World markets gain ground in ’06
LONDON, ENGLAND-Outside North America the picture is mixed, but several geographic markets are showing signs of renewed strength.
LONDON, ENGLAND-Outside North America the picture is mixed, but several geographic markets are showing signs of renewed strength. According to Manfred Augustin, who took over as head of Laser 2000 (Munich, Germany) in late 2006, the telecom market has rebounded in much of Europe, particularly in Germany, Benelux, the UK, and Italy. A report released by Strategies Unlimited (Mountain View, CA) in December 2006 noted that Europe is poised for rapid deployment of optical fiber to homes and neighborhoods, with compounded growth expected to be over 40% per year through 2010, and European equipment suppliers such as Alcatel (as well as local suppliers of parts and labor) will be in a good position to benefit from this growth. At the same time, however, the optical components market is already largely decoupled geographically from the equipment vendors and carriers; much of the package assembly has moved to East Asia to minimize manufacturing costs, which puts severe pressure on European manufacturers to find new ways to remain competitive and keep operations in Europe.
Laser 2000-the largest European distributor of lasers and optoelectronic components-is also seeing increased growth in Spain and several Eastern European countries, including Hungary, Poland, Slovakian Republic, and Czech Republic-again, particularly in the optical-telecom sector. From a product sales perspective, other strong markets in Europe include biomedical instrumentation, materials processing, graphic arts, consumer electronics, displays, and medical diagnostics and therapeutics.
“We have seen substantial growth in the European market overall, particularly in optoelectronics-on the order of 12% to 15%, and for some companies even more,” Augustin said.
It is interesting to note that the political and economic landscape in Europe has changed radically over the past few years and will continue to do so as Eastern European countries gain membership of the European Union (EU) creating much enlarged “home” markets for EU producers, while opportunities for expansion arise from cheaper labor pools and lower-cost manufacturing sites. The EU directs and funds research centrally for Europe, although of course the Member States also run their own program. In December 2005 the European Technology Platform (TP) “Photonics21” program was launched (see www.laserfocusworld.com/articles/257237). TPs play a major role in mobilizing Europe’s research, technological development and innovation efforts. They bring together the key stakeholders, including industry, national and European public authorities, the academic community, the financial community, consumers and users. The key players hope this new TP will lead to a strong focus on photonics in the upcoming Seventh Framework Programme (FP7), the European Union’s chief means of funding scientific research and technological development. FP7 takes over from FP6 at the beginning of 2007 and runs until 2013. It incorporates the target of raising European research funding to 3% of the European GDP, two-thirds of which should come from industry, by 2010.
As a result, in 2006 several laser and optoelectronics ventures crossed into new territory. Trumpf opened a new manufacturing facility in Liberec in the Czech Republic, along with a new Russian subsidiary. Siemens VDO Automotive took over Infineon’s manufacturing facility in Trutnov in the Czech Republic, when Infineon exited the fiber-optics business. 3M continued to invest in Poland, announcing plans to build an LCD optical-film manufacturing facility in Wroclaw near its existing manufacturing operation. Sharp is also negotiating with the Polish government to build an LCD manufacturing facility in Torun. The factory will supply LCD modules for large screen TVs. Schott has begun operating the first of nine new melting tanks for use in manufacturing glass tubes for the backlighting of monitors in Valasské Mezirící, Czech Republic. The Jenoptik Group’s new production site for lasers and laser components is now operational in St Petersburg, Russia. Lasers produced at the plant will be sent to Jena for integration into components and systems for civil and military applications.
Late in 2006 ESFRI (The European Strategy Forum on Research Infrastructures) presented the first ever European Roadmap for Research Infrastructures. Research infrastructures are defined as large-scale facilities, major pieces of research equipment or databases and networks that help scientists in their work. The costs of setting up and running these infrastructures are usually considered too high for one institution or country to invest in. The Roadmap outlines 35 research infrastructure projects, identified by inputs from over 1,000 experts as being vital to the development of science and innovation in Europe. These include “HiPER”, a high power long pulse laser facility for “fast-ignition” fusion, ELI (Extreme Light Infrastructure), designed to investigate laser matter interaction at the highest intensity levels and ELT (European Extremely Large Telescope), designed to be part of the next generation of ground-based mirror telescopes. The European Science and Research Commissioner emphasised that while the EU would be able to provide some financial support to the projects, the bulk of the funding would have to come from the Member States.
