A photodiode is a reverse-biased PN junction that produces a current proportional to the light falling on it. It is the exact reverse of a Light-emitting diode: instead of consuming electrical current to make photons, it absorbs photons to make electrical current.
How it works
The diode is held in Reverse bias, so the Depletion region is wide and contains a strong built-in electric field, while the dark current is just the tiny Reverse saturation current. When a photon of energy at least (the Bandgap) is absorbed inside that depletion region, it kicks an electron from the valence band into the conduction band, creating an electron–hole pair. The depletion region’s strong field immediately sweeps the two apart — the electron toward the n-side, the hole toward the p-side — before they can recombine. That separated charge flowing out the terminals is a photocurrent.
The more intense the light, the more electron–hole pairs are generated per second, so the photocurrent is (over a wide range) directly proportional to the incident optical power. This makes the device a clean linear light-to-current transducer. The reverse bias is what makes it work well: it widens the depletion region (so more photons are absorbed where the field can collect them) and speeds up the carrier sweep-out, giving a fast, sensitive response.
Photodiodes generate current under illumination; LEDs emit photons when forward-biased.
Where it is used
Anywhere light has to become an electrical signal: light meters, the receivers at the end of fibre-optic links, optical encoders and remote-control sensors, and — operated with no external bias and harvesting power from the photocurrent rather than measuring it — solar cells. A solar cell is just a large-area photodiode optimised to deliver power rather than to measure intensity. The shared physics with the Light-emitting diode is that both hinge on the energy exchanged when an electron–hole pair is created (photon absorbed) or destroyed (photon emitted) at the junction.