Targeted exposure to the photonics and optical-technology companies moving the world’s data with light
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Powering the optical backbone of AI
The AI build-out is constrained by how fast data can move between chips, servers, and data centres. As GPU clusters scale into the hundreds of thousands, copper interconnects hit hard limits on bandwidth, reach, and power, and the industry is turning to light. Photonics moves data at far higher bandwidth and a fraction of the energy per bit, placing the world’s optical component and photonic-chip makers at the heart of the AI supply chain.
Full-stack photonics exposure
The Photonics ETF aims to provide diversified exposure across the photonics value chain, spanning optical components and light sources (lasers, transceivers, fibre arrays and connectors), photonic semiconductors and interconnect chips (photonic integrated circuits, optical interposers, modulators), complete optical systems and networking, photonic foundries and manufacturing infrastructure, and the enabling materials on which photonic hardware is built, the building blocks of modern optical connectivity.
Pureplay index construction
The Photonics ETF tracks the Indxx Defiance Global Photonics Index, which selects the top pure-play photonics companies, those deriving at least 50% of revenues from photonics activities. Constituents are weighted by market capitalisation, capped at 10% per security, and rebalanced quarterly.
The AI build-out is constrained by how fast data can move. Photonics moves data at far higher bandwidth and using a fraction of the energy compared to copper interconnectors, placing the world’s optical component and photonic-chip makers at the heart of the AI supply chain.
A broad ecosystem
The full photonics value chain includes optical components, light sources, photonic semiconductors and interconnect chips, complete optical systems and networking, photonic foundries and manufacturing infrastructure, and the enabling materials powering modern optical connectivity.
Beyond the data centre
Photonics also underpins telecom networks, advanced sensors, autonomous systems and precision manufacturing, giving the theme relevance across multiple long-term technology trends.
Defiance Photonics UCITS ETF (LYTE) provides investors with targeted exposure to the companies developing, manufacturing, and commercialising photonic technologies, the optical hardware that generates, moves, and processes data using light rather than electricity.
As AI clusters, hyperscale data centres, and next-generation networks push copper interconnects to their physical limits, photonics has become critical infrastructure for high-bandwidth, low-power connectivity. The fund focuses on innovators across optical components and light sources, photonic semiconductors and interconnect chips, optical systems and networking, photonic foundries and manufacturing, and enabling materials.
The Photonics ETF tracks the Indxx Defiance Global Photonics Index, which targets high-growth opportunities across the full photonics value chain. The index selects globally listed companies deriving at least 50% of revenues from photonics activities, weighted by market capitalisation and rebalanced quarterly.
Key Risks
Companies in this sector may be affected, among other things, by emerging technologies and product obsolescence, dependence on IP rights and the risk of infringement or loss of rights. The sector may be sensitive to changes in global information technology spending, as well as disruptions to supply chains or other operational disruptions. Thematic ETFs are exposed to a limited number of sectors and thus the investment will be concentrated and may experience high volatility. Investors’ capital is fully at risk and may not get back the amount originally invested. Exchange rates can have a positive or negative effect on returns. The value of equities and equity-related securities can be affected by daily stock and currency market movements. Please note this is not an exhaustive list of risks. Other risks may apply. Further risks are disclosed in the KIID and Prospectus
Source: HANetf, data as of 30.09.2026. Please note that all performance figures are showing net data. Performance before inception is based on back-tested data. Back-testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such a strategy would have been. Back-tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled “Risk Factors” for further details of risks associated with an investment in this product. If fund is less than 12 months old, YTD field will be calculated since inception. When you invest in ETFs your capital is at risk.
No. of holdings: 25
Defiance Photonics UCITS ETF tracks the Indxx Defiance Global Photonics Index, a rules-based, market capitalisation-weighted index providing concentrated exposure to companies with material revenue exposure to the development, manufacturing, and commercialisation of photonic technologies.
Eligible securities must have a primary listing on a developed or emerging market exchange, a minimum market capitalisation of USD 500 million, six-month average daily turnover of at least USD 2 million, and a minimum free float of 10%.
Companies are classified across five themes: optical components and light sources; photonic semiconductors and interconnect chips; optical systems and networking; photonic foundries and manufacturing infrastructure; and photonic enabling materials.
Pure-Play companies derive at least 50% of revenues from these themes; Quasi-Play companies 20–50%; and Marginal-Play companies 5–20%. The portfolio comprises the top 20 Pure-Play companies by market capitalisation, with Quasi-Play companies (then Marginal-Play companies) added in market-cap order if fewer than 20 Pure-Play qualifiers exist.
Constituents are capped at 10% per security (15% for Quasi-Play and Marginal-Play) and rebalanced quarterly in February, May, August, and November.
