I love this time of year: After a hectic December one can lean back, relax, and think about the last year and about the one that just started. And there is so much that comes immediately to mind: laser markets, quantum revolution, and, yes, climate change.
2019 roller coaster
For laser companies listed on the stock exchange, the last year was a thrilling one: To name just a prominent example, the price for Coherent, Inc. stock went from $100 in January to $156 in April and back to $112 in May. After a small end-of-year rally, the company closed at $166. That’s far from the $300 they reached early in 2018. The changes were even more extreme for IPG Photonics: Although its gain within 2019 was remarkable, it also lost about half of its market value compared to its heights in 2018. But after all, such changes are a good reason to push innovation, as my colleague David Belforte observed last August.
Here in Germany things went a bit more smoothly, but nevertheless people were very concerned about the development of industrial-laser markets: Trumpf once again reported a revenue growth of 6%, but also a decline of 3% in orders. This is quite moderate in comparison to numbers for the German machine tool industry: Its industry association, VDW, reported a 23% decline of incoming orders for the first nine months in 2019. In November 2019, the association assumed a decline of 4% in revenues for 2019 as a whole, with this figure being supported by the clearing of the order backlog. They expect more-severe problems in 2020 when the backlog has been cleared. For the industrial laser market, the backlog is certainly smaller and a downturn may arrive much sooner. Laser market analyst Arnold Mayer (Optech Consulting) expects a downturn of 9% in 2019, and for 2020 he says, “It’s completely open. But after 10 years of growth a correction in the market was expected. Let’s see if it is over already.”
Sorry, it’s politics
Many of us are tired of looking at, not to mention seriously concerned about, politics. To name just one issue: The tariff war between the US and China has been a major point of discussion in relation to laser markets last year. But, as laser market analyst Arnold Mayer told me: “China is building its own laser industry. This has a much greater impact on the market than the tariff issue.” I guess we will hear an update on this matter at this year’s Lasers & Photonics Marketplace Seminar from Bo Gu.
In Germany, 2019 was the year in which the climate debate finally reached the level of big politics. Yes, it has been around for quite a while, but this year it really moved people, contributing to large gains for the green party in most elections. In industry, we saw a big move towards electric vehicles. All big brands are turning to e-mobility, resulting in changes along the supply chains. These changes are causing fears in many places, because the production of combustion engines alone provides jobs for several hundred thousand people in Germany.
How to deal with this? Laser champion Trumpf, for example, has already for some time focused on laser solutions for e-mobility and strengthened its new ventures. Finally, CEO Leibinger-Kammüller calmed down the discussion with a statement in a major German newspaper: “I am passionate about driving a car and am committed to the car. I love the space around me and my audio books. But we have to make it so that the car is even more environmentally friendly.”
Other photonics markets look much brighter. Another champion from the wider Stuttgart area, Carl Zeiss, has finally won its bet on extreme ultraviolet (EUV) technology. And the company reported substantial growth in all of its four segments. Even its incoming orders increased by 9%. Zeiss CEO Michael Kaschke has led a large change during the years of his leadership. In addition to substantial organizational changes, Zeiss introduced a number of groundbreaking innovations: Along with Trumpf and ASML, the company helped to make EUV lithography a big business; it brought OCT as a gold standard to ophthalmologists around the world; and it also got microscopy beyond the diffraction limit working, to name just a few. The recipe for the success of Zeiss is certainly not a simple one, but constant innovation and persistence over decades are important ingredients.
At a recent Fraunhofer event, Kaschke spoke about long term predictions in photonics. One trend he mentioned is the convergence of photonics and electronics. When photons are used instead of electrons, we may save a lot of power. This is where laser technology helps to save large amounts of carbon emissions. So next time your daughter asks you what photonics can do to save the earth, you may refer to the following example.
Trending: Integrated photonics
The internet, and in particular the big data centers, have attracted increasing attention for their carbon footprint. And internet traffic is growing steadily, as we know. Now it looks as if the industry is turning to optics as a solution for further growth with less energy consumption.
Cisco, a giant provider of networking hardware and telecom equipment, announced in November an initiative for “building internet for the next decade of digital innovation.” The company describes its formula as “Silicon + Optics + Software.” And, by the way, silicon photonics made it to #1 in Laser Focus World’s top 20 photonics technology picks for 2019.
Also in November, NTT, Sony, and Intel announced a joint activity for “building the future of the communications industry.” They founded an industry forum—the “Innovative Optical and Wireless Network (IOWN)”—to accelerate the adoption of “an all-photonics infrastructure.”
This may sound a bit far away for people who watch the industrial-laser market. But maybe you remember that fiber lasers were an innovation that telecom industries brought to materials processing; now we see the development of integrated photonics and silicon photonics massively supported. The least we can expect from that is a boost for all kinds of sensing technologies. We will see what other technologies may be created through such a large effort.
Small satellites as a market chance
One last and very fancy trend I would to mention is up there in the sky above us. SpaceX offers satellite missions just like others sell cars; they are advertised on the SpaceX website for $1 million per 200 kg payload. And there's no problem if you are behind schedule, as they have monthly launches. On January 6, SpaceX launched its third Starlink mission from Cape Canaveral. On board were another 60 satellites, adding to a fleet of 120 Starlink satellites already up there. SpaceX plans to use this fleet to provide internet access.
And this is where we talk photonics again: Just imagine, these satellites communicate via a laser link. Think four systems at least on each satellite. Other companies have similar planes for small satellite missions, so there are plans for thousands of them. Voilà, we have another rapidly growing market for sophisticated photonic systems.
A first Bose-Einstein condensate was created in space three years ago. Soon, we may see this technology in the core of small high-precision clocks up there. Satellite links, precision clocks—it seems quantum communication is within reach. At least there is enough funding poured into the field.
The upcoming year should bring many fascinating developments in photonics—some that may remain fancy ideas, and others that will help to solve real problems.
Andreas Thoss | Contributing Editor, Germany
Andreas Thoss is the Managing Director of THOSS Media (Berlin) and has many years of experience in photonics-related research, publishing, marketing, and public relations. He worked with John Wiley & Sons until 2010, when he founded THOSS Media. In 2012, he founded the scientific journal Advanced Optical Technologies. His university research focused on ultrashort and ultra-intense laser pulses, and he holds several patents.