Read about What a Difference One Year Makes, Photonics Clusters, Special Events, New Reports, and Other Noteworthy News, Opinions & Opportunities
In this Issue:
What a Difference One Year Makes
It's been one year since the OIDA newsletter forecast a decline in optics and photonics revenues of 12-15% for 2020, compared to 2019. While such a drop would have been a dramatic downturn, our forecast seemed optimistic to some, as the full impact of the global pandemic was just being felt in the U.S. The fear in March 2020 was that the immediate supply chain issues (remember toilet paper shortages?) were only the beginning. Surging unemployment would slow the economy on a global scale not seen in a decade, or a century. And thousands, perhaps millions, would die.
The pessimism was warranted. One year ago, there were just over 1,000 deaths in the U.S. from the pandemic. Today, well over 500,000 individuals have died from COVID-19, approaching the level of deaths from the 1918 influenza pandemic. Worldwide deaths from the pandemic total nearly 2.7 million. In just one month, U.S. unemployment went from a 50-year low to the highest since the government started current recordkeeping—over 70 years. While employment has shown a recovery, there are still 9.5 million fewer jobs in the U.S. today than a year ago. And there has been not one, but three surges so far.
Or perhaps it has been one long surge without any breaks, resulting in widespread consequences to children, families and worker burnout (e.g., see this Nature article). Maybe you feel like the rhinos in the cartoon below, brooding over an extended lockdown inside Noah's Ark during the Biblical deluge of forty days and forty nights, the same length of time that lent its name to "quarantine," medieval Venetian for quarantina giorni, or forty days (here).
Source: Will Santino at Cartoon Collections.
And yet, in the April 2020 newsletter, we pointed out that factories in Asia were already returning to normal production; some early revenue figures from Asia were tracking the normal seasonal behavior. We also cited recency bias: the tendency to overweight recent events when thinking about the future. Here are some of our own words from April 2020:
"We tend to overestimate the near term, and underestimate the long term. The near future is most uncertain, but if history is our guide, we will underestimate the recovery in the coming 6 to 9 months. A full recovery may be unrealistic; it took nearly a decade to rebuild after the 2008 recession. But the worst damage happened at the beginning. A new study from the U.S. Federal Reserve Bank and MIT suggests that, while pandemics depress the economy, public health interventions like social distancing do not, based on data from the 1918 Influenza Pandemic. The situation today is very different from that of 1918, but the study offers some hope for the mitigating effects of early and strict interventions."
So, how did we do? If you have been reading the OIDA newsletter recently, you know that we have reported reassuring news about our industry. Not only did we climb out of the early V-shaped supply-side dip, but the industry appears to have recovered enough in Q3 and Q4 for 2020 to remain about level with 2019. Unlike the sectors worst hit by the economy, our industry largely stayed open, either as so-called essential operations, or by sending workers home while manufacturing in Asia where the factories were still running. And even the sectors we expect to be hardest hit—such as machine tools—weren't impacted as badly as we expected.
The figure below is our preliminary quarter-by-quarter estimate for 2019-2021 (dotted line) compared to our forecast in April 2020 (black dashed line). A seasonal drop in revenues in Q1 is normal, followed by stronger quarters as the year ends. But while every sector suffered some setbacks during the early part of the shutdown, revenues quickly recovered in Q3 and Q4.
Source: OIDA (2021).
There are still supply chain issues: automakers are suspending operations for weeks at a time due to a shortage of electronic parts (as chipmakers switched to making parts for consumer products). And global shipping continues to be in disarray (here and here). But factories in Asia have kept our industry—and much of the global economy—running. And concerns over a longer-term drop in demand are waning or limited to certain sectors.
What about Zoom Video Communications, the company name that became a verb? It was fortuitously positioned when the pandemic hit, successfully scaling up deployment of an easy-to-use videoconferencing interface through the chaos. We noted last April that its stock price (symbol: ZM) zoomed upwards as well. At that time, it was just over USD 150/share. It later hit USD 540/share and at this writing its capitalization is at USD 92 billion in capitalization. Yes, you read that correctly. A dormant and unrelated company with a similar name, Zoom Technologies Inc. (symbol: ZOOM) also surged upward in the confusion, despite having a capitalization 1/1000th of big Zoom and not offering a product since 2011. (Trading was suspended on the smaller company around the same time.)
Source: OIDA (March 2021) from daily adjusted closing prices.
We also reported in October on the growth in the stock price of Peloton Interactive as the homebound sought new ways to exercise indoors. It currently has a market capitalization of USD 30 billion. That's billion. With a "b." However, it seems that the prices for both Zoom and Peloton have peaked as the pandemic recedes and investors look to newer opportunities.