Meanwhile in the UK the government Department of Trade and Industry (DTI) has injected £3.3 million into a Photonics Knowledge Transfer Network (KTN). The objective of a KTN is to improve the UK’s innovation performance by increasing transfer of technology into UK based businesses and by accelerating the rate at which this process occurs. Each Network must actively contribute, and remain aligned, to the development of a national Technology Strategy. A KTN already exists for Displays and Lighting. The DTI is also providing £9 million funding for collaborative R&D projects in the fields of organic electronics and solid-state lighting. The collaborative R&D projects, which must include at least 2 partners and at least one end user, will be 50% funded by participants, so that a total of £18 million could be pumped into this area.
Industrial sector strong
The industrial materials processing sector also remains strong. Rofin-Sinar (Hamburg, Germany) reported a 12% increase in revenues for 2006 (ended Sept.) over 2005, with net sales totalling $420.9 million, although the strengthening of the U.S. dollar against the euro had an $8.8 million negative impact. Net sales of lasers for macro applications increased by 10%, and net sales of lasers for marking and micro applications increased by 15%. Net sales in North America totalled $126.5 million, up 16% over 2005, while net sales in Europe/Asia increased 10% to $294.4 million. According to Peter Wirth, executive chairman of the board, Rofin-Sinar continues to concentrate on developing special laser models for dedicated applications to serve high growth industries, such as medical devices and electronics industries.
Machine tool specialist Trumpf (Ditzingen, Germany) also had a record year, with sales of €1.65 billion (US$2.1 billion) for FY2005/2006 (ended June 30, 2006), up 18% over the previous year. The company attributed the bulk of its growth to a 23% increase in its machine-tool business for sheet-metal processing, with the strongest gains coming in Eastern Europe, America, and the Pacific Rim. Sales of the Laser Technology/Electronics Division gained 8.5% to €438 million (US$561 million). According to the company-which estimates that it has a 22% share of the world market of industrial lasers-65% of its sales come from laser products.
CO2 laser optic specialist ULO Optics (Stevenage, England) is also expecting continued growth in sales. A management buyout at the beginning of the year saw the company, which originally traded as V&S, change it name from Umicore Laser Optics. A company spokesman is quoted as saying that ULO is one of the top three companies worldwide in terms of manufacturing optics for CO2 lasers. The company is also reported to be working double shift in order to compete with cheaper production plants in Asia and Eastern Europe.
High-power diode-pumped solid-state (DPSS) laser manufacturer Powerlase (West Sussex, England) has reported dramatic growth in demand this year. The company trebled its production area following its 233% growth year-on-year; Powerlase was listed by as “the fifth fastest growing venture capital backed company in the UK” by the national newspaper The Daily Telegraph. Technology giant LG Electronics placed a multi-million dollar order with the company for DPSS lasers intended for LG’s Korean display-making plants.
Sad news from the UK was the demise of Exitech (Oxford, England). In March the company announced expansion plans, increasing its staff levels by 10%, but by October Exitech had gone into administration due to cash-flow difficulties. In early December OC Oerlikon Corporation Ltd. (Balzers, Liechtenstein) acquired the laser technology, staff, and equipment of Exitech. Exitech was founded in 1984, specialized in the use of lasers for micro and nanofabrication applications and had a turnover of £24 million in the last financial year. Meanwhile, nearby Oxford Lasers increased its micromachining sub-contract manufacturing capacity to grow its business by 25%.
Fiber lasers and displays
Fiber lasers also look set for growth in the industrial sector. Quantel of France and two financial bodies have invested a total of €1.3 million into short-pulsed fiber laser specialist Femlight. Philippe Metivier, President and CEO at Femlight, commented on this strategic partnership: “Femlight has the ambition of becoming an international actor in rod-type pulsed fiber lasers; however, we know we need to cooperate with industrial leaders to quickly enter industrial markets. Our partnership with Quantel answers this ambition, and will allow us to reach market volumes by the end of 2007.”
Fiber-laser specialist SPI Lasers (Southampton, England) showed a 128% revenue increase for the first six months of FY2006 compared with the same period in 2005. The company reported strong demand in both the micro and marking segments, with a doubling of customers since December 2005. SPI placed 2.7 million new shares in August, raising £4.8 million (US$9.4 million). The company also opened a business support office in Shenzhen China, citing strong sales growth over the past year in CW lasers for a wide variety of micro machining applications as the reason for the new venture.
