Silicon photonics boom could push InP supply-demand gap above 70%, triggering race for strategic optical resources

The rapid expansion of silicon photonics is reshaping the optical communication supply chain. Driven by AI's demand for 800G and 1.6T transmission, the supply-demand gap for indium phosphide (InP) is projected to exceed 70%, intensifying upstream capacity constraints and pushing downstream module vendors toward silicon photonics adoption. From a compliance perspective, geopolitical tensions are prompting companies to reassess regional dependencies, especially amid U.S.-China tech decoupling. Market players are already investing in silicon photonics packaging and InP fabrication to gain competitive advantage. Over the next 12–24 months, unless significant capacity is added, silicon photonics will accelerate toward mature process nodes, while InP shortages may trigger a price surge, propelling the industry into a dual-phase evolution of technological transformation and resource competition.