SEMI's still newish InterSolar show outshined it's collocated Semicon West show this week, and that may be a sign of the future. InterSolar now has 3 floors of Moscone West, has all layers of the supply chain represented, and was simply more exuberant. The building has big windows. It feels more open. The solar industry this year is down, too, and there are still fewer vendors than at Semicon, but it just seemed brighter at the InterSolar show.
In contrast, Semicon is underground at Moscone North and South. It was cheerful enough, considering the downturn and the lack of windows, but the party was at the solar show. And judging from the signup map for next year, the North and South Halls will be even emptier. In fact, Photonics West is now clearly bigger than Semicon West--at least in exhibitors and floor space, and maybe attendees too. (Rumors that Semicon will be squeezed into the South Hall turned out to be false. They are putting all the wafer processing booths in the South Hall. The North Hall will have everything else.)
To be fair, no one was expecting Semicon West to be much of a party this year. After all, SEMI just announced that tool sales will drop 50% this year to the unspeakable low of $14 billion. (It was $43 billion in 2007.) But it's notable who is showing there nowadays, or rather who isn't. Semicon is a tool show, but Applied Materials, KLA Tencor, LAM Research, ASML, and many other major toolmakers don't have conventional booths anymore. For example, Applied and KLA only had meeting rooms at Semicon, while they showed their solar tools across the street at InterSolar.
Semicon West is now really about the gadgets that the major vendors attach to their systems, the materials they use, and R&D lab equipment. This means that there are suppliers for everything from microscopes and instruments to encoders and bearings. It's a good show for this kind of product development and lab stuff, and some of the specialty tools that are used in North America.
But this year, even that was down. In lasers, Cymer, Gigaphoton, Coherent, and JDS Uniphase--each one catering to the semiconductor industry--all didn't show. The laser companies that I saw were Deep Photonics, Eolite, DPSS Lasers, Innolas, Jenoptik, Quantronix, and Rofin-Baasel. IPG and Newport showed their lasers at InterSolar.
SEMICON is still the biggest fab tool show of the year for North America, and a very important one. One instrument vendor told me that even in a year like this they expected to get some sales from leads at SEMICON. New tool development still goes on. But it's a shadow of its glory days, about 15 to 20 years ago. The SEMICON shows in Asia are much weightier on the big tool side. And that makes sense, since as much as 75% of the world market for semi tools is in Asia, according to SEMI.
And, the industry has grown so big that there are other, more specialized shows to choose from. Like, for examplek, the lithography people like the SPIE Advanced Lithography meeting held in San Jose. There are meetings like this for every sort of nuance you can think of.
Photonics West is also a gadget show aimed at product developers and lab workers, like Semicon, but it spans more industries, particularly healthier ones, like biomedical and security. And it has a cross-cutting technical conference too. (And don't forget the Laser Focus World Marketplace Seminar, collocated with Photonics West every year!)
I think it's a sign of the times. Solar is in. Photonic gadgets are in. Semi tool gadgets are still in. But the days of the big tool show in North America may be over.
Wednesday, July 15, 2009
Monday, July 13, 2009
Breaking down the "micro" laser market
We just published our special market report on the so-called micro materials processing market. Once the market bounces off the bottom, the growth in the recovery will be good, but the interesting part of the story will be in changes in market share as the technology marches forward.
I should first explain what the micro materials processing market is. These are lasers used for lower power welding, cutting, drilling, microfabrication, additive processes, heat treatment, and lithography. We don't count kilowatt lasers at all, nor do we count marking and decorative engraving. The lasers are used to make semiconductors, solar cells, medical devices, jewelry, electronics, consumer products, and a wide range of various industrial parts.
The market will take a 40% hit this year, which is dreadful, but this is not big news any more, and the recovery will bring the market to $460 million by 2013. There is talk that the semiconductor tool business is already turning around, after falling since 2007. Other markets, like solar cells, has a ways to go yet, and automotive may be slower to come back.
