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Optoelectronic Industry Trends

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					 Optoelectronic Industry Trends

   The Optoelectronic Industry and Technology Development            industry was conducted as described below.
Association (OITDA) was established in 1980, and since                  Questionnaire surveys were performed from early October
then, thanks to a great deal of support and cooperation from         2007 to the end of January 2009 with the participation of
the affiliated members and enterprises, OITDA has annually            289 domestic enterprises manufacturing optoelectronic-
conducted a Survey of the Trends of the Optoelectronic               related products (optoelectronic equipment, components) to
Industry to analyze the current scale of domestic production         determine actual production in FY 2007, estimated production
and estimate future prospects, and at the same time to grasp         for FY 2008, and prospects for FY 2009. Based on the results
tendencies and other factors related to optoelectronic               of the questionnaire, discussions were conducted by the
resources and optoelectronic industries in other countries.          seven field-specific research committees and the Statistics
It is highly regarded as basic information on industry               Research Analysis Committee to compile the domestic
trends.                                                              production of optoelectronic industry.
   The current global recession is presenting challenges we             The optoelectronic industry is categorized into the
have never experienced, and the optoelectronic industry has          following seven fields by combining optoelectronic
also come to a critical moment where it will continue as a           equipment and components:
saturated industry, or become a motor giving birth to a new
era. In this situation, we believe that it is more important         1. Optical communication
than ever to have an accurate grasp of the comprehensive                Optical transmission equipment/systems, optical fiber
trends in the optoelectronic industry and optoelectronic                splicing equipment, light-emitting equipment, photo
technology and to prepare mid-term/long-term research and               detectors, optical fibers, optical connectors, optical passive
development and business strategies.                                    equipment, etc.
   For the survey of optoelectronic industry trends, the             2. Optical storage
following seven basic policies were set by the Optoelectronic           Equipment (read-only and recordable types), media (write
Industry Trend Research Committee and activities were                   once read many types, rewritable types), semiconductor
conducted accordingly.                                                  lasers, etc.
1. Conduct activities through eight specialist committees,           3. Input / Output
   including seven field-specific research committees and                 Optical printers, digital copiers, digital cameras, digital
   the Statistics Analysis Research Committee;                          camcorders, photo detector arrays, etc.
2. For the statistics on domestic production, perform                4. Displays
   questionnaire surveys on (1) actual production in FY 2007,           flat panel displays, projection displays, LED (for displays),
   (2) estimates for FY 2008 and (3) prospects for FY                   etc.
   2009;                                                             5. Photovoltaic cells
3. Conduct a questionnaire survey on optoelectronic industry            Photovoltaic cells
   resources;                                                        6. Laser processing
4. Attend the annual meeting of International Optoelectronics           Laser processing equipment, medical laser equipment,
   Association to study overseas trends in the optoelectronics          gas laser, etc.
   industry                                                          7. Measuring and sensing
5. Summarize market trends in the optoelectronics industry              Optical measuring equipment, optical sensing equipment,
   in a timely manner and make the information available                etc.
   on the web version of OptoNews (Research &                        8. Other
   Analysis)                                                            Individual photo detectors for non-communication uses,
6. Continuous discussions about ways to improve the                     hybrid optical equipment, etc.
   coverage, collection rate, and reliability of the
   questionnaire survey; and                                         1.2 Survey of Domestic Production in FY 2007, FY 2008 and
7. Discussion of the survey items of the questionnaire by                 FY 2009
   field-specific research committees and establishing                    Table 1 shows the actual domestic production in FY 2007,
   consistency by the Statistics Analysis Research                   estimated production for FY 2008 and projected production
   Committee.                                                        for FY 2009. Figure 1 shows the contribution of each field
   In addition, this work was subsidized by JKA through its          to the increase in the domestic production of the
Promotion funds from KEIRIN RACE.                                    optoelectronic industry over the three years.
                                                                        Actual production recorded in FY 2007: 8,070.5 billion
1.   Trends in Domestic Production for the                              yen, growth rate: 2.6%
     Optoelectronic Industry                                              Digital cameras and flat-panel displays support growth
1.1 Survey on the Domestic Production of the Optoelectronic             of the optoelectronics industry. Optical communication
     Industry                                                           and laser processing continued to be firm. Also,
   A survey on the domestic production of the optoelectronic            photovoltaic cells recovered.


