Member News - December 2020

Industry Member News

30 November, 2020

 

 

Read about Changes in E.U. Funding of Photonics, France and Europe Photonics Markets, Optical Communications, Special Events, New Reports and Other Noteworthy News, Opinions & Opportunities

OSA Corporate Member
Newsletter

In this Issue:


Changes in E.U. Funding of Photonics

While the U.S. has been inwardly focused on a presidential election, there is mixed news on European funding of optics and photonics.

Photonics21 hosted an information session on 5 November (here) in place of its annual meeting. Among other things, the session included an update on proposed funding through 2021-2027 under the new Horizon Europe R&D program. Photonics21 is the E.U. technology platform in public-private partnership with the European optics and photonics community. Horizon Europe is the new European Commission's R&D budget that follows Horizon 2020, which spanned 2014-2020. At stake is the continued dedicated funding of photonics as one of the E.U.'s key enabling technologies.

The good news is that photonics will remain as a unit in the new Horizon Europe, but differently than before. There is talk of a "ring-fenced budget", having its own section in Cluster 4 (Digital, Industry & Space) of Pillar 2 of the program, and so on—all somewhat difficult to decipher for anyone not familiar with the labyrinthine nature of the European Commission's workings. (For example, see this presentation from 2019).

But what everyone wants to know is: What of the budget? As of this writing, the proposed funding for photonics is "up to €500 million" over the period 2021-2027, which would be up to €71 million per year. This compares to €100 million/year under the seven years of Horizon 2020. The new budget could set funding back to the level of 2013.

Photonics21 has done well to reach its targets and demonstrate the value of photonics to Europe. However, the Commission wants to avoid entrenched entitlement programs, and keep its agenda current with the E.U.'s strategic goals. Toward that end, Photonics21 will reorganize to match the six E.U. Pillar 2 application groups pursuing those goals. This will require formal collaborations with each group, with the aim of opening up co-funding. The Commission also wants more commercialization around these collaborations. It's an ambitious undertaking but one intended to make the agenda more effective.

In short, Photonics21 will survive for another 7-year funding program by adapting to the times. If it continues to perform well, it may continue as a dedicated photonics unit within the E.U.

It's not just photonics that is chafing at the proposed budget. While Horizon Europe is not the only channel for E.U. funding of R&D, it is the largest. In 2019, the Commission proposed €94.4 billion for the full Horizon Europe program, an increase from the previous 7-year program of €74 billion (in 2018 prices). That budget was cut, but then increased again, to about €85 billion (in 2018 prices). The figure shows how the E.U. funding for its R&D "framework programmes" (FP) grew dramatically since 2007, recorded here in current year (i.e., unadjusted) prices.

Source: OIDA, from E.U. documents. The 2021-2027 proposed budget is in 2018 prices.

In November, the League of European Research Universities (LERU) complained about the cuts through an opinion piece entitled "They couldn’t care less." It notes that the E.U. governance promised greater investment in R&D, with hopes that it might exceed €100 billion, but it hasn't followed through.

To put this all in perspective, the U.S. federal government non-military R&D budget is about US$ 80 billion per year, or about 7X that of the E.U. But consider too that the E.U. is not the primary provider for its member states. The entire E.U. budget, which is about 12X larger than Horizon Europe, is still only about €150 billion per year. This is in the range of the Denmark national budget. The State of California budget is about US$ 150 billion per year.

None of this precludes the E.U. national governments from increasing their own spending on R&D, whether for universities or industrial projects. But that requires different conversations with different policymakers. It's easier to make the case for increasing spending on existing programs than to make the case for new programs.

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France and Europe Report on Photonics Markets

Photonics France recently reported on its optics and photonics industry, approximately confirming OIDA's own estimates for the country. The market research firm Tematys conducted the study, and is also tabulating the values for the E.U. countries for Photonics21 (see story above). It’s helpful to have the same firm doing both studies and Tematys has done a good job.