We found the market share leaders to be Coherent, Rofin-Sinar, and GSI Group, with over 50% of the market. It's not hard to see why. Coherent is strong in CO2 lasers, excimer lasers, and DPSSLs. Rofin is strong in multiple categories too (don't forget that Rofin includes other brands: Lee Laser, etc.) And we counted all of Excel Technology's laser production in GSI's 2008 share, so that includes significant lamp-pumped solid-state lasers and CO2 lasers. There are a lot of players and product segments, so any company that is strong in multiple segments will have greater share. (Of course, many companies are also diversified across other laser applications apart from the micro category, but that isn't counted here.)
By the way, lamp-pumped lasers may be on the decline, but the sales still amount to something, especially considering that they often involve higher powers, and therefore higher prices. By comparison, a lot of CO2 marking lasers sell for under $2,000, so it takes a lot of them to amount to much.
The thing that is striking is that the technology, as mature as it is, isn't staying still, especially in the micro category. Innovations like pulse shaping fiber lasers, higher power green lasers, and picosecond lasers, to name a few, promise to upset the market share at least a little while the market comes back.
Friday, July 10, 2009
How photonics can learn from Two Buck Chuck
Recent news about the crash of the Australian wine business fulfills a prophecy I heard years ago, and highlights parallels to the photonics business. How so? For starters, both carry a certain prestige, but deep down, wine is really about agriculture and photonics is really about manufacturing. Let me explain.
One of my favorite characters in the wine industry is Fred Franzia, famous for his Charles Shaw wine, better known as Two Buck Chuck. He's the guy that Napa Valley loves to hate, and he loves that they do. He boldly claimed several years ago that the Australian wine business would one day crash because they were planting too many grapes and financing with debt. At some point the world market would go through one of its inevitable cycles, prices would fall, and they wouldn’t be able to meet their fixed costs.
Sound familiar? A recent article cites some other familiar factors: relatively high labor costs, an unfavorable exchange rate, and over-association with a single, lower-end brand.
All of this has been said at one time or another about photonics companies. Especially the part about overplanting. Who in photonics doesn't dream of starting a company developing high end cool stuff, ramp quickly, and make a ridiculously prosperous exit. It's happened enough to prove that it can. However, the reality is that it usually takes years to build up the business, and a lot of it is about as glamorous as pulling weeds.
In the wine industry, you don’t start by selling high end wines to collectors. You start by selling bulk grapes. Maybe you can begin making your own wine, or at least contract it out. Then maybe you do some bottling and run a small tasting room on the side. Eventually you may be able to get out of the low-end grapes altogether, except to sell off overstock. That’s if a downturn doesn’t force you to sell out to a large corporation.
I hate to say it, but the photonics business could learn a lot from Fred Franzia. I hate to say it because Franzia is on a crusade to take away the pretense in wine, while many people are obvioulsy willing to pay top dollar for pretense. And in photonics, too, not only is there is a place for suppliers of low volume, specialty products, but I'm hope that everyone can enjoy the highest margins possible.
You can learn everything you need to know from Fred Franzia in this colorful interview in 2007.
One of my favorite characters in the wine industry is Fred Franzia, famous for his Charles Shaw wine, better known as Two Buck Chuck. He's the guy that Napa Valley loves to hate, and he loves that they do. He boldly claimed several years ago that the Australian wine business would one day crash because they were planting too many grapes and financing with debt. At some point the world market would go through one of its inevitable cycles, prices would fall, and they wouldn’t be able to meet their fixed costs.
Sound familiar? A recent article cites some other familiar factors: relatively high labor costs, an unfavorable exchange rate, and over-association with a single, lower-end brand.
All of this has been said at one time or another about photonics companies. Especially the part about overplanting. Who in photonics doesn't dream of starting a company developing high end cool stuff, ramp quickly, and make a ridiculously prosperous exit. It's happened enough to prove that it can. However, the reality is that it usually takes years to build up the business, and a lot of it is about as glamorous as pulling weeds.
In the wine industry, you don’t start by selling high end wines to collectors. You start by selling bulk grapes. Maybe you can begin making your own wine, or at least contract it out. Then maybe you do some bottling and run a small tasting room on the side. Eventually you may be able to get out of the low-end grapes altogether, except to sell off overstock. That’s if a downturn doesn’t force you to sell out to a large corporation.
