Before the technology comes to market, Intel plans to combine the transmitter and receiver components into a single chip, and also to shrink the chips to a size where they will fit inside smartphones and tablets.

The silicon lasers can be made using existing manufacturing techniques, which will help keep costs down and is partly why chip makers like Intel and IBM are interested in it.

"We have to use the silicon manufacturing technologies we know," Demain said. "That's what the promise of the technology is. It is based on a silicon foundation."