data, our dedicated team of analysts can offer you the following customization options are available for the VCSEL Market:
Product Analysis: Product matrix, which offers a detailed comparison of the product portfolio of companies.
Regional Analysis: Further analysis of the VCSEL Market for additional countries.
Competitive Analysis: Detailed analysis and profiling of additional Market players & comparative analysis of competitive products.
Go to Market Strategy: Find the high-growth channels to invest your marketing efforts and increase your customer base.
Innovation Mapping: Identify racial solutions and innovation, connected to deep ecosystems of innovators, start-ups, academics, and strategic partners.
Category Intelligence: Customized intelligence that is relevant to their supply Markets will enable them to make smarter sourcing decisions and improve their category management.
Public Company Transcript Analysis: To improve the investment performance by generating new alpha and making better-informed decisions.
Social Media Listening: To analyze the conversations and trends happening not just around your brand, but around your industry as a whole, and use those insights to make better Marketing decisions.
VCSEL Market Report Snapshots
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