Supply chain shuffling shines a light on photonics.
Trade disruption triggered by tariffs has stressed supply chains for electronic components. From the uncertainty, a new chip technology could get its time in the spotlight.
What’s happening? Researchers are making advances in processors that use light instead of electricity.
One recent innovation solves a tricky optimization challenge using light-based (photonic) chips; another shows that cutting-edge artificial intelligence models could run faster and more efficiently on them.
Why do they matter? Fragmentation of traditional supply chains may create opportunities for new, disruptive technologies to gain prominence, speed towards commercialization, and eventually grab market share.
In the current context, photonics — including photon-based components integrated into silicon semiconductor materials — are a strong candidate to do so.
How? Light moves fast, and doesn’t heat up the components in which it moves as much as electricity does. These are massive advantages for computer chips, in terms of efficiency and performance.
Plenty of challenges remain for photonics; including figuring out how to store information in light form, and using light for both the computation and the communication functions that a chip must perform.
So what? There are tentative signs that The White House may seek deescalation of the trade war it triggered on “Liberation Day”. Even so, damage has been done to the idea of stable, global technology supply chains. Tensions between America, China and Europe will not disappear quickly.
In recent decades, supply chains for almost all electronics that include an integrated circuit (chip), have been widely distributed, and dependent on a complex interlinking of research, prototyping, and production processes in multiple jurisdictions and relying on a host of path dependencies and materials.
The rules are being re-written. Even if tariffs on Chinese goods are rolled back to the 35 to 100 percent level suggested, US Treasury Secretary Scott Bessent’s recent remarks indicate that America’s mission to “rebalance global commerce” will continue.
Other governments and companies will continue to feel pressure to de-risk technology supply chains.
Uncertainty created by tariffs could mean more considerable investment into photonics. The structure of the industry could make it an early test case of whether protectionism will prompt US trading partners to try to design US technology out of their supply chains.
Why? While several of the industry’s leaders are American companies, the market is less concentrated than for advanced electronic chips.
Some estimates suggest that Asian firms had just over 44 percent of the market for photonic integrated circuits (PICs) last year. Others suggest that America claims the “highest share of the global PIC market due to a complete ecosystem of tech corporations, research and development institutions along with high investments in silicon photonics.”
Though preeminence in the market is not settled. European companies also intend to compete. The EU is in the process of investing €380 million in piloting production of photonics chips and associated research in the Netherlands.
Other processes that’ll support the diffusion of photonics tech — like the repurposing of manufacturing sites and cleanrooms in Belgium for photonics — are underway.
China is also intensifying work on photonics. It included photonic development in its 14th Five-Year Plan, perhaps seeing the technology as a way to “change lanes and overtake”, and of evading US export controls.
The innovation ecosystem for electronic integrated circuits has evolved over decades. While the US dominates in areas like semiconductor design, including advanced software required to create modern integrated circuits, Taiwan has taken the global lead in manufacturing.
And while China is investing huge sums and making some headway trying to catch up to the cutting edge, existing dependencies make it a huge challenge.
A new game in town. The need to harness tacit knowledge shared across an entire ecosystem of firms operating with high levels of trust means that the easiest way to become a global semiconductor leader is to already be one.
By contrast, photonics are still a bundle of mostly experimental technologies, for which the production processes are not mainstream, and have not reached significant economies of scale.
The machines that make the machines that make chips are important. The EU is already home to a lynchpin in the advanced electronic components market — lithography machine manufacturer ASML.
Building an equivalent player for photonics would be a major step in deepening European leadership and sovereignty in semiconductor technology, and advanced computing components.
As Lawrence Lundy, at State of the Future writes; “European companies that can position photonic technologies as strategic for technological independence may find additional support, this is especially true since Trump’s tariffs blew up the idea of a global supply chain."
Lundy told Inferences that “European governments have an opportunity to play an essential role in the emerging global AI infrastructure; rather than pursuing the impossible goal of complete semiconductor autonomy, smart industrial policy should explicitly aim to make European photonics companies indispensable nodes in global supply chains.”
The race is on. A decade ago, the US’s National Institute for Standards and Technology noted that “the United States has historically been the world leader in deploying photonics research for cutting-edge technologies, but global competition has put this leadership at risk, causing a substantial U.S. loss of market share and jobs to overseas competitors.”
Competition from Europe, China and the likes of Israel’s Tower Semiconductor has grown more intense in the meantime.
Is photonic supremacy on the horizon? It has been a century since the first electronic logic gate was invented by Walther Bothe. Electronic computing emerged over the following decades, and the memory and latency constraints are still falling today.
Photonics has reached the stage of experimental, all optical (light-based) logic gates, and rely on a totally different process of manufacturing to electronics. The relevant properties and materials are also very different.
A survey of equipment needs for photonics production by HTSC identified building lithography tools at a lower cost as one of the key issues preventing more widespread development. These problems, which remain scientific rather than purely engineering-related, will take time to solve.
Though accelerators, like the use of artificial intelligence for modelling and optimization, as well as geopolitical risks that put more pressure on domestic research and development to invent commercializable techniques shouldn’t be underestimated.
The upshot? The timeline for photonic components to achieve performance and cost parity with electronics is disputed. Yet changing incentives for researchers and investors, triggered by trade turmoil, could obviously accelerate breakthroughs.
If American protectionism drives Chinese and European innovators to design out American components — and if the White House continues to weaponize dependency on American technology to achieve other political aims — photonics are a space to watch for sudden capability leaps outside of the US, and equally impactful geopolitical consequences.
What we’re reading:
Alex Chalmers on the UK’s dumbest trade war: How the Royal Navy went three rounds with the Icelandic Coast Guard and lost.
Anthropic take a comprehensive look at signs of emergent social and ethical values in LLM conversations.
Heavy hitting AI researchers, David Silver and Richard S. Sutton, tee up the theoretical grounding for a new era of AI: Welcome to the Era of Experience.
What we’re looking ahead to:
14 - 16 May: B7 Summit, Ottawa.
4 June: AI+ Expo and Ash Carter Exchange in Washington, DC.
June (expected): The UN Internet Governance Forum.
15 - 17 June: G7 Leaders’ Summit in Kananaskis, Alberta.
24 - 25 June: North Atlantic Treaty Organization (NATO) Summit.
6 - 7 July 2025: Annual BRICS Summit, Rio de Janeiro, Brazil.
9 - 11 July 2025: AI for Good Global Summit.
9 - 23 Sep 2025: UN General Assembly (UNGA 80), New York.