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OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Optoelectronics Industry Perspective

Andrew YangConsultant to OIDA

University of California, Santa BarbaraSolid State Technology Review

November 19, 2002

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

About OIDA• OIDA is a 60-member North America-based association of

optoelectronics-related firms• OIDA’s Activities:

– New Business Development• Market studies, Future Vision

– Technology Advancement• Technology roadmaps, University Centers, PTAP

– Infrastructure Improvement• Manufacturing advancement, Standards promotion

– Industry Advocacy• Forum for users and suppliers• Recommendations to the Government

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Today’s Talk

• World optoelectronics market update– Communications in turmoil, others weak

• A few things OIDA is doing– NGLI (Next Generation Lighting Initiative)– PTAP (Photonics Technology Access Program)– Broadband

• Some personal prospectives

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

The Scope of Optoelectronics

• OE technology enables numerous high-value applications• Major enabled product groups

– Fiber communications• Lasers, detectors, modules, passive, optical fiber, equipment…

– Information display• Flat panel monitors, notebooks, handhelds,…

– Digital imaging• Sensor arrays, displays, scanners, cameras, disk storage,…

– Data storage and entertainment• CD rewritable media, lasers, detectors, DVD/CD players, …

– Energy Conversion• LED lighting, photovoltaics, …

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Optoelectronics-enabled MarketsSelected Optoelectronic-enabled Products

2001 Total: $111 billion

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Fiber-basedTelecom andDatacom eq.

Computer OptDrives

Scanners andCameras

Computersand Displayequipment

$ Bi

llions 1999

20002001

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

OE Components Sales in 2001

Total: $56 Billion

Flat Panel Display$22.5B

Fiber & Cable$9.9BConnectors &

Hwe., $2.4B

Modules $3.2B

Sources & Det, $11.5B

Storage Media$5.2B

Passives $0.9B

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Summary of 2001 OE Markets

Total OE Market Estimates

02040

6080

100120140

160180200

1999 2000 2001

$ B

illion

s

Enabled products Components

• Components revenues fell 20% to $56B

• Enabled products almost flat

• Declines will continue through 2002 with some recovery in ‘03

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Communications Equipment Orders - U.S.

New Orders - Total Communications Equipment

0

2000

4000

6000

8000

10000

12000

14000

16000

J'00 A J O J'01 A J O J'02 A J OMonth

$ M

illio

ns Moving 3 month Average

Source: US Census Bureau

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Carrier TroublesFor the 7 top US carriers...• Long distance revenues

fell 11%• Local voice revenues

dropped 2.3%• Data services up 15%• Overall wireline revenues

actually increased 3%• But profits dropped 56%

Top 10 Global Telecoms

0

10

20

30

40

50

60

'96 '97 '98 '99 '00 '01$

billi

ons

Revenues/10 Profits

Sources: ITU, Corp. reports

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Global Optical Transport Forecast

0

510

15

20

25

30

35

4045

50

$ B

illion

s

'00 '01 '02 '03 '04 '05

Regional Spending on Optical Comm Equipment

North America EuropeAsia/Pacific ROW

Source: RHK

• Modest recovery worldwide for optical communications

• North America will not recover until ‘03– Fiber flat for a long time

• Carriers returning to historic capex levels– 15-20% of revenue vs 35%

at the peak

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Quarterly Telecom Equipment Revenues

0

5000

10000

15000

20000

25000

$US

Mill

ions

July 2000 2001 2002

Second Quarter Revenues for Nortel, Lucent, Alcatel

NTLUALA

Source: Company reports

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Production Workers in Communications

Source: Bureau of Labor Statistics

• 38% job loss since 1997• 42% decline in shipments in 2 yrs• Imports have exceeded exports

since 1999• In ‘01 the trade balance was -$11B

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Display Market Forecast by Technology

Forecasted Display Revenues (including CRTs)

0102030405060708090

2000 2001 2002 2003 2004 2005

$ B

illio

ns

OLEDOtherPDPPM LCDAM LCDCRT

Source: DisplaySearch

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Growth of Digital Imaging

Digital Camera:– Market value ~

$5B in 2001– Forecast ~ $10B

by 2006

Unit Sales of Cameras (Excluding single-use products)

0

5

10

15

20

25

30

35

40

45

1999 2000 2001 2002 2003 2004 2005

Units in Millions

FilmDigital

Source: Gartner Dataquest

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Optical Storage Markets

Optical Disk Drives, Worldwide ($13B)

