Small and medium-sized enterprises (SMEs) across Europe have long struggled to adopt photonics technologies. Fragmented support systems, limited access to advanced manufacturing. And a lack of expertise in scaling from lab to market have hindered innovation. Now, a new EU-funded initiative is stepping in to change that.
The European Commission has committed €15 million to launch PhotonHub PHACTORY, a pan-European virtual factory designed to fast-track photonics development. The initiative connects startups and companies with over 30 leading competence centers across the continent. Offering everything from early-stage prototyping to industrial-scale upscaling.
Launched on January 1, 2025, PhotonHub PHACTORY builds on the momentum of its predecessor, PhotonHub Europe. Which supported over 100 companies in generating €750 million in revenue, creating 1,000 jobs, and raising €250 million in venture capital in just four years. The new programme aims to unlock €4.2 billion in SME revenue by 2028 while cutting time-to-market for photonics-based products by up to 40%.
“PhotonHub PHACTORY represents a major leap forward in making photonics innovation accessible and scalable,” says Professor Hugo Thienpont, Director of Brussels Photonics and the programme’s coordinator. “This €15 million effort will enable collaborative projects across sectors like healthcare diagnostics, green energy, and quantum communications. Reinforcing Europe’s leadership in photonics-based technologies.”
Unlike traditional support systems, PHACTORY operates as a cross-border innovation platform. Enabling startups from one country to collaborate seamlessly with research labs in another. A Dutch healthtech startup, for example, could partner with a German quantum optics lab or an Italian AI research team to co-develop new technologies.
This integrated network covers the entire photonics value chain — from early-stage R&D (TRL2) to prototyping (TRL3-4) and upscaling (TRL5-7) — offering streamlined access to top-tier European labs and pilot manufacturing lines.
Importantly, the initiative also accelerates investment readiness levels (IRL), allowing companies to become not only technically but also commercially prepared for scale. Through this structured approach, PHACTORY addresses the full lifecycle of innovation — from idea to industry deployment.
One of PHACTORY’s most transformative elements is its high subsidy rate, with EU grants covering up to 85% of project costs. This financial support has already enabled innovations like miniaturized biosensors for pathogen detection and high-efficiency laser sorting systems for industrial use.
The program’s flexible design is built to serve a wide range of sectors, with dedicated tracks for:
- Early-stage startups via a Launchpad
- Scaling ventures via a Scaling Club
- Established companies through Business Coaching and advanced R&D support
According to Nathalie Debaes, Consortium Management Support Officer, the initiative is about more than just technology. “Our mission is simple: we want European businesses to thrive on the global stage. And photonics is the key to lighting the way.”
PhotonHub PHACTORY runs until 2028, with the broader goal of building European photonics sovereignty in key strategic areas. With China already investing €3.2 billion in its domestic photonics ecosystem. Europe is now pushing back with coordinated investments in quantum security, AI-based photonic accelerators, and secure infrastructure.
By empowering businesses with free expert assessments, lab access, and tailored technical guidance. PHACTORY is not only reducing innovation friction but also cultivating the next generation of photonics talent.
As global competition intensifies, initiatives like PHACTORY are set to become critical pillars of Europe’s industrial strategy — ensuring the continent remains competitive in one of the most transformative technology fields of the decade.
