Read About the Newest, Biggest Laser Company in the World, the Coming Optical Communications Milestone, Special Events, New Reports, and Other Noteworthy News, Opinions & Opportunities
In this Issue:
The Newest, Biggest Laser Company in the World
OIDA member II-VI Incorporated announced on 25 March that it signed an agreement to acquire OIDA member Coherent, pending regulatory approvals. The deal makes II-VI the largest merchant laser company in the world, with combined revenues initially of about USD 4.1 billion annually. It is the latest in a long string of acquisitions by II-VI, which has shown 19% compound annual growth since 1995.
OIDA estimates that a little more than half of II-VI's growth has been from acquisitions. The figure shows II-VI’s revenues as reported (i.e., current U.S. dollars) on a log scale. The dotted grey line shows the revenues discounted by inflation to 1995 values, contributing an average annual growth of 2% compounded over the period. II-VI claims that its organic growth (growth of the core business apart from recent acquisitions) averaged 7% annually for 2009-2018, shown as the green straight line for comparison. This exceeds the global economic growth rate and even that of the optics and photonics sector. In other words, II-VI is gaining market share on competitors in established segments or entering new ones. The difference of about 10% compound annual growth came from II-VI's acquisitions. II-VI has been on a long buying spree, including its 2019 deal to buy Finisar valued initially at USD 3.2 billion.
Source: OIDA, from company filings (2021).
It didn't seem that it would turn out this way for Coherent. On 19 January, Lumentum announced an agreement to buy Coherent in a deal valued at USD 5.7 billion. It seemed like a done deal until MKS Instruments and II-VI entered into a three-way bidding war that continued for several weeks, culminating in the agreement with II-VI, valued at USD 6.9 billion at the time of the announcement. Coherent will pay Lumentum USD 218 million for breaking its earlier deal (here). The II-VI acquisition will make it one of the largest of its kind in the history of optics and photonics, or at least since the Telecom Bubble.
Coherent is one of the oldest laser companies, founded in 1966. Coherent's share price declined substantially since 2018, in part due to slowing demand in China that impacted industrial laser makers. Coherent's board appointed a new CEO last April, Andy Mattes, from McKinsey & Company, just as the pandemic forced companies to lock down facilities and send workers home. II-VI seems to think that the current market conditions will pass, and Coherent's value is closer to that of 2018. II-VI will pay Coherent stockholders USD 220 and 0.91 share of II-VI stock per share of Coherent stock, amounting to about USD 280 per share as of the day of the announcement. That value has already drifted higher since then.
Source: OIDA, from company filings (2021).
The combined company sells more than just lasers, but II-VI's revenues will be the largest of those selling merchant laser sources. For comparison, Trumpf makes laser sources for its EUR 3.5 billion business of lasers and machine tools. ASML makes laser sources for its EUR 14 billion microlithography system business.
The March issue of the OIDA newsletter discussed whether the claim that "consolidation is good" is true or merely a cliché. II-VI claims that there will be some synergistic savings from the consolidation, but the businesses are not greatly overlapping. (Bain Capital illustrated its estimates for combined market share here.) For II-VI, execution will be everything. For everyone else, there are opportunities for fast-moving or niche players. Either way, our industry is in good shape.
The Coming Optical Communications Milestone: Not When but How
Optical communications is about to reach an important milestone. It might be easy to miss from its unpretentious title—co-packaged optics and electronics—but it represents another step where optics replaces copper wiring. It is now a question of how, not when, and it was the topic of an OIDA workshop on 30-31 March, held online this year (details here)
Optical communication first appeared in commercial networks in long-haul and undersea links, where its substitution for copper wire was most compelling. Launching an optical signal is most favorable when transceiver power and the overall cost is spread over long distance; it is less competitive when used over shorter distances. Innovations in optical technology tilted the balance over the years to the point that optical fiber extends to homes and inside data centers to racks and boards. The next milestone would be to reach inside the board edge to a multi-chip module containing the switch chip and multiple transceiver chiplets. Also critical is that integrated photonics is necessary to reduce the size, power, parts count, and cost.