Photonics exposure generally means investing in companies that develop technologies using light to generate, transmit, process or detect information. This may include optical components, lasers, fibre-optic equipment, photonic semiconductors, networking systems, specialist manufacturing infrastructure and enabling materials. The exposure is more specialised than broad technology investing because company performance may be closely linked to demand for high-speed communications, data-centre infrastructure, advanced manufacturing, sensing and optical equipment. Investors should examine how much of each company’s revenue is genuinely connected to photonics rather than assuming that every semiconductor or technology company has meaningful exposure. (Borsa Italiana)
Photonics is becoming important because large AI systems require increasing volumes of data to move rapidly between processors, memory, servers and networking equipment. As computing clusters expand, traditional copper connections can encounter limitations involving bandwidth, transmission distance, energy use and heat. Optical technologies use light to carry information and may support higher-capacity connections across large data-centre environments. Demand may therefore extend beyond the processors performing AI calculations to the transceivers, lasers, optical chips, networking systems and components that connect them. However, investment outcomes will still depend on customer spending, adoption rates, competition and whether companies can convert technological demand into profitable revenue. (hanetf.com)
Photonics exposure focuses primarily on technologies that generate, manipulate or transmit light, while general semiconductor exposure may include a much broader range of processors, memory chips, analogue components and electronic devices. Some companies operate across both areas, particularly those developing photonic integrated circuits, optical interconnects or semiconductor materials used in optical systems. However, the commercial drivers can differ. Photonics companies may be particularly influenced by optical-network upgrades, data-centre connectivity, laser demand and telecom capital expenditure, while conventional chipmakers may be more dependent on computing, smartphones, automotive electronics or memory cycles. Investors should review the methodology to understand how these overlapping businesses are classified.
Photonics exposure may cover several connected parts of the value chain. These can include optical components and light sources such as lasers, transceivers, fibre arrays and connectors; photonic semiconductors and interconnect chips; complete optical networking systems; specialist foundries and manufacturing infrastructure; and materials or substrates used to produce photonic hardware. Different segments may have different business models and risks. Component suppliers can be exposed to pricing pressure and customer concentration, while systems companies may depend on large telecom or data-centre contracts. Foundries and equipment providers may be affected by manufacturing investment cycles and the pace at which new photonic technologies reach commercial scale.
No. AI connectivity is an important potential demand driver, but photonics is also used in telecommunications, fibre networks, industrial lasers, precision manufacturing, sensing, medical equipment, aerospace, defence, autonomous systems and scientific instruments. These applications use light for activities such as transmitting data, measuring distance, detecting objects, cutting materials or producing high-resolution images. This can provide exposure to several end-markets, although individual companies may remain highly dependent on one customer group or application. Investors should therefore look beyond the overall theme and consider each company’s revenue mix, competitive position and sensitivity to areas such as telecom spending, industrial demand or government procurement. (hanetf.com)
Examples of listed companies operating across the photonics and optical-technology value chain include Ciena, Lumentum, Fabrinet, MACOM Technology Solutions, Coherent, Applied Optoelectronics, Marvell Technology, Corning, IPG Photonics and nLIGHT. Their activities vary considerably: some focus on optical networking, others manufacture lasers, components, semiconductors, fibre products or equipment used in advanced communications and manufacturing. Inclusion should not be interpreted as a recommendation, and not every company has the same level of exposure to the theme. These names were among the largest positions in a specialist photonics portfolio as of 16 July 2026, but holdings and weights can change following market movements and index rebalances. (hanetf.com)
A rules-based index can use revenue classification to distinguish companies whose main business is photonics from diversified technology businesses with only limited involvement. One methodology classifies companies generating at least 50% of revenue from relevant photonics activities as pure-play businesses. Companies with 20% to below 50% may be treated as quasi-play, while those with 5% to below 20% may be considered marginal-play. The index can then prioritise the largest pure-play companies and only add broader businesses when insufficient qualifying companies are available. Investors should review these definitions because the chosen thresholds materially affect how targeted or diversified the resulting exposure will be.
Liquidity and company-size requirements can help ensure that the selected securities are sufficiently established and tradeable. A specialist methodology may require companies to exceed minimum market-capitalisation, trading-volume and free-float thresholds before they are eligible. These rules can reduce exposure to very small or thinly traded businesses, which may be difficult to buy or sell efficiently. However, they can also exclude early-stage companies developing potentially important technologies. Investors should therefore understand that an investable photonics index may represent the more liquid public-market segment of the industry rather than every innovative company operating in the field.
Disclaimer: These FAQs have been generated with the assistance of AI and may contain errors or omissions. They are provided for general information only and do not constitute investment advice, a recommendation, or an invitation to buy or sell any investment.
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About Partner
Founded in 2018, Defiance ETFs is a leading U.S.-based ETF issuer specialising in thematic, income, and leveraged exchange-traded funds. With a track record of bringing innovative investment ideas to market quickly and effectively, Defiance has established itself as a first mover in several high-growth thematic categories, including AI, quantum computing, and leveraged single-stock ETFs. The firm’s investment philosophy is grounded in identifying structural, long-term trends and translating them into accessible, liquid ETF products for investors worldwide. Led by a team of seasoned finance professionals with backgrounds at ProShares, BlackRock, and Direxion, Defiance brings deep expertise in ETF product development, capital markets, and investor education.
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