What’s really new in photonics over the past 20 years—China

March 10, 2021
China’s economic growth has transformed it from a low-end supplier of optical components into an enormous market for lasers and a critical part of the international photonics supply chain.

What is the most profound new development impacting photonics (and everything else) in the past 20 years? I think it’s the rise of China, with its highly developed market for industrial lasers and vast supply chain that exports photonics components to the world.

The emergence of China in photonics is especially evident if you look at the International Photonics Stock Index created by John Dexheimer of LightWave Advisors. At the recent Lasers & Photonics Marketplace Seminar, he showed that many of the top companies in the photonics ecosystem are Chinese, and that fact doesn’t capture the impact of many more, smaller Chinese photonics companies that are suppliers of components and systems. And, as we know, international laser makers such as Coherent, IPG Photonics, nLight, and Trumpf have a very large percentage of their sales in China. But the business and political environments are changing.

In his Marketplace Seminar talk, consultant Bo Gu described the decoupling or new multimodal model of globalization that is underway as the Chinese economy rebounds strongly from the pandemic and establishes itself more assertively on the global political, technological, and economic stage. The resulting changes are creating many uncertainties for economic relationships and presenting very substantial challenges. Bo is a strong advocate for international businesses to address these challenges by having production operations located inside China.

He says that a decoupling will impact U.S. laser manufacturers much more than the Chinese. To a large extent, the Chinese laser industry is quite complete except for a few key components from abroad. While to many U.S. and European companies, the Chinese market represents one of the most important markets and perhaps the biggest potential for revenue growth in the near future. You can read much more about Chinese government policy and laser markets in Bo’s January 2021 article in Industrial Laser Solutions: “Will the U.S. and China decouple?”.

The new Biden Administration is reconsidering every aspect of the U.S.-China relationship. The potential economic impacts of decoupling or at least serious divergence are the subject of a report from the consulting firm Rhodium Group and the U.S. Chamber of Commerce China Center: Understanding US-China Decoupling: Macro Trends and Industry Impacts. The costs could include a $190 billion annual loss in American economic output by 2025 if all U.S.-China trade was subject to the type of 25% tariff imposed by the previous administration on $250 billion of Chinese goods.

I believe very strongly that we must observe and be prepared to react to the new relationship between the Chinese government and what are sometimes termed LMDs (liberal-minded democracies, which include not only Europe and the U.S., but Japan, India, Australia, and other countries). An excellent long read on this subject and on the internal politics of China driving many foreign and domestic actions is: China – A Look Ahead to 2021 and Beyond, by Charles Parton of the Royal United Services Institute, a think-tank in London.

Given rising tensions with the Chinese government, the governments of the LMDs may react with measures that will strain relations. As a result, foreign companies may have to reexamine their supply chains and markets if they are to avoid damage to their business interests. So, fair warning: business and politics are always intertwined, and the coming years will see a new version of this relationship between international photonics companies and Chinese businesses. 

About the Author

Conard Holton | Editor at Large

Conard Holton has 25 years of science and technology editing and writing experience. He was formerly a staff member and consultant for government agencies such as the New York State Energy Research and Development Authority and the International Atomic Energy Agency, and engineering companies such as Bechtel. He joined Laser Focus World in 1997 as senior editor, becoming editor in chief of WDM Solutions, which he founded in 1999. In 2003 he joined Vision Systems Design as editor in chief, while continuing as contributing editor at Laser Focus World. Conard became editor in chief of Laser Focus World in August 2011, a role in which he served through August 2018. He then served as Editor at Large for Laser Focus World and Co-Chair of the Lasers & Photonics Marketplace Seminar from August 2018 through January 2022. He received his B.A. from the University of Pennsylvania, with additional studies at the Colorado School of Mines and Medill School of Journalism at Northwestern University.

Sponsored Recommendations

Request a free Micro 3D Printed sample part

April 11, 2024
The best way to understand the part quality we can achieve is by seeing it first-hand. Request a free 3D printed high-precision sample part.

How to Tune Servo Systems: The Basics

April 10, 2024
Learn how to tune a servo system using frequency-based tools to meet system specifications by watching our webinar!

Motion Scan and Data Collection Methods for Electro-Optic System Testing

April 10, 2024
Learn how different scanning patterns and approaches can be used in measuring an electro-optic sensor performance, by reading our whitepaper here!

How Precision Motion Systems are Shaping the Future of Semiconductor Manufacturing

March 28, 2024
This article highlights the pivotal role precision motion systems play in supporting the latest semiconductor manufacturing trends.

Voice your opinion!

To join the conversation, and become an exclusive member of Laser Focus World, create an account today!