Read about what current political events mean to our industry, market updates, quantum photonics, special events, new reports and other news, opinions and opportunities.
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Message on COVID-19 (Coronavirus)
The Optical Society (OSA) has expanded virtual meetings, programs and services to ensure our global community is informed and engaged during the COVID-19 pandemic. We have embraced our core value of inclusivity in providing high-quality technical content at no cost to our members and customers worldwide. Learn more.
What Current Political Events Mean to Our Industry
The saying that 'bad news travels fast' was never truer than early this year, when the pandemic brought the entire globe to a standstill. Everyone from the busiest metropolises to remote Nepal adapted to a new and global tragedy. The catastrophe hit hospitality and retail businesses the hardest, while most optics and photonics companies were able and continue to adapt surprisingly quickly to sustain revenues, as we've reported in previous OIDA newsletters. Nonetheless, the pandemic changed everything, and as we wrote in April, it is truly a Black Swan event. Six months in, there is still far to go, and we believe it will be another 12-24 months for a global recovery from COVID-19.
There's also a U.S. presidential election this year. What will that mean for optics and photonics, in the U.S. and globally? We said it in 2016 (here) and it's worth saying again: the supertanker of the U.S. government is slow to change course. If there is a change in the administration, the new government would take power in late January, and changes don't happen immediately. And it's not just the White House that is at stake: the election will determine whether the U.S. Senate will be in the hands of the same party as the president, and actions in congress take even longer.
The most lasting impact of the current administration to the optics and photonics community is arguably the U.S.-China trade conflict. Even if there is a change in the presidency, it may mean a change in style with regard to China rather than a reversal in policy to the past relationship. China has joined the club of global trading countries and is acting accordingly, by expanding and protecting its trade routes and alliances, through programs such as Made in China 2025 and the Belt & Road Initiative. For its part, the U.S. is looking to bolster its domestic sourcing of semiconductors and other key products as a way to reduce dependence on offshore manufacturing (eg, nationasee more on the CHIPS Act here). That's also the justification for federal funding of AIM Photonics and the National Quantum Initiative.
The U.S.-China conflict is therefore not just about the current tariffs or TikTok itself; rather, both countries are looking ahead to the next generation of tech companies, influence over currencies and regional allies and showing force but also maintaining open channels to de-escalate conflict from North Korea and Central Asia as needed. In the background in domestic politics are questions over who gets to control the technology used in AI, surveillance, free speech and privacy. For its part, China's leadership has not said who it wants to win the election, preferring to keep a low profile. Most of all it may prefer a chaotic outcome that diminishes U.S. credibility (see here).
Europe is facing tough decisions regarding its own policies. The region is strong in areas like robotics, 5G networking, aerospace and basic science. But it is weak in cloud computing (where the U.S. is strong) and electronics manufacturing (where China is strong). There is growing concern in the E.U. that it will fall behind the U.S. and China without a stronger foreign strategy. The tools of national security include diplomacy, trade, and as a last resort, military action. However, the nature of the E.U. is that its policies are fragmented. The E.U. government manages a common trade policy, but national security is managed by the member states. The E.U. has its own initiatives too, and Americans commonly express admiration for the E.U.'s explicit support of photonics R&D. But it has other challenges to overcome too, and action is just as slow in Europe as it is in the U.S., if not slower.
Meanwhile, Brexit negotiations continue. U.K. citizens voted to leave the E.U. in 2016, and four years later, the exit is happening but there is still no trade agreement with the E.U. (See OIDA's comments from 2016 here and here.) The U.K. government has announced plans to substantially increase public funding of R&D, and it will be implementing a new point-based immigration policy aimed at attracting talent.
This web of interconnected natural and human crises is nearly intractable to decipher. Fortunately, our industry seems to be on a relatively even course. The immediate concern of optics and photonics companies will continue to be the well-being of their staff and customers and navigating the pandemic and political events as they unfold. As Aristotle said, "Patience is bitter, but its fruit is sweet."
Source: Roy Delgado, from Cartoon Stock.