Source: Peter O'Brien, Tyndall Institute and European PIXAPP pilot line (2021).
The workshop consensus was that 2023 will be the first year when some data center architectures will require co-packaging with 50 Tbps switches. Migration to 100 Tbps switches, due to appear as soon as 2025, will require co-packaged solutions. This will come quickly; the industry has discussed on-board solutions for years, but the fiber hasn’t extended beyond the board edge.
The workshop converged around several performance targets to make co-packaging possible: an order of magnitude improvement in power to picoJoules per bit, "shoreline densities" of 100s-1000s Gbps per mm of board edge, and cost of much less than USD 1/Gbps.
The workshop differed about how to make it happen, however. OIDA's informal poll of attendees suggested that about 25% believed the laser would have to be in the package, another quarter thought it would have to outside the package, and half thought that both solutions would prevail, depending on the application. Intel is in the latter group; it is pursuing both solutions for its customers. With substantial innovation continuing in areas like fiber attach, participants were mixed about standards. About one quarter thought standards would be necessary, one third thought proprietary solutions would come first, and the rest thought both would coexist for the time being.
The workshop Gold Sponsor was PIXAPP photonic packaging pilot line, joined by Silver Sponsors Lumentum, GoFoton, and AIO Core. For more on the OIDA workshop, click here or read the OSA blog item here.
Want to Advocate for Science Funding? Sign the UNESCO Trust Science Pledge!
The International Day of Light provides a unique opportunity to celebrate the impact of optics and photonics and the wonder of scientific discovery. It is an occasion to remind the general public and policymakers of the value of supporting evidence-based science and science funding. You can participate in the 2021 celebration by signing the pledge to trust science at trust-science.org.
The science of light has brought these benefits to our lives in many ways: clean energy solutions, water treatment, less-invasive healthcare options and communications infrastructure—to name a few. Expressing confidence in the scientific process can help increase funding for science and, ultimately, its benefits, which are essential to our future.
The goal of the Trust Science pledge is to demonstrate widespread public support of science to world leaders. We hope you sign on by 16 May 2021 along with the Nobel Laureates, UNESCO Prize winners and leaders of major international optics and scientific bodies. In addition to signing, we encourage you to forward the pledge to your friends and families. Make sure to use #TrustScience and #LightDay2021 to join the conversation on social media and share the URL trust-science.org in any way you see fit.
The Trust Science campaign is co-sponsored by OSA, IEEE Photonics Society, SPIE, and the International Day of Light Steering Committee. For more information on how to get involved with the International Day of Light and OSA’s activities, please contact firstname.lastname@example.org.
Welcome New OIDA Members
OIDA Executive Forum Goes Virtual This June—Register Now to Participate
OIDA members who selected our Networking & Events benefits category can register a colleague for free through 28 May.
OIDA Executive Forum, the premier annual event for leaders in optical networking and communications is a virtual even this year, and will take place over two half-days. Join your colleagues and industry leaders for the first-ever, two-day virtual event on 02-03 June.
Executive Forum features C-level panelists in an informal, uncensored setting discussing the latest issues facing the industry and your business.
Attend three panel presentations, two keynote presentations, a business fireside chat and small-group meet the speakers sessions.
- Will Open and Disaggregated Optical Networking Change the Service Provider Landscape? This session explores the prospects of open optical communications in the evolution of technologies and network architectures, and highlights the progress of key open initiatives and actors across the components, hardware and software ecosystems.
- The Next Big Things — Pushing the Boundaries of Optical Communications Learn what the next big things are and explore with us how they will push the boundaries of optical communications.
- What is Going on at the Edge? This panel debates service requirements, network architectures, and the role of disaggregation and slicing at the network edge.