The last words in our assessment in April 2020 are worth repeating here: our industry helped to get through this pandemic. Genome sequencing instrumentation was used to identify and understand the SARS-CoV-2 virus and remedies. Display and telecommunications technology make it far easier to send workers and students home than even a few years ago, for those who are in a position to do so. And look for wider adoption of UV-C illumination for disinfection.
Our industry survived the last year better than expected, but it has been devastating to millions of individuals of all ages and their families, as well as thousands of small businesses. Our sympathy to all of you caring for family and neighbors, and we hope for a speedy recovery all around.
What is a Photonics Cluster? Part I
We're going to visit the topic of optics and photonics clusters, one of the great assets of our ecosystem, but this month we are going to discuss the kind of cluster that is usually ignored: the informal industry cluster. Why start with this? Because they are the type of cluster that everyone wants: a community that has enough critical mass to maintain or grow its position in a competitive, global market. It is the type described by Michael Porter in the book, The Competitive Advantage of Nations.
The economic cluster is best understood with examples. Think of Detroit in automobile manufacturing, Los Angeles for film and TV production, Milan for fashion, Houston for the oil industry, or Silicon Valley for tech startups. Even small locales can be the home of a healthy cluster, such as in farming or vacation hospitality. The clustering of gas stations at the same intersection near a freeway exit illustrates the same principle: the stations are better off clustering even though they compete.
The map below illustrates some prominent clusters of this type. Taiwan is arguably the strongest economic cluster in optics and photonics, along with several strong areas in China, South Korea and Japan. Silicon Valley is strong too. Expanding the definition a little could include Silicon Valley to the West Coast, Colorado and Arizona, all within a two-hour plane flight. We can add the cross-national corridor that connects Boston, Rochester, Ottawa and southern Quebec. We can count the many clusters in Germany as an extended uber-cluster, or extend it to include much of Western Europe. Israel is remarkable for having many startup companies in a region well removed from other clusters. The list goes on.
Everyone wants to be on the map, of course, and in fact they are—although not necessarily at this "zoomed out" view. Note that a formal cluster organization is not a requirement for a strong informal ecosystem; Silicon Valley has no organization advocating for its optics and photonics industry and yet it thrives. Neither do the several clusters in China.
Source: Richard Dasher: U.S.-Asia Technology Management Center, Stanford University (2016).
What does it take for a cluster to thrive? Richard Dasher at Stanford University's U.S.-Asia Technology Management Center says there are four key elements: capital, talent, knowledge, which all rest on a foundation of infrastructure that spans law, accounting and more. It helps to have "anchor stores"—one or more large manufacturer that trains young professionals and spawns startup companies. Local teaching and research universities are necessary to deliver new talent and collaborate on ideas. Many places have one or more of these elements, but a cluster needs all of them to thrive.
Source: Richard Dasher: U.S.-Asia Technology Management Center, Stanford University (2016).
The table highlights another dimension that is easy to overlook: the ecosystem must include not just any pieces, but pieces for every stage of commercialization. For example, it's not enough to launch startup companies, but there have to be exits too. If founders never leave their companies, they cannot transfer their experience to new companies (an issue in China). A well-regulated stock market allows investors to capture and reinvest gains in new businesses (an issue in Malaysia).
The table also illustrates why it is so challenging to create a thriving cluster or ecosystem: the many pieces that need to be in place cannot be established simply through government decree. Clusters are much more organic than that, requiring a broader economic strategy and patience. The local optics and photonics companies should be aligned to the greater strengths of the region. For example, German laser and optics companies serve many markets, but are particularly aligned with Germany's auto manufacturing industry.
Hold that thought, because we will discuss another type of cluster in a future OIDA newsletter: the formal cluster organization. There are many interesting activities going on in these clusters today that merit attention.
Welcome New OIDA Members
OSA Industry Member Profile — PHIX Photonics Assembly
Located in the Netherlands, PHIX Photonics Assembly provides assembly services for all major photonic integrated circuit (PIC) technology platforms. This "one-stop shop" is a growing global business that specializes in hybrid integration. OSA reached out to CCO Jeroen Duis to discuss the company's successes and future goals. Read the article.
Luminar Technologies Co-Founder and CTO Jason Eichenholz Discusses a Milestone for the Company
Luminar Technologies Co-Founder and CTO Jason Eichenholz discusses a milestone for the company with OSA Senior Industry Advisor Tom Hausken in this OSA podcast episode. They discuss the importance of the company going public and what it means for LIDAR technology and the automotive industry. Eichenholz describes the alternative pathway towards becoming public and opportunities to deliver the software for self-driving cars to market. Listen to the podcast.