A Brief Market Update
The latest results indicate that, according to official financial statistics, optics and photonics continue to fare as well as can be expected under the circumstances of the pandemic. The figure below from Omdia shows the estimated sales from optical components suppliers into the communications sector. Revenues dropped over 13% in Q1 from the initial supply chain disruption, but then recovered by about 25% in Q2. Perhaps that’s no great surprise, since the world is demanding more—and different—telecom services since the pandemic spread. Omdia expects a slight increase in Q3 as suppliers catch up with backlog.
Source: Omdia (2020), from an upcoming OIDA Market Update.
How are the Asian consumer products manufacturers that we examined early in this pandemic doing? The figure below shows the monthly revenues for the contract manufacturing giant Foxconn, normalized to October of the previous year. So far this year revenues are slightly lower, compared to previous years, but the pattern is not greatly different. The expectation out of Asia is that sales of many consumer products, such as displays, will continue through the fall.
Source: OIDA (2020), from company statements.
The consumer product lens maker Largan Precision is following a similar trajectory. The figure shows its 2020 sales distinctly lower than in the previous four years at this point in the year, and well below 2019. But sales are on an upward trajectory, as they did in previous years.
Source: OIDA (2020), from company statements.
And just for fun, there's Peloton Interactive. That's the company that is an "exercise equipment and media company" (not photonics) that has seen a 300% surge in its stock price since the pandemic started. And yet, its revenue has increased by only 1/3 over the same period. It's surprising for an equipment company, as our industry well knows, since equipment sales will eventually saturate to the available market. At that point, new shipments will likely decline, unless the old equipment wears out or needs upgrading, and how much can you wear out an exercise bike or treadmill?
That's where the so-called media company comes in. Peloton Digital is a monthly subscription service that brings recurring revenue even as equipment sales lag. Subscribers work out with live or on-demand videos, and can compare their workout stats in real time with other subscribers. The media feature doesn’t even require the bike and treadmill equipment, which makes it essentially just an online workout app. Will it last? Or will it rise and fall like how most people buy and use exercise equipment? Stay tuned!
Source: OIDA, from Yahoo Finance.
See the last OIDA newsletter for examples of recurring revenue in optics and photonics companies, in the form of consumable product sales and service contracts.
What Our Expert Roundtable Said About Quantum Photonics
OIDA hosted two of a series of roundtable discussions on the commercialization of quantum photonics on 15 and 16 September, "collocated" with OSA's Quantum 2.0 and Frontiers in Optics online conferences. The next OIDA roundtable discussion will be on 7 October at the online Photonics Days Berlin Brandenberg event (see here for free registration). What follows are some of the catchy takeaways from the September discussions:
- Quantum sensors are already in commercial use, but need some more quick wins. What defines a commercial product varies from person to person, but certainly clocks and gravimeters have been in the field for a good while. What would constitute success? With the acceptance of the next new application? When the end-use components market exceeds the R&D components market? When the end-user doesn't know or care that "quantum" is even part of it?
- Quantum key distribution (QKD) is an early quantum communication application, but not the only one, or even the most important one. What's needed now are customers for QKD to demonstrate that quantum technology can work in point-to-point links. In the near term, low key rates, trusted nodes and unentangled schemes are likely good enough. Once QKD becomes customer driven and "business as usual," service providers can build scale and trust. Then quantum technology can be used in other applications, including quantum networking, where entangled photon schemes will be necessary.
- What's so hard about reducing SWaP? "It’s just engineering," right? No, reducing size, weight and power (SWaP) means redesigning everything again, at substantial cost. For example, smaller form factors introduce crosstalk. They require new approaches, new materials. As important as it is to reduce SWaP, however, the customers may prefer to trade lower SWaP for higher performance at this stage. Lower SWaP may have to wait until the next generation of products.
- What are the missing components? The optical components are generally available off the shelf today, but they are "academic grade" products from the back of a very high shelf. The telecom sector has invested an enormous sum to make optics robust and "plug and play," but the same robustness doesn't exist in the visible wavelength sources needed for quantum sensing and computing. And products vary from batch to batch. Even telecom-grade products are not sufficient: as one panelist said, "we shake them up pretty hard." That said, there are some gaps in performance too, such as higher performance single-photon detectors, ultra-low-loss switches, deterministic photon pair sources and, of course, quantum repeaters.
