The Silicon Photonics Race

The Dawn of a New Technological Frontier

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In the world of semiconductor technology, where the stakes are high, a quiet revolution is underway. While the world focuses on traditional microchip manufacturing, China is steadily advancing in a different direction – the realm of optical chips. This burgeoning technology, which uses light instead of electrons to transmit data, has the potential to reshape the landscape of global technological competition.

“When you can’t go through an obstacle, go around it”—this approach to semiconductor development has been adopted by China. Faced with increasing restrictions on access to advanced chip manufacturing equipment from Western countries, Chinese scientists have accelerated their work on silicon photonics—a technology that may allow them to leapfrog existing barriers and change the competitive landscape.

Why Optical Chips Matter

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An optical chip, using light instead of electrons to transmit data, offers numerous advantages such as increased speed, bandwidth, and energy efficiency. Silicon photonics, integrating photonic components based on silicon, leverages existing semiconductor manufacturing processes.

Imagine downloading an entire 4K movie in less than a second, or training an AI model that would normally take weeks in just a few hours. Optical chips enable such scenarios, offering three key advantages over their electronic counterparts:

• Blazing Speed: Data travels at the speed of light, not electrons
• Unmatched Energy Efficiency: Dramatically lower power consumption and heat generation
• Exceptional Bandwidth: The ability to process far more data simultaneously

As traditional electronic chips approach their physical limits in performance and energy efficiency, optical technology is emerging as the most promising solution for next-generation computing needs. For China, mastering this technology is not just a matter of scientific achievement—it is a path to technological self-sufficiency in a critical sector.

This technology has the potential to overcome the limitations of traditional electronic chips, especially in data-intensive applications such as AI and high-performance computing (HPC). The possibility that optical chips can surpass the limitations of conventional electronic circuits is the main driving force behind global interest in this technology.

Breakthrough Achievements in Chinese Laboratories

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Integrating Light with Silicon

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In the city of Wuhan, scientists from JFS Laboratory have accomplished what many considered a fundamental challenge: successfully integrating a laser light source directly onto a silicon chip. This achievement—the first of its kind in China—represents a crucial milestone in the development of silicon photonics.

The JFS team, backed by $1.2 billion in government funding, used heterogeneous integration technology to connect an indium phosphide laser to an eight-inch SOI wafer. This is a technical feat that directly addresses one of the most significant bottlenecks in data transmission between chips.

Breaking Speed Records with Light

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Meanwhile, researchers at Fudan University have created something remarkable: an integrated photonic high-order multiplexer chip capable of transmitting data at a staggering speed of 38 terabits per second. To put that in perspective, this single chip could transmit 4.75 trillion AI model parameters every second—essentially enabling artificial intelligence systems to process information at unprecedented speeds.

This breakthrough directly addresses critical challenges in large-scale AI model training, data center connectivity, and high-performance computing, all with exceptional energy efficiency and minimal latency.

Optical AI Accelerators: Thousands of Times More Efficient

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Not to be outdone, researchers at Tsinghua University have developed optical chips specifically designed for AI applications. Their “Taichi-II” optical chip enables efficient and precise training of extensive neural networks in optical computing systems.

The previous generation of the “Taichi-I” chip has already demonstrated impressive area and energy efficiency in AI tasks. However, perhaps most notable is their ACCEL chip, which reportedly processes computer vision tasks 3,000 times faster while using four million times less energy than state-of-the-art GPUs.

From Lab to Fab: Building Manufacturing Capabilities

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Scientific breakthroughs are useless without the ability to manufacture at scale. China is approaching this reality head-on by launching the first domestic pilot line for photonic chip manufacturing at the Wuxi Photonic Chip Research Institute, which belongs to Shanghai Jiao Tong University.

This pilot line is planned to reach an annual production capacity of 10,000 wafers and supports a complete, closed production cycle for lithium niobate photonic chips, as well as processes silicon and silicon nitride. The first set of PDKs (Process Design Kit) is to be released in the first quarter of 2025, enabling the provision of external chip manufacturing services.

In parallel, breakthroughs in materials are paving the way for mass production. Shandong Hengyuan Semiconductor Technology has successfully developed a 12-inch optical-grade lithium niobate crystal – a key material for photonic chips. Researchers at the Shanghai Institute of Microsystem and Information Technology have created a new type of “optical silicon” that can be mass-produced.

A Growing Ecosystem: Companies and Institutions Driving Innovation

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China’s optical technology landscape is characterized by a rapidly growing ecosystem of companies and research institutions:

Leading Companies

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From established tech giants like Huawei to specialized companies like Centera Photonics and Sourcelight Technology, dozens of Chinese companies are investing heavily in various aspects of optical technology – from components and transceivers to specialized chip development and manufacturing.