New Virtual OIDA Technology Showcase: See the Latest Technology and Network with Industry Leaders
Looking for new products for your organization, information about the latest technology and an opportunity to connect with colleagues and industry leaders? Join us online 27-29 April and get an in-depth look as OIDA member companies present and explain their cutting-edge technologies.
Presentations Focus on 5 Key Technologies:
- Fiber Optics and Communications
- Instrumentation and Meterology
- Precision Optics and Components
How Does It Work?
The OIDA Technology Showcase is a free 3-day program, consisting of two parts:
- Showcase Presentations—participating companies will have 15 minutes to present their latest products and technologies live. View the schedule by day or by technology and topics.
- Networking—join participating companies in individual breakout rooms for additional programming, demos and Q&A. This is an exclusive opportunity to meet face to face and make new connections. View the networking schedule to see company's availability to connect during the event.
Register now for free access to all the sessions, then pick which presentations you want to attend—there's no travel, no jetlag, just plenty of information!
OFC Confirms Virtual Format
The premier event in telecom and data center optics—the 2021 Optical Fiber Communication Conference and Exhibition (OFC)—today announced it will convene in an interactive, all-virtual format, 06 – 11 June 2021. Considered the hub of the industry, OFC represents the entire ecosystem—from research to marketplace. This format, which includes technical sessions and a virtual exhibition featuring industry-focused programs, will expand engagement with the conference's global audience through live and on-demand content. The technical conference will take place 06-11 June, and the virtual exhibition will take place 07-11 June. Sessions will be scheduled at times convenient for many time zones.
Get the Details
OSA Optical Design and Fabrication Congress Confirms Virtual Format
The OSA Optical Design and Fabrication Congress will be now be presented in an all-virtual, web conference format on the scheduled dates, 27 June — 01 July. Learn more.
OSA 5G Webinar Series
5G technologies promise to offer increased network speeds, expanded interactivity on the network, much lower latency and provide vastly elevated conductivity. Join us for these upcoming sessions to learn more:
- 29 April: Optical Communication Technologies in the 5G Era
- 3 May: Industry 4 Starter Kit Guideline for Successful Implementation if Your Smart Factory
- 24 May: Access network evolution: convergence, virtualisation and intelligent control for 5G and beyond
- 26 May: Optical Networking an Enabler for 5G and Beyond
- 21 October: From 5G to 6G: Challenges and Opportunities
- On Demand: 50 Gbit/s Passive Optical Network (50G-PON): Standards Progress and Applications in 5G
Final Call for Team Engineering Excellence Award Nominations
The submission deadline for the 2021 Paul F. Forman Team Engineering Excellence Award is fast approaching. Nominations are due 10 April 2021. This award recognizes team technical achievements such as product engineering, process and software development, and patent development, as well as furthering public appreciation of optical engineering. Don’t miss this opportunity to gain recognition and promotion for your optical engineering team(s).
Promotion of winning teams includes:
- Announcement in Optics and Photonics News and on OSA.org
- Dedicated press release
- Outreach on OSA social media channels
- Recognition during Frontiers in Optics (FiO), OSA's annual meeting
- Participation in the FiO Awards Ceremony and Reception
- Recognition in trade magazines, journals and/or conference publications
Digital Programming Now Available Live and On-Demand
OIDA management and OIDA members have produced a series of webinars and virtual Technology Showcases that are available at no charge. We encourage you to browse our growing list of upcoming events and view on-demand recordings as they become available. And there is much more! Check out the OSA We Are On webpage for more high quality webinars on career development from the OSA Foundation and the OSA Career Lab.
Invitation to Join the OIDA Optics and Photonics Industry LinkedIn Group
Join 4,000+ of your colleagues in our OIDA Optics & Photonics Industry Network LinkedIn Group. This one-of-a-kind Forum for Industry lets you participate in discussions about cutting-edge issues. Extend your professional network. Exchange information about problems, ideas and solutions. Collaborate with experts in your field. Now is the perfect time to build a relationship with fellow optics and photonics professionals!
Questions or Suggestions about OIDA Member Benefits?
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OIDA (OSA Industry Development Associates) Council
Thank you to the volunteers who oversee the programs and services available to the Industry Community.
Inrad Optics, Chair-Elect
Plymouth Grating Laboratory, Inc.
Cedric F. Lam,
Double Helix Optics
Optimax Systems, Inc.