- Down-selecting the number of lasers required by customers is a recurring topic. Brent Young of AO Sense illustrated how they use 10 laser types on two wavelengths for four purposes in their quantum sensors, and that's just one vendor and one application. He suggested that suppliers should focus on products for sensors based on cesium and rubidium atoms first, which use longer visible wavelengths. Make those products bulletproof, and then migrate to strontium, which uses short visible wavelengths. Strontium promises better performance, but is more expensive to develop.
- Integrated photonics may have to wait until the second generation of products for applications other than quantum computing. For quantum sensors, discrete photonics are likely good enough to demonstrate commercial products. Integrated photonics will be more compelling when the market brings greater volumes or requires further miniaturization. (There are a few companies pursuing integrated photonics as a unique solution in quantum computing, solutions that cannot be built with discrete components.)
- What about the talent shortage? There wasn't much talk about a lack of quantum physicists, although in recent years the completion to hire them has increased. Solid engineers and technicians are always in demand, however.
Come to our next OIDA roundtable discussion on the commercialization of quantum photonics, at Photonics Days Berlin Brandenburg (see here). For a free copy of the OIDA Quantum Photonics Roadmap: Every Photon Counts, go here (for OIDA members) and here (for OIDA non-members). Previously registered conference attendees can view recordings of the September roundtable discussions here.
Source: xkcd, under a creative commons license.
Welcome New OIDA Members
Last Chance to Register for the Virtual OIDA Roadmap Roundtable on Quantum Photonics Requirements on 7 October
This is one of a series of online discussions of the requirements on optical components for applications of quantum technology. This roundtable will consider a wide range of applications, while focusing on specific optical components such as lasers, detectors, and integrated photonics. The aim of the event is to assess and revise, if necessary, the requirements described in the document published this year, OIDA Quantum Photonics Roadmap—Every Photon Counts. The event will feature experts invited to offer their perspectives, and attendees will also encouraged to participate in the interactive discussion.
Held with Photonics Days Berlin Brandenburg 2020. Learn more and register now.
Register Now for the Free Virtual Laser Applications Conference Starting 13 October
Meet the innovators breaking new ground in laser technology. Participate in the free virtual Laser Applications Conference at the OSA Laser Congress, where you can hear from — and network with — colleagues, industry luminaries and exhibitors sharing the latest advancements and applications of laser technologies for industrial products and markets. Technical sessions will be presented live from the Eastern Daylight Time Zone (EDT) with a recorded archive available later for on-demand viewing.
There is no cost to participate as an attendee. Don't miss this first-ever opportunity to bring the OSA Laser Congress experience into your home or office. Free registration provides access to both the Laser Applications and the Advanced Solid State Lasers conferences.
Access a world class program which includes:
New! Read OPN's interview with Laser Congress plenary speaker Peter Moulton, the original inventor of the tunable Ti:sapphire laser, on 60 years of solid-state laser history.
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Whether you have been an active member for years and need a quick refresh or are transitioning to the new OIDA membership model — this orientation is a must-attend! Please feel free to share this with your colleagues. When you join OIDA, everyone at your organization becomes a member.
New Digital Programming Now Available Live and On-Demand
OIDA management and OIDA members have produced a series of webinars and a virtual Technology Showcase 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.
Congratulations 2-Photon Optical Clock Collaboration - 2020 Paul F. Forman Team Engineering Excellence Award Winner
The 2-Photon Optical Clock Collaboration, USA received the 2020 Paul F. Forman Team Engineering Excellence Award for the development of an optical atomic clock architecture that leverages microfabricated photonic components, leading to a vast reduction in size, weight, and power for next generation applications in timing, navigation, and communication. This advancement could have broad commercial implications. Learn more.
Invitation to Join the OIDA Optics and Photonics Industry LinkedIn Group
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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.
- Simin Cai,
- Claudio Mazzali,
Corning Research &
Development Corp, Past Chair
- John Dexheimer,
LightWave Advisors, Inc.
- Turan Erdogan,
- Amy Eskilson,
- Christoph S. Harder,
- Anjul Loiacono,
- Rick Plympton,
Optimax Systems, Inc.
- Debbie Wilson,
Lumentum Operations Inc.