A study published by the European technology platform Photonics21 shows China’s substantial growth in the photonics industry, prompting calls from EU photonics experts for increased funding to close a gap in market share. Over the past two decades, China’s global market share has increased from 10% to more than 30%, eclipsing both the U.S. and Europe, each with 15% market share respectively, the report said. Photonics production in China is expected to reach €315 billion (approximately $342 billion) in 2025, the report said.

The study, Political Steering Processes in China in Core Segments of the Photonics Industry, was conducted by international management consultancy EAC. The report notes the role played by industrial development plans and unique regional clusters in China’s growing market dominance.  

Lutz Aschke, president of Photonics 21, said that while Europe currently holds the second position in the global photonics industry, a lack of significant investment means that Europe faces the threat of losing ground in the photonics technology sector, with implications for its technological independence. 

"We need to implement a European strategy on critical materials and components for key industries and technologies to secure a resilient photonics supply chain in Europe. Specifically, research and development activities, as well as the production of photonic components in Europe that are critical to the industry supply chain, should be strengthened," Aschke said.  

The EAC report shows that China’s photonic industry clusters are enabling regional strategies and market demands to drive the photonics boom. China’s financial backbone, the study said, consists of local governments, investment institutions, and enterprises. These entities are set to exceed national contributions with around €5 billion for photonics innovations over the next few years. The research shows that public funds account for only 20% to 30% of this regional revenue. The remaining 70% to 80% is composed of funds from investment institutions and enterprises.

These clusters are based in eight different cities in major industrial areas across China, each with its own focus and strategy. In Suzhou, for example, a 10 billion RMB (approximately €1.4 billion) photonics industry fund aims to establish the Suzhou Taihu Photonics Center to fuel scientific innovation through collaborative research. Beijing, for its part, plans an approximately €30 million optoelectronics fund.

The research shows a significant part of China’s success lies in a series of proactive industrial development plans, including Made in China 2025, the 14th Five-Year Plan and Beyond, and the National Science and Technology Plan. While the U.S. passed its CHIPS and Science Act in 2022, China’s National Integrated Circuit Industry Investment Fund (ICF) had been operating for more than seven years. According to EAC, 2024 marked the start of Phase III of the ICF, which has a budget of €39 billion. Integrated photonics is one of the technologies funded in the third phase of the ICF.