Gooch & Housego : G&H Insight June 2021

INSIGHT

The Growth

of Laser

JUNE 2021

"As we start exiting the tunnel, is this light or the train coming right at us?

G&H INSIGHT

Photonics Emerges Stronger from the Pandemic, Proving its Robustness and Resilience Against Market Disruptions

AS WE START EXITING THE TUNNEL, IS THIS LIGHT OR THE			28.5%
TRAIN COMING RIGHT AT US?1
The year 2021 has forced enterprises and indeed entire economies to				Growth in some
completely re-baseline their expectations of how sectors and markets				categories of
will perform. Unfortunately, there have been several casualties along	10.4%	industrial
the way, especially for those businesses with narrowly targeted	laser use
offerings in applications affected by the pandemic.	Overall increase
Photonics being a truly cross-cutting, enabling technology is stubbornly		in industrial	$18.2
bucking this trend and shows strong growth across many different market		laser market
sectors.				billion
From micro-machining and materials processing for semiconductors, to				Value of global
applications including industrial and telecom, aerospace and defense, and life
			industrial
sciences, a recent study2 predicts that by the end of the year we will witness:
			laser market
• Growth of over 28.5% in some categories of industrial laser use
• Overall industrial laser market increase of 10.4%
• A global industrial laser market worth $18.2 billion (£13.2 billion)
		To be at the vanguard of industrial
These are positive signs that create optimism and hope for businesses across		laser"	use, laser component
the complete value chain - from component manufacturers and value-add OEM		manufacturers need to be at
vendors, to Tier-1s relying on photonics to manufacture the end-products their
customers buy - from smartphones to wind turbines.		the forefront of industrial laser
With strong growth in high-volume industrial lasers, increased ubiquity is		design.
expected to lead to more demanding expectations of cost versus performance
in industrial laser systems for commoditized products in this specific market		In this article we explore the
sub-sector. On the other hand, innovative photonic products are expected to
continue to dominate in the semiconductor processing market, as well as in life		demand for photonics-based
sciences and aerospace and defense, driven by high-performance, field reliability,	solutions across sectors,
qualification standards and product differentiation.		applications and pain-points,
In short, to be at the vanguard of industrial laser use, laser component		and set out industry needs for
	photonic components to address
manufacturers need to be at the forefront of industrial laser design. Anything
else is going to put them - and, ultimately, the businesses they serve - behind		the challenges customers face
the curve.		today.

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G&H INSIGHT

WHAT'S DRIVING LASER MARKETS? UNRAVELLING THE UPLIFT

Rather ironically, the pandemic itself has been responsible for a significant uptick in certain areas of the laser component market, both in 2020 and 2021.

Arguably, this is unsurprising in the communications sector, given the exponential increase in the use of online conferencing tools and the electronic devices that facilitate them.

It is equally unsurprising that China leads the world in this respect, via the famed '3C' triumvirate ('computer, communication, consumer electronics'), particularly when one considers that the country's ultrafast laser market alone grew at a CAGR of 70.5% from 2015-2019, compared to a global CAGR of 11% over the same period3.

And the stability of several other sectors is in itself, revealing. Demand in these sectors has increased or remained roughly the same against the backdrop of an extreme economic downturn - indicating that the market for industrial laser components in these applications is, by its very nature, highly resilient.

Growth in the telecom sector for photonics is driven from 'both sides'; on the one hand, core and subsea networks are racing for more capacity, and on the other hand, the increased bandwidth at the network edge is pushing adoption of photonics further out, including interconnection of the mast to the base of 5G antennas and within massive data centers.

Global internet traffic continues to increase, driven also by remote working and the impact of Covid-19. Globally, the total number of Internet users is projected to grow from 3.9 billion in 2018 to 5.3 billion by 2023 at a CAGR of 6%, and as of January 2021 stood at 4.66 billion4.

To intercept this global traffic increase, all the 'background' enabling technologies need to step-up and deliver. Amongst others, these include a new generation of faster microchips, higher-speed printed circuit boards, new compound semiconductors and more advanced and high-throughput manufacturing techniques. Innovations in photonics technology have been the primary enabler in all these advancements in the microelectronics industry; from lasers used in wafer fabrication and inspection, to laser-based manufacturing equipment.

The continuous advancement of equipment and more precise and high-throughput lasers can only be maintained if the components used to build these systems continue to meet the specific and rapidly evolving needs of those applications; and because photonics has the potential to deliver quicker, cheaper, and 'better than' alternatives, all eyes are on it - so the competition to meet those needs skyrockets.

Because photonics has the potential to deliver quicker, cheaper, and 'better than' alternatives, all eyes are on it.

Beyond the industrial market, photonics is currently also underpinning the aerospace and defense sector, outperforming the sector average. The technology's potential for faster, miniaturized, power-efficient and EMI-free systems is attracting significant attention

for generating photonics-enabledmission-critical functionality. From advanced multi-band imaging systems in aerospace platforms, to ground-based sighting systems using augmented reality (AR) is going to be a game-changer in the defense sector.

From advanced multi-band imaging systems in aerospace platforms, to sighting systems on the ground, using augmented reality AR is going to be a game-changer in the defense sector.

Although certain biophotonic sub- markets have suffered through the pandemic, the sector was resilient and most importantly, the outlook for photonics-enabled life sciences is 'brighter' than ever. Our ageing population, the ever-increasing shift of healthcare funding from therapy to early diagnosis, coupled with the advancements of high-resolution and multi-modal imaging systems will continue to challenge and push for new biophotonic components and systems.

What, then, are these applications, what are their needs, and what does it take for one component to underpin a laser that outperforms another?

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