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Executives Share Market Perspectives

Photonics.com
Jan 2011
SAN FRANCISCO, Jan. 28, 2011 — Executives from six laser and optics companies gathered to share their perspectives on the state of the industry Wednesday as part of a SPIE-sponsored panel at Photonics West.

Moderated by Tom Hausken, director, components practice, at Strategies Unlimited, the panel included Hamamatsu VP Ken Kaufmann, Trumpf Managing Director Timothy Morris, CVI Melles Griot President and CEO Stuart Schoenmann, Edmund Optics CEO Robert Edmund, Coherent Senior VP of Speciality Laser Systems Mark Sobey, and Newport Precision Components and Systems Business VP Dennis Werth.

Hausken began the session by providing the audience with an overview of the active photonics market, which is worth $132 billion and includes flat panel displays (the largest segment), solar cells and modules, lasers (which is now a $6.4 billion market), high-brightness LEDs, and image sensors.

In terms of photonics industry mergers and acquisitions in 2010, 28 percent occurred in the medical life sciences segment, 15 percent in optoelectronics and optics, 14 percent in aerospace, defense and security, 11 percent in industrial manufacturing and metrology, and seven percent in lighting, with the remaining 25 percent divided among several other segments.

2010 saw the laser industry recover from the recession of 2008 and 2009, Hausken said, but that recovery was a jobless one. Revenues in 2011 will essentially wipe out the declines of the past two years to return to 2007 levels.

The market for display backlights, which has been helping drive demand for high-brightness LEDs (HB-LEDs), didn't really see a recession and experienced huge growth in 2010, he said. The solar industry also continued its very strong growth.

In terms of the job market, Hausken said his unscientific survey of the positions posted on the spie.org career center showed that 2010 had more job openings available than in 2006, 2007 or 2008, and had substantially more than those posted in 2009, which declined sharply from 2008.

Looking ahead to the next decade, he said the growth areas will be flat panel displays, imaging, green (while the previous decade saw a boom in LEDs and solar, lighting will be the big story in the next 10 years), "all things biophotonic," and new materials and technologies.

His list of five big disappointments included the decline in the markets for optical storage, telecom components, photonic integrated circuits (PICs) and optical computing, and the death of CRTs, photographic film and the fax machine.

"I'm not a big believer in PIC. I haven't seen any big future for that on the silicon photonics side," Hausken said, adding that maybe a hybrid device would have more of a future.

Hausken then turned to the panel to ask them their perspectives on the market.

Schoenmann said there is currently a transformation taking place in the industry, because of second and even third generations of leaders at companies offering new perspectives and because of new markets opening up through continued globalization.

"As we look at the next five years, we will continue to see consolidation, but also further growth and development. I don't think the industry will be the same in five years," Schoenmann said.

"Once again we're the darling of the capital markets," Edmund said. "There's real evidence that capital and interest is flowing back in a boom sort of way to technology, but are we building another bubble?"

"With the companies we deal with, most grew between 20 to 40 percent between 2009 and 2010," Werth said, adding that the growth was not evenly distributed, with some countries, like China, booming more than others.

Werth said Newport is focusing on biophotonic applications such as two-photon imaging. "We think the market has legs," he said.

"Like everyone else, we had a good 2010, but the rest of the US did not," Kaufmann said. He pointed out that developing countries experiencing rapid growth need photonics products and are a good market for the industry. "The challenge for us is to be where the growth is."

Hausken posed a question to the panel about "mom and pop" companies, and whether they are fundamental to the industry or whether they will even be around in five years.

"Not every business has a climax moment of they die or get sold," Edmund said. "We see here (at Photonics West) all kinds of new businesses that could fill the vacuum. You always see acquisitions, but I think there will be a lot of small businesses."

As the conversation turned to funded sources, Schoenmann said, "We are finding more VCs (venture capitalists) are coming to invest -- money is available."

Kaufmann said a new trend for his company is seeing money coming from developing countries.

One venture capitalist in the audience posed a question to the panel about the liklihood that there will be a huge technology shift that "changes what the previous generation knew, and what the new generation has to know."

Sobey said huge paradigm shifts are usually materials-based, and are not sudden, but can take five to 10 years to fully develop. Kaufmann said such paradigm shifts could come from people looking to solve problems in the developing world, such as medical care and diagnostics, and that those systems can prove to be so good that they start replacing established technology in the developed world.

Sobey pointed out the difficulties associated with making lasers and finding customers in today's market.

"Our products are technologically extremely challenging, and take years to develop," he said, adding that reliability testing can take six months.

As the panel's hourlong session concluded, Schoenmann pointed out that the photonics industry doesn't get enough credit for being the enabling technology for many markets.

"It all starts here," Hausken responded.

"I think so," said Schoenmann.

More Photonics West 2011 coverage

Posted by Melinda Rose, Senior Editor


GLOSSARY
optoelectronics
A sub-field of photonics that pertains to an electronic device that responds to optical power, emits or modifies optical radiation, or utilizes optical radiation for its internal operation. Any device that functions as an electrical-to-optical or optical-to-electrical transducer. Electro-optic often is used erroneously as a synonym.
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