I hate to say it, but the photonics business could learn a lot from Fred Franzia. I hate to say it because Franzia is on a crusade to take away the pretense in wine, while many people are obvioulsy willing to pay top dollar for pretense. And in photonics, too, not only is there is a place for suppliers of low volume, specialty products, but I'm hope that everyone can enjoy the highest margins possible.
You can learn everything you need to know from Fred Franzia in this colorful interview in 2007.
Thursday, June 25, 2009
LED replacement lamps: new regulations and 100+% growth
Most people are not aware that new energy regulations in Europe and the U.S. will progressively ban incandescent lamps from the market, creating a huge market opportunity for LED replacement lamps just as they improve in performance and price. Our new market report anticipates growth rates in this product of over 100% per year for the next several years, thanks to the new regulations, continuing declines in prices, and the unique features that only LEDs provide. That’s great news for LED makers, who see the lighting market as the ultimate application for LEDs.
It’s not quite so simple as that, however. For one thing, LED replacement lamps are too expensive today for widespread use, so they are relegated today to special applications, such as hard-to-reach places. Manufacturers have yet to realize economies of scale. In the meantime, compact fluorescent lamps (CFLs) are more prominent. Also, customers have to be educated to think in terms of cost of ownership, rather than the initial price. Even the government regulations aren’t set in stone, given the big change that it entails.
What's so great about LEDs? LED lamps are directional and can be adapted to fit different lamp profiles not possible with other light sources. They come in all possible shades of white, last for a long time, can be dimmed and controlled easily. And unlike CFLs, LED lamps contain no mercury.
The LED is in many ways the ideal lighting technology, but actually developing that market is still surprisingly challenging. That's why the new energy regulations will prove so pivotal for the LED business.
Oh, and in case you missed the hint earlier, we do have a new market report on this topic.
It’s not quite so simple as that, however. For one thing, LED replacement lamps are too expensive today for widespread use, so they are relegated today to special applications, such as hard-to-reach places. Manufacturers have yet to realize economies of scale. In the meantime, compact fluorescent lamps (CFLs) are more prominent. Also, customers have to be educated to think in terms of cost of ownership, rather than the initial price. Even the government regulations aren’t set in stone, given the big change that it entails.
What's so great about LEDs? LED lamps are directional and can be adapted to fit different lamp profiles not possible with other light sources. They come in all possible shades of white, last for a long time, can be dimmed and controlled easily. And unlike CFLs, LED lamps contain no mercury.
The LED is in many ways the ideal lighting technology, but actually developing that market is still surprisingly challenging. That's why the new energy regulations will prove so pivotal for the LED business.
Oh, and in case you missed the hint earlier, we do have a new market report on this topic.
Tuesday, June 23, 2009
The Newport-Oclaro swap--Tipping the scales, a return to bartering
Ever since the announcement that Newport will give its diode business and $3 million in cash to Oclaro in exchange for its New Focus operation, opinions have been all over the map: from Newport is crazy to give up its internal diode business, to Newport got the better deal. The bottom line? I think it will tip the scales against the least competitive players.
Here’s how it works. Newport’s laser group, Spectra-Physics, got its diode business in 1992 when it acquired OptoPower, located in Tucson, Arizona. For years there was an industry-held view that the diode-pumped laser makers needed to control the diode pump technology so vital to the solid-state lasers. Today, the big laser companies like Coherent, TRUMPF, Rofin-Sinar, and IPG Photonics all pretty much make all their own diodes.
Fabs, though, are very expensive operations, costing as much as $30 million or more per year, depending on what you're counting. A classic way to make that work is to get volume through the fab--increase the capacity utilization. But with well over a dozen competitors and a slow market, that's hard to do, and everyone knows it. Spectra's diode operation has certainly seen better days, now that its assembly operations have moved to China and sales are soft for everyone.
Meanwhile, Bookham (now Oclaro) has two gold-plated fabs, a GaAs fab in Zurich and an InP fab in Caswell, UK. By shutting down the Spectra diode fab in Tucson and making the diodes in its own fab, Bookham can get much better returns out of its capital. The new volume could even be low margin chips, as long as it helps keep the lights on. Moreover, even Bookham's competitors regard Bookham's R&D highly. And Oclaro is hoping that it can be *the* independent diode supplier to the solid-state laser makers.
