Warning from the photonics industry: Europe’s lead is at risk

Europe has a leading position in photonic chip technology, a key technology that enables a better world by driving energy-efficient digital infrastructure, accelerating medical innovation, and enhancing sustainability across mobility, agriculture, and communication systems. Without targeted investment and action, the EU risks losing its advantage as the global competition intensifies with large investments elsewhere. A group of eight European CEOs from the sector, with input from more than 80 European photonic chip organisations and support from PhotonDelta, is calling on Europe to act. The industry urges, among other things, for priority in the upcoming revision of the EU Chips Act, a better innovation, investment, and business climate, and targeted public and private investments. 

Through years of sustained research and investment, the European photonic chip industry has established a clear international lead. This industry is rapidly gaining traction and the market for integrated photonics is expected to grow by more than 350% in the next five years to a value of around 65 billion euros by 2031.  

Competition from the United States and Asia, among others, is growing rapidly and threatens to overtake the nascent European industry. In the run-up to the revision of the EU Chips Act, it is crucial to take action to maintain Europe's lead, secure strategic autonomy, and support the economy's future growth engine. This urgency also aligns with the warnings in the 2024 Draghi report that, without investment and decisiveness, Europe will fall behind and the EU will lose its strategic and economic relevance.

Lessons from the past: the importance of targeted investments

Europe has been at the forefront of emerging technologies before, such as semiconductor production in the 1970s and solar energy in the 2000s, only to lose out to Asia and the United States. Without action, the same threat looms for photonic chips today. The 2023 European Chips Act was a much-needed first step to support the photonic chip ecosystem by establishing a manufacturing pilot line, but it lacked any investments to scale this European industry. Now, Europe must invest to scale up this sector and remain indispensable, thereby avoiding dependence on non-European countries. This is underlined by today’s geopolitical situation and the relevance of photonic chip technology for Europe’s strategic autonomy.

Call to action: Europe can remain the leader

Several concrete steps are needed to ensure the European photonic chip industry continues to grow into a leading position. In the white paper, the eight European CEOs from the sector put forward a shared industry perspective and made a number of concrete recommendations:

1. In the planned revision of the Chips Act (Chips Act 2.0), establish a special program with subsidies and initiatives dedicated to the photonic chip industry. For example, the EU can accelerate demand for European photonic chips by stimulating cooperation between European companies, coordinated procurement for large projects, and backing 'buy European' initiatives.
   
2. Provide a strong foundation for industrialisation and upscaling. Targeted investments in open-access foundries enable faster scale-up for small businesses without requiring them to invest in production facilities. In addition, strengthen public-private partnerships to close the gap between fundamental research and industry.
   
3. A better innovation, investment, and business climate is needed for the European photonic chip industry. To this end, the EU must simplify regulations and make access to funding more accessible for scale-ups and SMEs. Focus on talent development to stimulate innovation and retain critical knowledge.  

Comments

Eelko Brinkhoff, CEO PhotonDelta: "Photonic chips are essential to Europe’s broad-based, sustainable, digital, and competitive future. Without targeted investments and strategic recognition, such as the Chips Act 2.0, we risk losing our lead to global competitors. That is why we call on government, industry, and knowledge institutions to join forces. Now is the time to show vision, decisiveness, and European leadership."

Johan Feenstra, CEO SMART Photonics: "We are busy scaling up manufacturing technology for photonic chips and making this available to all fabless companies. The potential benefit of this to Europe is enormous. But to really accelerate, we require concrete action and a strong drive to scale up and industrialize. If we only focus on pilot lines and research, we risk missing the boat. We must take action and put photonic chip technology at the heart of Europe’s industry and innovation policy.”

Iñigo Artundo, CEO VLC Photonics: “We pioneered PIC research and SME access in Europe 15 years ago. But with AI’s rise, Europe has lost high-volume manufacturing to US and Asian silicon photonics foundries and are now losing software, testing, and packaging to global Outsourced Semiconductor Assembly and Test (OSAT) organisations. End-user adoption is also lagging. Urgent, focused support is essential if Europe wants to remain a key player. Integrated photonics is no longer emerging; it’s a critical semiconductor technology in a booming market.”