The Tematys study estimates employment of about 73,000 workers across over 1,000 companies, bringing €18.6 billion in annual revenues. This compares to OIDA's estimate in 2016 of 68,000, about 21% of the European employment, including the U.K and non-E.U. countries. OIDA estimated France's location quotient at 2.5, second only to Germany. The location quotient is a measure of the relative concentration of photonics employment compared to the overall economy, with values greater than 1 indicating greater than average concentration.

OIDA places France behind Germany but essentially tied with the U.K. as the second-largest optics and photonics industry within Europe. OIDA estimates that 86% of the European photonics employment is in these three countries. Germany has the most organized and visible industry, with strengths in optics and lasers for manufacturing, and home of the biannual exhibition commonly known as Laser Munich. France and the U.K. aren’t as well recognized, but boast their own strong photonics sectors, including significant military equipment and aerospace industries that employ a lot of expensive precision optics

Source: OIDA, from Photonics France document (2020).

Tematys also recently provided preliminary estimates for the European optics and photonics market at the Photonics21 event mentioned above, with a final report coming by the end of the year. Tematys projects growth of 5-6% for the period 2020-2025, which approximately agrees with OIDA’s projection.

Tematys's preliminary estimates for national market shares match in some places with OIDA's estimates from early this year (here and here), shown side by side below. We both agree that China is leading in production. OIDA places North America slightly ahead of Europe, while Tematys reverses the order. The two regions are approximately equal in both market size and the kind of products they offer—Europe and North America are each strong in applications that use high performance, high precision optics and photonics.

Sources: OIDA (2020) and Tematys (2020).

Asian countries generate about 2/3 of revenues, and are strong in assembly of high volume consumer products, such as displays, camera modules and LED lighting. The order has changed significantly in recent years, however, with China rising in nearly every major segment, while Japan and Taiwan have moved much of their manufacturing offshore, as the U.S. did decades ago. The specific estimates can vary according to the exchange rate, since OIDA values the worldwide market in U.S. dollars, while Tematys values it in euros.

There is one striking difference between OIDA's market estimates and that of Tematys. OIDA sized the 2019 optics and photonics global components and systems market at US$ 500 billion. Tematys places it at about €650 billion, or about US$ 730 billion. While it's difficult to reconcile such a gap, the numbers are so large and heterogeneous that they become abstract, just numbers. What matters is whether they are growing or declining, and how much.

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Optical Communications Keeps Moving Forward

Market research firm Omdia expects that 2020 will end up with positive growth in the optical communications components market, followed by several years of strong growth, to nearly US$ 25 billion by 2025, a compound annual growth rate of 10%. This is remarkable growth for a market at any time, much less through a pandemic. One doesn’t have to go far to note industries that have been devastated by the pandemic, such as travel and hotels, as we’ve written in previous OIDA newsletters.

The forecast includes both transmission components (such as transceivers and other active and passive components) and transport components (such as ROADMs/WSSs and the active and passive components they contain). The chart shows the overall optical components market, beginning at US$ 14.2 billion in 2019. It includes both merchant and captive devices (products that are made and consumed internally by network equipment manufacturers, NEMs). The merchant portion was US$ 10.2 billion, or approximately 74% of the market. Omdia expects the merchant portion of the market to shrink to 64% as component suppliers that were recently acquired by NEMs increasingly get pulled into supporting internal products. By 2025, this would bring the merchant market to US$ 16.1bn.

Source: Omdia (2020), with permission.

Wide Area Networking (WAN) was the largest segment of the market in 2019 with 52%, followed by datacom with 37% and access with 11%. Omdia expects datacom to gain share over the next five years to bring it to 45%, just ahead of WAN with 43% and access will be at 12%.Driving this increase in revenue will be Internet Content Providers (ICPs) adoption of 400G, and some adoption of 800G toward the end of the forecasting period.

This forecast and more will be included in an upcoming OIDA Market Update.

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Welcome New OIDA Members


FiberPro Inc.

 

ukrcomline

 


Gamdan Optics

 

ukrcomline

 


Gentec Electro-Optics, Inc.

 

ukrcomline

 


LioniX International

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Member Benefit: Plan Your 2021 Strategy with Industry Reports Available to OIDA Members

Industry leaders worldwide are planning their strategy for 2021 and beyond. A winning strategy is driven by intelligence. OIDA Members have exclusive—and complimentary—access to OIDA Market Update reports. Have you downloaded our newest industry reports?