In 2005 the European displays sector seemed buoyant; in 2006 it seemed less so. In 2005 UK polymer organic light emitting diodes (P-OLEDs) specialist Cambridge Display Technology (CDT; Cambridge, England) reported revenues of $18.1 million for the year, an increase of 36% over the prior year. In November this year the company posted disappointing results. Total revenues for the third quarter of 2006 were $0.9 million, compared with $6.6 million for the same period in 2005. Chairman and CEO Dr. David Fyfe commented that the company’s financial results “continue to be impacted by the slow-down in discretionary R&D spending in the display industry.” CDT expects better news in the future, having just completed another major license deal. In addition CDT licensee MicroEmissive Displays raised funding for the construction in Germany of a volume manufacturing facility for its P-OLED microdisplay products.
Staying with displays, Liquavista, a spin-out of Philips Research, has been created to commercialize Philips’ electrowetting display technology. The new company will be led by Mark Gostick, who was part of the original CDT team, and includes the technology’s co-inventors, Rob Hayes and Johan Feenstra.
Worth watching over the next year are new opportunities for solar cell and panel design as the world looks for alternative non-carbon energy sources. Among moves in Europe in 2006, The Institute for Crystal Growth (IKZ; Berlin, Germany) and BP Solar signed a cooperation agreement to develop a process for the deposition of silicon on glass. The thin crystalline silicon layer will form the semiconductor layer for the fabrication of cost-efficient solar cells. And Maxxun, a spin-off company from the Eindhoven University of Technology (TUE) in the Netherlands, has developed a photovoltaic system that it claims will revolutionize solar power and bring it to households worldwide. The Maxxun solar energy system is based on combining its patented luminescent solar concentrating technology with a small solar cell. Sunlight is channelled from a large surface-area, low-cost, predominantly plastic plate to a small, efficient solar cell that converts the light into electricity.
Asian market potential
Alliances and manufacturing opportunities in Asia remain attractive to European companies. In 2006 Dutch consumer electronics giant Philips merged its mobile display system business unit with Taiwanese firm Toppoly to create a joint venture, TPO, giving Philips access to high volume production facilities in Taiwan and China for advanced mobile display technologies such as low-temperature polysilicon and active-matrix OLEDs. French liquid-lens pioneer Varioptic announced that it would build the world’s first mass production line for liquid lenses with Creative Sensor of Taiwan. The production line will be installed at Creative Sensor’s manufacturing site in Wuxi, China. In addition, the move of Bookham’s test and assembly operations to its site in Shenzhen, China, has led to the sale of the company’s facility in Paignton, England, to an unnamed buyer.
Overall, the Asian market continues to represent great potential for lasers and photonics. While China is still considered more of a producer than consumer-with the exception of a growing optical-network infrastructure based on wireless technologies-Japan has re-emerged as a noteworthy market for lasers, particularly in fiber-to-the-home applications and medical and industrial systems.
“For Newport/Spectra-Physics, Asia is faring quite well,” said Arnd Krueger, director of marketing for the Spectra-Physics division of Newport (Irvine, CA). “China is doing well in the research market, where we are seeing some success with diodes and Q-switched lasers, although it usually is very price competitive. But overall we have done very well in the Pacific Rim, not just Japan but Taiwan, Singapore, and Korea especially-and that is for all lasers, not just research.”
At the same time, however, some analysts are concerned that China’s big banks have overextended themselves with too many loans for political or social reasons rather than commercially sound ones.1 While the government has sought to ease the problem by spending $400 billion since 1998 to cover bad loans for real estate projects or to state-owned enterprises, fears remain that Chinese banks are still burdened with many more troubled loans than they will admit. Even so, some of the world’s largest financial institutions are investing in these banks; Bank of America, Goldman Sachs, Royal Bank of Scotland, UBS, Merrill Lynch, HSBC, and American Express have all bought minority stakes in Chinese banks ahead of planned IPOs, and so far these investments appear to be smart ones. The Bank of China, for example, raised $11.2 billion in an IPO in mid-2006, and in October the Industrial and Commercial Bank of China, the country's largest bank, sold a 16% stake, raising $22 billion.
-Bridget K. Marx and Kathy Kincade
1. D. Barboza, New York Times (Nov. 15, 2006).