Advancing technologies, broader applications and societal trends are impacting both the industry and the economy. No trends issue would be complete without a discussion about the global economy and its impact on the photonics industry – as well as the industry’s potential to impact the economy. More and more, light-based technologies are addressing significant issues facing the world today – energy efficiency, health care, security, financial needs – as demonstrated in some major breakthroughs in technology such as LEDs and displays, cost-effective manufacturing, and development of innovative imaging and sensing devices. Photonics Spectra spoke with representatives of several companies about their views on these and other key topics. • Joel Bagwell, director of engineering for Edmund Optics in Barrington, N.J., a supplier of optics and optical components industrywide. • Alex Fong, vice president of life sciences at Gooch & Housego, an Ilminster, England-based company that researches, designs, engineers and manufactures advanced photonic systems. • Dr. Tom Hausken, senior adviser of engineering and applications at The Optical Society. • Dr. Kenneth Kaufmann, vice president of Hamamatsu Corp. in Bridgewater, N.J., a research, development and distribution company for photonics components and subsystems used in instrumentation. • Dr. Albert Theuwissen, founder of Harvest Imaging in Grenoble, France, delivering coaching and training services in the digital imaging world. He is also a professor at Delft University of Technology in Belgium. • Eliezer Manor, president of Shirat Enterprises Ltd. in Israel, which focuses on venture capital and funds management, as well as business development. • Dr. Mike Houk, vice president of technology at Bristol Instruments Inc. in Victor, N.Y., a designer, manufacturer and marketer of lasers and precision test instruments used in basic and applied research, engineering and production test applications. • Dr. Steve Sheng, president of Telesis Technologies in Fremont, Calif., a manufacturer of identification and traceability technologies, including lasers and marking systems. Q: How would you characterize current growth trends for photonic technologies? What is the driving force behind current trends? Fong: In terms of the “megatrends” perspective, I think that photonics almost perfectly mirrors the major issues facing society. This correspondence has a lot to do with the broad engagement of photonics as an enabling technology. For example, our biggest industrial markets are LED and display testing, and there continue to be projections for strong growth for the next five years and beyond for both. This coincides with commercial trends such as the increasing adaption of LEDs to replace incandescent and the popularity of smartphones and flat panel displays. In terms of scientific and defense R&D applications, there continues to be interest in our products for characterization of imaging systems response. This stands out against the continued decline in defense funding but is understandable when viewed in the context of demand for increased surveillance, remote sensing and detection, which reflects the nature of current threats. However, medical and life sciences continue to provide the greatest potential for new areas of growth for photonics. OCT for clinical ophthalmic applications is the poster child for this, but there are many more similar examples in development trials that may prove just as beneficial and popular. I believe that such technologies are the key to reducing costs and improving outcomes. Bagwell: I would certainly characterize the growth trend we see as being healthy. We have seen increased demand and are correspondingly positioning ourselves to respond in areas such as chalcogenide components for mid- and long-wave applications. We additionally see increased demand from the higher laser fluence apps that place an increased demand on component quality. As far as a driving force, I would have to say from the infrared standpoint, there are forces at work that have reduced the market dependence on the defense industry and pushed more toward the commercial space. This in turn has led to a diversification of the applications with even some commoditization. Kaufmann: Aging population is increasing diagnostics needs. Cost containment and diagnostics for developing countries are driving lower costs. Consumer electronics (wearables) is also stimulating growth, but for low-cost sensors. Manor: I estimate that the major growth in photonics technologies would be related to nanotechnologies, and therefore photonics progress will be driven by that basic field. The driving force behind the field of nanotechnologies for photonics is the basic and the applied research carried out in universities and applied research institutes – in other words, in academia. Of course, breakthroughs will have a major impact on all the chain. Q: What are some significant trends you are seeing, and how will the growth of those, as well as the photonics industry as a whole, impact the global economy in the years to come? Theuwissen: Imaging sensors are becoming imaging systems. Processing power is getting cheaper by the days, and the same is true for memories. So the processing after an image sensor will still grow, imaging systems will become higher performance, lower power and will become commodities. Imagers will be found in every corner of every room, on every corner of every street. Fong: Keeping with the megatrends view, photonics has the potential to conserve resources, reduce costs and make us healthier and safer. At present, security is a major concern, and imaging is a big part of that. Photonics enables inexpensive and potentially ubiquitous situational awareness through lightweight and cost-effective technologies that produce data-rich images and require little power to operate. This is a big reason why UAVs (unmanned aerial vehicles) have become seen as such an effective tool – it’s not just the drone; it’s just as much about the camera. Energy independence, an issue which drives economies and foreign policy, is also an area where photonics is poised to make an even greater contribution through improvements in solar cell technologies. Another area, cost-effective health care for an aging population, is a long-term issue. Conventional structures, modalities and technologies will not be enough to address rising costs, declining revenues and still maintain the same level of care or improve it. Photonics, when combined with techniques from molecular biology, shows great promise to meet all those requirements. Kaufmann: Diagnostics for developing countries, wearable consumer electronics and POC in developing countries will eventually merge into a single market. Photonics will be a key technology. Q: With a sizable aging population, the demand to meet increasing medical care needs is rising. What impact will this have on the global economy and on the industry as a whole? Bagwell: The impact on the economy is one area that should be separated from the impact on the industry. The socioeconomics of an aging population is a complex question to address, but, clearly, areas of the world such as Japan are consciously addressing it today. With regard to the photonics industry and the impact of an aging population, clearly there will be an uptick in demand for some of the next-generation medical devices. Blood analysis, point-of-use care devices and cancer screening equipment should all see an increased demand. A simple example is the scanning and imaging equipment used to create a new tooth for a