It all sounds good, but competitors are quick to take pot shots at the deal.
For its part, Coherent is keen on keeping its diode manufacturing in-house, in part because it also makes its OPSL gain chips in its fab with its high power diodes. Thus, while Spectra's fab may no longer be as integral to its overall laser business, Coherent's fab is. And the other big laser companies (Trumpf, Rofin, and IPG) are all quite religious about controlling the supply of key components and keeping their fabs in-house.
Others suggested that Newport gets a solid business from New Focus (albeit one that is reportedly losing money at the moment), while Bookham-Oclaro could very easily fumble the diode business it's taking over.
This is all true, although I would add that at least it plays to a larger strategy for Oclaro. Oclaro shows that it has a plan for its diode business. That's better than no plan.
One thing that everyone agrees on is that the New Focus operation fits better with Newport, even though it's reported to be losing money. And it’s something of a completed circle for New Focus, since one of the founders (in 1990) was Milton Chang, already then a former CEO of Newport.
As for the remaining competitors, one less high-power diode fab has to be viewed as a good thing. Of course, Bookham/Oclaro aims to get most of the benefit from that, which is to say that it makes it all the harder for the least competitive suppliers—it tips the scales against them.
Finally, you have to wonder what this says about the state of the industry when a major deal amounts to a barter, with almost no cash or stock involved. Of course, all deals are swaps of some kind, but bartering is considered the most primitive form of trade--a pre-monetary transaction that happens in primitive societies and war zones. The value of the diode laser business is evidently so low that a monetary or stock transaction these days is out of the question, and perhaps only a trade of this kind can go forward.
Here’s how it works. Newport’s laser group, Spectra-Physics, got its diode business in 1992 when it acquired OptoPower, located in Tucson, Arizona. For years there was an industry-held view that the diode-pumped laser makers needed to control the diode pump technology so vital to the solid-state lasers. Today, the big laser companies like Coherent, TRUMPF, Rofin-Sinar, and IPG Photonics all pretty much make all their own diodes.
Fabs, though, are very expensive operations, costing as much as $30 million or more per year, depending on what you're counting. A classic way to make that work is to get volume through the fab--increase the capacity utilization. But with well over a dozen competitors and a slow market, that's hard to do, and everyone knows it. Spectra's diode operation has certainly seen better days, now that its assembly operations have moved to China and sales are soft for everyone.
Meanwhile, Bookham (now Oclaro) has two gold-plated fabs, a GaAs fab in Zurich and an InP fab in Caswell, UK. By shutting down the Spectra diode fab in Tucson and making the diodes in its own fab, Bookham can get much better returns out of its capital. The new volume could even be low margin chips, as long as it helps keep the lights on. Moreover, even Bookham's competitors regard Bookham's R&D highly. And Oclaro is hoping that it can be *the* independent diode supplier to the solid-state laser makers.
It all sounds good, but competitors are quick to take pot shots at the deal.
For its part, Coherent is keen on keeping its diode manufacturing in-house, in part because it also makes its OPSL gain chips in its fab with its high power diodes. Thus, while Spectra's fab may no longer be as integral to its overall laser business, Coherent's fab is. And the other big laser companies (Trumpf, Rofin, and IPG) are all quite religious about controlling the supply of key components and keeping their fabs in-house.
Others suggested that Newport gets a solid business from New Focus (albeit one that is reportedly losing money at the moment), while Bookham-Oclaro could very easily fumble the diode business it's taking over.
This is all true, although I would add that at least it plays to a larger strategy for Oclaro. Oclaro shows that it has a plan for its diode business. That's better than no plan.
One thing that everyone agrees on is that the New Focus operation fits better with Newport, even though it's reported to be losing money. And it’s something of a completed circle for New Focus, since one of the founders (in 1990) was Milton Chang, already then a former CEO of Newport.
As for the remaining competitors, one less high-power diode fab has to be viewed as a good thing. Of course, Bookham/Oclaro aims to get most of the benefit from that, which is to say that it makes it all the harder for the least competitive suppliers—it tips the scales against them.