CD-ROM$3.5B, 27%

Re-write$7.5B,58%

DVD-ROM$7.5B, 15%

• Optical disk drive production rose slightly in 2001

• Rewritable and DVD have overtaken CD-ROM

• Rewritable and high density (blue laser) DVDs are on the way

• DVD players* outsold VCRs in 2001

* Not included on chart

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

DVD Player Sales by RegionSales Forecast of DVD Players by Region

0

10000

20000

30000

40000

50000

60000

1997 1998 1999 2000 2001 2002 2003 2004

Thousands of Units

China Asia Japan Europe Central/South America North America

Source: Philips/CMI

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Next Generation Lighting Initiative (NGLI)

• General lighting requires long term investment, it is too risky for industry alone. Other countries have government-industry consortia (Japan, Korea, Taiwan)

• NGLI is a cooperative program between US industry and government to accelerate the commercialization of solid state lighting

• The Department of Energy represents Government

• The Next Generation Lighting Consortium (NGLC) represents industry

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

PTAP

Stimulating New Uses for OEPhotonics Technology Access Program

Sponsored by DARPA and NSF

As PTAP’s broker, OIDA makes state-of-the-art, pre-commercial

photonics technology available for academic research and teaching

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

PTAPBenefits to Universities

• Access to devices not available commercially– At no cost to researcher - proposal required– Paid from researchers own funds - no proposal required

• Source of supporting technology– Drivers– Logic devices– Packaging– Materials

• Build relationships with industry• Graduate students train on state-of-art technology

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

PTAP

Benefits to industry• Access to university research base• Technical feedback

– New applications– Device performance

• Recruitment pool of graduates versed in leading edge technology

• Early market for prototypes

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Broadband Access is a Thorny Problem -It’s not only Technology!

BusinessModels

BusinessModels

Technology

Regulation

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Some Observations

• Broadband will be the engine for economic growth– Worldwide belief

• Infrastructure/applications is a “chicken & egg” problem, but progress can be made in tandem

• Time is critical for massive deployment of broadband access

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Worldwide Broadband Penetration

0 5 10 15

Korea

Canada

Sweden

USA

Netherlands

Austria

Denmark

Belgium

Subscribers per 100 inhabitants, June 2001

DSLCableFiber

Source: OECD

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

US Broadband Households by Data Rate

This may be too slow!Source: Technology Futures, Inc.

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

A Personal Perspective

During the last decade:• WDM firmly established in telecom• VCSEL-based interconnects widely used in

computing system & datacom• Microdisplays are ubiquitous• Optically-controlled phased-array antenn deployed• Large diameter GaAs, InP, & SiC substrates

available

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

What’s Not Been Done in Technology• Many high performance optoelectronic

devices were developed….BUT

• Very little integration…– Especially, no integration technology for

passives such as • Isolators • Waveguides• Etc.

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Infrastructure Trends

• Disappearance of industrial R&D centers– These were the engines for high-tech innovation – Government must act to replace this resource– New centers should be focused on shorter term specific

goals

• Massive foundry movement offshore– There will be significant economic fallout – Also, this trend endangers national defense readiness

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Where Can We Succeed?

• Dispersal of manufacturing to low-cost labor countries is probably irreversible…– Following the well-traveled road of other industries

• Our comparative advantage lies in complex innovative design with highly-integrated technologies– eg, microprocessors– Innovation without manufacturing is not viable– Use comparative advantage to retain critical

manufacturing capability

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

Looking Forward:OIDA’s Future Vision Workshop – Some Themes

• Attributes of OE products going forward:– Small, Smart, Cheap, Low power

• Opportunities across applications:– More connectivity– New consumer/personal devices & services– High tech as a defense/security advantage– More bandwidth to the consumer!

• Promising new technology areas– Bio-photonics is a rich source of new devices– Clean energy: solid state lighting, photovoltaics– Smart sensors and optical sensor networks

OIDA OPTOELECTRONICS INDUSTRYDEVELOPMENT ASSOCIATION

OIDA Planned Events

San Diego, CAWorkshop: BiophotonicsOct 1-2, 2003

Santa Barbara, CAWorkshop: LEDsJul 16-17, 2003

Palo Alto, CAWorkshop: Residential Broadband

Apr 22-23, 2003

Washington, DCOIDA Annual ForumNov 20-21, 20

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