Reports cover areas such as:

  • Optical communications
  • Optical sensors and applications
  • Military and security
  • 3D imaging
  • Agriphotonics
  • 5G mobile deployment
  • Industrial machine tools
  • Biophotonics
  • LED Lighting
  • Augmented and Virtual Reality
  • LIDAR
  • International research funding
  • Integrated photonics
  • Quantum Photonics
  • And More!

OIDA members have free access to all reports. We encourage you to browse the OIDA Publications and Reports Center to see everything available to you.

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It's a Wrap! 5th Annual OIDA Funding Accelerator Speed Meetings Focused on SBIR/STTR Funding

OIDA is committed to fostering the development and commercialization of new optics and photonics technologies that will expand the industry's product pipeline, and to offering OIDA members the opportunity to get the funding they need. We brought companies with less than 500 employees together with top U.S. federal agencies for one-on-one virtual meetings and presentations on 12 November. Companies had the opportunity to discuss their innovations and business model with this exclusive audience, and got an insider perspective on what specific agencies are looking to fund. The event helped government agencies better understand what our Industry can offer and how optics and photonics technologies can help them meet their goals.

Thank you to the participating agencies: Department of Energy (DOE), NASA, Navy/NRL, National Science Foundation (NSF), and U.S. Department of Homeland Security (DHS). Thank you to the companies attending including: GAMDAN Optics, Intelligent Fiber Optic Systems Corporation (IFOS), Iris Light Technologies, KMLabs, PFG Precision Optics Inc., Semper Fi Systems, Source Photonics, and SRICO, and Vertex Optics.

If your company is interested in learning more about OIDA SBIR/STTR events, please reach out to: OIDA@osa.org.

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RSVP for Virtual OIDA Member Benefit Orientation

RSVP for OIDA's member benefit overview orientation. This is an opportunity to learn more about key membership benefits you and your company should be taking advantage of and explore how to maximize performance and grow your business.

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.

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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.

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Showcase Your Company's Useful Techniques: Submit to Applied Optics' Engineering and Laboratory Notes

Applied Optics (AO) publishes Engineering and Laboratory Notes (E&L Notes)—brief, concise articles that share useful laboratory techniques and practical engineering approaches in the applied optics field. Topics range from design and analysis, to fabrication and integration, alignment, testing, and calibration of optical systems. E&L Notes offers a unique way to publish useful techniques from your engineering notebook in Applied Optics. Read more about E&L Notes and suitable topics for submission and learn about how to submit your contribution.

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Gain Recognition for Your Optical Engineering Team

Submissions are now being accepted for the 2021 Paul F. Forman Team Engineering Excellence Award, which recognizes team technical achievements such as product engineering, process and software development, and patent development, as well as contributions to society such as engineering education, and furthering public appreciation of optical engineering. The submission deadline is 10 April 2021. Don’t miss this opportunity to gain recognition and promotion for your optical engineering team(s).

Promotion of winning teams includes:

  • Special recognition in OSA's magazine, Optics and Photonics News
  • A dedicated press release
  • Outreach on OSA social media channels
  • Recognition during Frontier’s in Optics (FiO), OSA's annual meeting
  • Participation in the FiO Awards Ceremony and Reception
  • Recognition in trade magazines, journals and/or conference publications

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Invitation to Join the OIDA Optics and Photonics Industry LinkedIn Group

Join 3,500+ 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!

Linkedin

Link Now...

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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.

Not yet a member? Learn more about the benefits of membership.

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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,
Go!Foton, Chair

Turan Erdogan,
Plymouth Grating Laboratory, Inc.

Anjul Loiacono,
Double Helix Optics

 

Claudio Mazzali,
Corning Inc., Past Chair

Amy Eskilson,
Inrad Optics, Chair-Elect

Rick Plympton,
Optimax Systems, Inc.

 

John Dexheimer,
LightWave Advisors, Inc.

Christoph S. Harder,
SwissPhotonics

Debbie Wilson,
Lumentum

 

 

 

 

 

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