Finally, you have to wonder what this says about the state of the industry when a major deal amounts to a barter, with almost no cash or stock involved. Of course, all deals are swaps of some kind, but bartering is considered the most primitive form of trade--a pre-monetary transaction that happens in primitive societies and war zones. The value of the diode laser business is evidently so low that a monetary or stock transaction these days is out of the question, and perhaps only a trade of this kind can go forward.
Laser Munich--Bottoming out, fiber lasers, and a family reunion fueled by beer
Who can be gloomy at a show where the beer starts flowing before noon and booth parties start before closing? If booth traffic is slow, at least the halls are bright and cheery and everyone is there. It’s the closest thing to a family reunion in the laser business, and it only happens once every two years.
The number of exhibitors at Laser Munich last week was almost exactly the same as in 2007, but spread out in four halls instead of three. Considering the laser industry is in its deepest trough ever, people were in a great mood.
One factor would be that there is now a general feeling that the industry, and the economy at large, has more or less hit bottom. One comment that sums it up is that now “there are finally more new orders than cancellations.” It’s kind of like how you feel when you stop beating your head against the wall.
The bright colors may have helped too. Trumpf was touting the Blue Laser, which I was told referred to blue sky, earth as seen from space, earth-friendly, and something about cozying up to Mercedes. Its new-ish acquisition, SPI Lasers, featured its redENERGY and redPOWER lasers--really more infrared than red, but close enough. Coherent, meanwhile, went yellow and featured a more industrial look, evoking images of robots, Caterpillar tractors, and guys with hardhats.
The best coverage of the show, including video coverage, is by Industrial Laser Solutions magazine (look for articles in the June 15 to 19 timeframe). But, since everyone seemed to ask, "What's new at the show"? here's my general take.
Fiber lasers were once again the big thing at Laser Munich. At Munich 2007 we saw several early fiber laser products from players who had been on the sidelines, most notably Trumpf, Rofin, and GSI. This year those companies stepped up their fiber laser offerings. In addition, Coherent showed a fiber laser prototype based on bar pumping that will be out next year. Newport quietly relaunched a 100W CW fiber laser for industrial applications. nLight featured its fiber laser products from its OptoTools acquisition. And even LASAG, well known for its lamp-pumped YAG lasers but not wanting to be identified only as such, had a fiber laser in its booth.
Never one to be outdone, IPG showed a 10 kW single mode fiber laser. Even 3 kW was remarkable just a couple years ago, now they are at 10 kW. Its main application is for military customers developing directed energy weapons, a good business for IPG these days.
Direct diode lasers also had some buzz. For the most part, there were the usual players, Laserline being a leader, but acceptance is growing for processes like brazing and welding. Trumpf was the most notable new player. Lumics was able to boast about its "three digit" unit order for 200+ W fiber-coupled diode systems--a nice win in a tough economy.
Overall, the booth traffic may have been on the light side, but I wonder if Laser Munich may steal some market share from competing events. Even with companies tight on travel budgets, everyone still wants to be at Laser Munich, to be part of the family reunion.
The number of exhibitors at Laser Munich last week was almost exactly the same as in 2007, but spread out in four halls instead of three. Considering the laser industry is in its deepest trough ever, people were in a great mood.
One factor would be that there is now a general feeling that the industry, and the economy at large, has more or less hit bottom. One comment that sums it up is that now “there are finally more new orders than cancellations.” It’s kind of like how you feel when you stop beating your head against the wall.
The bright colors may have helped too. Trumpf was touting the Blue Laser, which I was told referred to blue sky, earth as seen from space, earth-friendly, and something about cozying up to Mercedes. Its new-ish acquisition, SPI Lasers, featured its redENERGY and redPOWER lasers--really more infrared than red, but close enough. Coherent, meanwhile, went yellow and featured a more industrial look, evoking images of robots, Caterpillar tractors, and guys with hardhats.
The best coverage of the show, including video coverage, is by Industrial Laser Solutions magazine (look for articles in the June 15 to 19 timeframe). But, since everyone seemed to ask, "What's new at the show"? here's my general take.