Research Powerhouses

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Chinese universities and research institutes are at the forefront, with Tsinghua University leading in research on optical AI chips, Fudan University developing high-order multiplexer chips, and the Shanghai Institute of Microsystem and Information Technology making breakthroughs in “optical silicon” chips.

Table 1: Leading Chinese Companies in Optical Chip Technology

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Applications Transforming Industries

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JFS Laboratory has developed a silicon photonics chip integrated with a laser, enabling fast and low-resistance optical connections for data transmission, potentially exceeding the limits of Moore’s Law. The high-order multiplexer chip developed by Fudan University achieves ultra-wide bandwidth (38 Tbps) for on-chip communication, which is crucial for large AI models and data centers. The “Taichi” and ACCEL chips from Tsinghua University demonstrate significant improvements in energy efficiency (up to 1000 times better than Nvidia H100 for Taichi-II, 4,000,000 times less power consumption for ACCEL in vision tasks) and processing speed for AI applications.

The potential applications of Chinese optical chips span numerous key sectors:

• Telecommunications and 5G Networks: Increasing data transmission speeds and efficiency in 5G infrastructure. Microwave photonics, also being developed in China, may significantly improve telecommunications systems.
• Data Centers and Cloud Computing: Improving performance and energy efficiency in data processing capabilities. Optical interconnects could alleviate I/O bottlenecks in AI computing.
• Artificial Intelligence and Machine Learning: Accelerating AI computations and model training. This includes applications in large language models (LLMs) and AI-generated content (AIGC).
• Quantum Communication: Supporting advancements in quantum technology.
• Advanced Sensors: Enabling LiDAR in autonomous vehicles and industrial automation.
• Aerospace: Enhancing capabilities in laser remote sensing and laser communications.
• High-Performance Scientific Computing: Accelerating complex scientific calculations.

Table 2: Comparison of Key Advancements in Chinese Optical Chip Technology

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How China Stacks Up Against Global Competition

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China’s research into next-generation chip manufacturing technologies, including optical computing, is reportedly more than double that of the United States. China also leads in the number of highly cited publications in this field. Some believe that China’s advances in silicon photonics could allow them to “change lanes” and surpass the US in the semiconductor field.

However, the United States is actively seeking to restrict China’s access to advanced semiconductor technology and equipment. Some analysts suggest that China still lags behind the US and Taiwan in terms of overall semiconductor manufacturing. The vice president of TSMC notes that silicon photonics may solve energy efficiency and computing power issues in AI.

What is clear is that while the US and its allies maintain dominance in traditional semiconductor manufacturing, they are also actively investing in silicon photonics, recognizing its strategic importance.

The Road Ahead: Challenges and Opportunities

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Despite significant progress, China still faces significant challenges:

Technical and Manufacturing Challenges

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• Technical barriers to widespread adoption of silicon photonics still exist
• Commercializing scientific breakthroughs into mass-produced products can be difficult
• It is also necessary to develop software and operating systems optimized for optical computing
• China still faces limitations in access to advanced semiconductor manufacturing equipment, such as EUV lithography
• The cost of producing advanced chips using older equipment is higher

Strategic Opportunities

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• Photonics offers excellent speed, energy efficiency, scalability, and bandwidth
• It can form the basis of many future technological advances
• China has the potential to take the lead in this developing technology
• Silicon photonics may be a key technology in the development of AI and HPC
• It can help China reduce its dependence on foreign semiconductor technology

China’s Optical Chip Market: Investment, Production and Growth Forecasts

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In China, a state-backed chip industry investment fund worth $47.5 billion has been launched. The Optics Valley of China (OVC) has seen significant investments in photonics. JFS Laboratory was established with $1.2 billion in government funding. Huawei plans to invest significantly in chip manufacturing equipment.

The pilot line in Wuxi aims to achieve an annual production capacity of 10,000 wafers. Shandong Hengyuan plans to significantly increase the annual production of lithium niobate crystal wafers. Overall chip production capacity is expected to increase in China.

Table 3: Projected Growth of the Chinese Optical Chip Market

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Note: For the Global 25G Optical Chip Market Report, the specific projected market size and CAGR were missing from the available material.

The Future of Light-Based Computing

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The global photonic chip market is poised for significant growth, with forecasts reaching $10.41 billion by 2031, at a compound annual growth rate (CAGR) of 15.4%. The optical communication chip market is expected to reach similar values, with a CAGR of 12.9% by 2032.

As China continues to invest heavily in optical chip technology, the global semiconductor landscape may experience significant changes. China’s strategic focus on optical chips represents both a technological hedge against current limitations and a bold bet on the future of computing.

In the race for technological supremacy, China’s advances in optical chips may prove to be a decisive move—potentially allowing it to leapfrog competitors by mastering the science of light-based computing before others do. As traditional electronic chips approach their physical limits, the ability to harness light for computation may determine which nation leads the next era of technological advancement.

The silicon photonics revolution is in full swing, and China is determined to be at the forefront.