dental crown. The scanning is done on the spot, and the new tooth is then milled in the next room based on the real data collected minutes earlier. An older population means more patients in these dental offices and hence more of a demand for quicker turnaround of care. Devices and technologies like the dental scanner should see increased demand with an aging population. Sheng: More advanced forms of light-based medical devices will help improve the quality of treatment and lower its cost in the future. This trend would provide the industry opportunities to expand in the associated field. Hausken: For wealthy countries, particularly in the U.S., the aim is to reduce health care costs. New tools may allow early diagnosis of conditions, speeding recovery or eliminating unnecessary care. For poor countries, the aim is to bring affordable care to millions of people who haven’t had it, where poor health care is a drag on their quality of life and the regional economies. This is a very promising area for photonics. Q: There is a global push to develop more energy efficient, sustainable light-based devices and components. How can research and development in this area be conducted more economically? Fong: The newly proposed National Photonics Foundry Center of Excellence, endorsed by the White House and under the National Network for Manufacturing Innovation, is one potential way to do this. Private-public partnerships are an effective way to address such challenges. There are great examples of how well this can work in Germany, for example. As part of an industrial policy, government, academe and industry created some of the established leaders in the fiber laser segment. We could do the same here if we could get away from partisanship and work to get something done. Manor: I don’t think that basic research can be done more economically; it can be increased only by increasing budgets. However, more funding can be allocated to applied research and R&D when this industry grows, because this amount is always a percentage of the total turnover. Sheng: Fundamentally, it is a scale of economy question. Given that a solar cell is not a 24-hour power generator (barring expensive battery included), it can only be implemented to a certain level before the economic benefit is neutralized (we still need to maintain and sustain the traditional power generation infrastructure to support the dark hours and days). Hence, the impact of economy by solar cell in the developed countries like the U.S. is to develop more low-cost and efficient installation and network connection infrastructure-related technologies (instead of solar cell cost reduction) in order to expand the scale of economy more quickly. For the developing countries or remote areas, the cost of the solar cells themselves dominates, and the government policies may dictate their deployment and growth. Q: Which light-based technologies do you see advancing and growing the most over the next decade? Bagwell: Excitingly, I see a very bright future for machine vision, particularly with security and surveillance. UAVs in both military and civilian uses, airport security, automotive and handheld blended spectral band systems are all coming down in price, and hence the market could plausibly respond with increased volume. Hausken: It is now the golden period for LEDs used for lighting. That’s not to say it will be smooth sailing for the suppliers. In fact, periods like this can be very chaotic. But it is a period of substantial growth, with a substantial impact in our everyday lives. Houk: In addition to telecommunications, OLED-based consumer lighting will have large growth. Sheng: LED lighting, as the base technology, is getting more matured and cheaper. The global lighting industry will be transformed to more LED based, especially given the energy cost benefits it incurs. The impact of economy would be higher than other new technologies, including advanced lasers. Q: How can the industry overcome economic challenges? Bagwell: The easy answer here is the old trinity of faster, cheaper, better; we all need to figure out how to achieve all three, or else, but in reality, I don’t necessarily see any major threats of a photonics industry contraction but rather some headwinds to realizing the full growth potential in certain areas of the world. Namely, the U.S. lags Germany and China in terms of government support and catalyzing of the industry. The National Photonics Initiative aims to address the issue, but the U.S. has some catching up to do. Inspiringly, the sum of all parts globally will respond to the demand and should grow as a whole. Fong: Probably the biggest concern is the withdrawal of funding for science and technology education and research. It’s hard to see how this will not impair considerably our competitiveness by reducing both the pipeline of talent and resources, as well as basic innovations that this industry and others have been built on. No matter how much you unfetter free enterprise, it will not be their function to address this. As a community and constituency, we need to speak as loudly to Congress and the administration as others that our interests matter to everyone. One problem you hear about a lot in our industry press is the fragmented nature of the industry. There are lot of very small players and only a handful of big ones. This makes creating an enterprise of sufficient scale to address the really big challenges difficult, and we tend to be looked at as a portfolio of novelty technology developers. Every so often, one firm will consolidate with another, but such mergers and acquisitions often don’t result in the synergies anticipated. However, I think that we are looking at it the wrong way. I always like to say that the goal of every photonics company should be to get out of photonics. What that means is that the success of a photonics firm is to find an application for its technology and define [itself] by that market, instead of maintaining the identity on the underlying technology. For example, if you are making lasers for punching precision holes in metal, then you really are a materials processing company. Looking at it that way, clear synergies emerge. Hausken: Many photonic segments are now large enough and mature enough that they are very dependent on the global economic cycles. Examples include displays and image sensors for consumer products. Most suppliers are playing in a global market today, where your prospects depend on swings in global economic cycles and currency exchange rates. Companies can try to protect themselves, for example, by diversifying their business. Q: In what sector of the photonics industry do you predict the most economic growth in the next five to 10 years? Kaufmann: Consumer. Consumer electronics is now at the leading edge. The pyramid has been turned over, with consumer electronics at the top, followed by industrial, then research, then military. An example is the sCMOS cameras that started with cellphones. Manor: Machine vision, because of the need in the transition from traditional industries to high-tech industries in fast-developing countries, in particular in the Far East and China. This transition is characterized by upgraded robotic manufacturing techniques and lines, and introduction of new products in international markets. Biophotonics, because of the progress of life sciences and therefore development of new medical devices. The major related impact would be here on sensors, lasers and optomechanical devices (MEMS). Lighting, because of the major role LEDs will play in this huge world market.