Fiber lasers were once again the big thing at Laser Munich. At Munich 2007 we saw several early fiber laser products from players who had been on the sidelines, most notably Trumpf, Rofin, and GSI. This year those companies stepped up their fiber laser offerings. In addition, Coherent showed a fiber laser prototype based on bar pumping that will be out next year. Newport quietly relaunched a 100W CW fiber laser for industrial applications. nLight featured its fiber laser products from its OptoTools acquisition. And even LASAG, well known for its lamp-pumped YAG lasers but not wanting to be identified only as such, had a fiber laser in its booth.
Never one to be outdone, IPG showed a 10 kW single mode fiber laser. Even 3 kW was remarkable just a couple years ago, now they are at 10 kW. Its main application is for military customers developing directed energy weapons, a good business for IPG these days.
Direct diode lasers also had some buzz. For the most part, there were the usual players, Laserline being a leader, but acceptance is growing for processes like brazing and welding. Trumpf was the most notable new player. Lumics was able to boast about its "three digit" unit order for 200+ W fiber-coupled diode systems--a nice win in a tough economy.
Overall, the booth traffic may have been on the light side, but I wonder if Laser Munich may steal some market share from competing events. Even with companies tight on travel budgets, everyone still wants to be at Laser Munich, to be part of the family reunion.
Friday, June 5, 2009
CLEO 2009--The year of mid-IR
To name one thing that stands out at an industry event may do an injustice to the many others, but mid-infrared is my pick for CLEO 2009. This is a product category that really seems to be gaining traction. From a market perspective, it has a lot going for it: many new and exciting potential applications, and many new technology solutions. Of course, application development takes time, but there are both near-term and long-term apps. A nice place to be these days.
There was a session in the PhAST Market Forum on mid-IR environmental monitoring. There was a plenary presentation by Federico Capasso, now a professor at Harvard, on quantum cascade lasers. Daylight Solutions, Hamamatsu, Alpes Lasers, Maxion Technologies , and AdTech Optics are some of the companies that make quantum cascade lasers or products built around them. There were also companies showing 2 micron fiber lasers, such as Advalue Photonics, IPG Photonics, and Photonics Industries. And there are usual established players that make OPOs and the pumps to drive them, companies that feature coatings, and so on. Some of the companies have even been hiring through the downturn. MIRTHE, the NSF Center on Mid-Infrared Technologies for Health and the Environment headquartered at Princeton, had a booth at CLEO showing off some applications.
Of course, there were also lots of other great new products and conference presentations. Laser Focus World magazine does a great job covering those topics, I'll leave that to them.
The turnout at CLEO wasn't too bad, considering we are going through the biggest economic downturn in decades. Sure, companies cut back in booth size and attendees, but CLEO attendance was only in the lower end of the range of recent years, not drastically different.
CLEO really addresses scientific and R&D applications--you see lots of ultrafast lasers and fancy instrumentation. The markets for those applications are as close to flat as any today. Which is to say, really good.
There was a session in the PhAST Market Forum on mid-IR environmental monitoring. There was a plenary presentation by Federico Capasso, now a professor at Harvard, on quantum cascade lasers. Daylight Solutions, Hamamatsu, Alpes Lasers, Maxion Technologies , and AdTech Optics are some of the companies that make quantum cascade lasers or products built around them. There were also companies showing 2 micron fiber lasers, such as Advalue Photonics, IPG Photonics, and Photonics Industries. And there are usual established players that make OPOs and the pumps to drive them, companies that feature coatings, and so on. Some of the companies have even been hiring through the downturn. MIRTHE, the NSF Center on Mid-Infrared Technologies for Health and the Environment headquartered at Princeton, had a booth at CLEO showing off some applications.
Of course, there were also lots of other great new products and conference presentations. Laser Focus World magazine does a great job covering those topics, I'll leave that to them.
The turnout at CLEO wasn't too bad, considering we are going through the biggest economic downturn in decades. Sure, companies cut back in booth size and attendees, but CLEO attendance was only in the lower end of the range of recent years, not drastically different.
CLEO really addresses scientific and R&D applications--you see lots of ultrafast lasers and fancy instrumentation. The markets for those applications are as close to flat as any today. Which is to say, really good.
Subscribe to:
Posts (Atom)