- Business Fireside Chat Join industry leaders and discuss market fundamentals, industry consolidation, Covid’s impact, new architectures and more.
- Keynote Presentations by Elizabeth Rivera Hartling, Subsea Optical Network Architect, Facebook and Bikash Koley, VP, Global Networking, Google
- Special "Meet the Speakers" Sessions Connect with speakers and colleagues in an intimate setting where you can ask questions and participate in a timely discussion.
View the program and speakers.
Register now. One low registration rate provides access to participate live online and/or view recorded sessions on-demand later.
Announcing a New Executive Forum Pre-Event Webinar
OIDA members can attend this webinar for free!
Webscale companies have fundamentally changed the optical networking market — will they do the same for satellite communications? This webinar will explore key technology and business aspects of the latest wave of LEO satellite communications projects while also exploring the risks and challenges ahead as the sector seeks to invest billions in these ventures.
Brought to you by the OIDA Executive Forum Planning Committee, register now for this special webinar in advance of the main event this June.
This one hour presentation requires a separate registration and is not part of your OIDA Executive Forum registration.
OSA/OIDA Virtual 5G Summit—Registration is Open
The 5G Summit is a two-day program providing an overview of the entire ecosystem. This technology promises to offer increased network speeds, expanded interactivity on the network, much lower latency, and provide vastly elevated conductivity.
Confirmed speakers from China Mobile, Deutsche Telekom, Ericsson, ETSI-F5G, Futurewei, Lumentum, MobileEdgeX, NTT, NTT Docomo, Orange Labs, Rakuten Mobile, Telecom Italia, Qualcomm, VaporIO, Verizon, and II-VI.
Topics will include Deployments & Use Cases, Radio Technology, Access Network Evolution and Open RAN, Edge Computing, Virtualization & Network Slicing, Transport Network Evolution in the Dawn of 5G, Scalability of Deployment, Optical Access and Aggregation Networks, and Optical Transceivers & Photonic Devices.
Present at the Laser Applications Conference
You can now submit your paper for consideration to present at the upcoming Laser Applications Conference (LAC), which is co-located with the Advanced Solid State Lasers Conference (ASSL), at the Laser Congress, 03-07 October 2021. This year's Laser Congress and Exhibition is planned as a hybrid event comprised of both in-person and online participation options. The in-person event will take place in Toronto, Ontario, Canada. The submission deadline is 02 June 2021.
LAC is accepting papers for posters and may upgrade some of the posters to oral presentations. This 3-day meeting focuses on two main topic areas — Materials Processing and Applications for High Power Lasers.
View a detailed list of paper submission subtopics.
View submission guidelines and other paper preparation information.
One of the themes of this meeting will be to initiate discussions on what engineering and production advances are needed to translate promising technological advances into marketable products. At LAC, you'll be immersed in an innovative learning environment that introduces new, groundbreaking information, offers insightful knowledge, showcases cutting-edge products and engages your active participation in important debates and discussions.
Innovation School Presentations Now Available Online
On 5-9 April, we hosted the Innovation School virtually for a second year. There were 20 participants from 12 countries as well as 21 additional attendees who served as mentors, speakers, and judges.
The guest speaker presentations are now available at osa.org/innovationschool.
OSA Advanced Photonics Congress Confirms Virtual Format
The OSA Advanced Photonics Congress will be now be presented in an all-virtual, web conference format on 26-30 July 2021. Learn more.
OSA Imaging and Applied Optics Congress and OSA Optical Sensors and Sensing Congress Announce Virtual Format
The OSA Imaging and Applied Optics Congress and the OSA Optical Sensors and Sensing Congress will be now be presented in an all-virtual, web conference format on 19-23 July 2021.
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?
We are committed to ensuring the value of your OSA Industry Development Associates Membership, so please email OIDA if you have any suggestions for new programs or comments on your membership.
Forward this message to your colleagues.
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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.