A lossless holographic spectrum splitter is proposed for partitioning the solar spectrum into two segments in a two-cell lateral photovoltaic (PV) device. The holographic splitter is used to redirect the majority of high energy photons to a high band-gap PV cell. A low band-gap PV cell is positioned to collect any remaining high energy photons along with the low energy photons. The optimal spectral characteristics of the holographic spectrum splitter, implemented using two multiplexed volume phase gratings, and the optimal band-gap energies of the two lateral PV cells are simultaneously obtained through a detailed balance analysis. With arbitrary band-gap energies and a concentration of 100 suns, the overall efficiency of the proposed lateral PV cell architecture can reach as high as 45% under the AM 1.5 direct-plus- circumsolar spectrum.