Because silicon lasers are based on high-volume silicon manufacturing techniques, they are much cheaper to produce than traditional lasers that require more exotic materials, expensive processing, and complex packaging. According to Dr. Mario Paniccia, Director of Intel's Photonics Lab, the move from traditional lasers to silicon lasers is comparable to the move from vacuum tubes to transistors in the 20th century.
Intel thinks silicon lasers will be vital for interconnects in future "tera-scale" systems that might have processors with tens or even hundreds of cores. Where transfer speeds for current copper-based links are limited by heat and/or electromagnetic interference, optical links have no such limitations and can thus provide the bandwidth necessary for future systems. Namely, Intel says silicon laser-based chips will be able to squeeze 1Tb/s (125GB/s) of data down a single optical link. This technology could also give engineers the freedom to place memory as much as a couple of feet away from a system's memory controller to facilitate new cooling systems.
This technology is still at the experimental stage, and both Intel and UCSB say there's a fair amount of work to be done before it makes its way into commercial products. However, the two reckon silicon lasers should be commercialized within five to ten years. Additional information about the technology, including videos and the Hybrid Silicon Laser white paper, can be viewed here.