                                                                 2
                                                                                                                                                         Optoelectronic Industry Trends




                                                                 Table 1 Domestic Production of the Optoelectronic Inductry (total)
                                                                                           FY2007 Production Actual              FY2008 Production Estimate             FY2009 Production Prospect
                                                 Product Items
                                                                                         (in million yen)               (%)
                                                                                                              Growth Rate       (in million yen)     Growth Rate
                                                                                                                                                               (%)     (in million yen)               (%)
                                                                                                                                                                                            Growth Rate
Optical Communication Field                                                              537,474                         0.6    574,003                         6.8    588,552                         2.5
        Optical Communications Equipment                                                 248,645                     − 8.7      271,501                         9.2    277,255                         2.1
            Truck System (including MUX)                                                             103,301           13.4                 107,948             4.5                107,407         − 0.5
    Optical Equipment




            Metro System                                                                               46,270            9.1                  48,481            4.8                  43,274      − 10.7
            Access System                                                                              51,192      − 19.2                     56,522          10.4                   68,130          20.5
            Optical LAN, Wireless LAN                                                                   4,970      − 84.2                      5,119            3.0                   5,120            0.0
            Picture Transmission (CATV, etc)                                                           15,337      − 38.1                     19,726          28.6                   23,879          21.1
            Optical Fiber Amplifier                                                                    17,456          93.9                   23,557          35.0                   22,531        − 4.4
            Others                                                                                     10,119        − 1.9                    10,148            0.3                   6,914      − 31.9
        Optical Fiber Splicers                                                            17,088                       41.0      16,664                     − 2.5       16,664                         0.0
        Laser Diodes for Communication                                                    38,877                       17.6      40,284                         3.6     37,836                     − 6.1
        LEDs for Communication                                                             1,174                         1.3      1,047                   − 10.8         1,349                       28.8
    Optical Components




        Photo Detectors                                                                    4,131                       24.3       4,450                         7.7      4,807                         8.0
        Optical Transmissiton Modules                                                     53,926                       38.7      53,249                     − 1.3       65,825                       23.6
        Optical Fiber Cables                                                             110,848                     − 0.1      119,920                         8.2    120,693                         0.6
        Optical Connectors                                                                26,771                         1.1     30,104                       12.5      28,567                     − 5.1
        Hybrid Optical Devices                                                             1,681                       77.5       1,766                         5.1      1,449                   − 18.0
        Optical Passive Components                                                        30,188                     − 2.9       29,891                     − 1.0       28,980                     − 3.0
        Optical Circuits                                                                   4,145                         9.8      5,127                       23.7       5,127                         0.0
Optical Storage Field                                                                    601,211                     − 9.6      610,876                         1.6    609,312                     − 0.3
        Optical Disk                                                                     548,193                     − 6.4      564,794                         3.0    561,659                     − 0.6
    Optical Equipment




                                           Equipment                                                  463,176        − 1.5                  485,177           4.8                  477,485         − 1.6
                                              Read-only (CD, MD, DVD, BD/HD DVD)                      317,441        − 4.1                  265,760       − 16.3                   246,981         − 7.1
                                              Recordable (MD, MO, CD, DVD, BD/HD DVD)                 145,735          4.8                  219,417         50.6                   230,504           5.1
                                           Media                                                       55,684        − 9.4                   55,567        − 0.2                    59,026           6.2
                                           Others (Optical Head, Processing &
                                                                                                       29,333      − 45.5                     24,050      − 18.0                     25,148          4.6
             Inspection Equipment)
        Laser Diodes                                                                       53,018                  − 33.3         46,082                  − 13.1         47,653                     3.4
Input/Output Field                                                                      2,101,926                     5.8      1,904,491                   − 9.4      1,776,868                   − 6.7
        Optical I/O Equipment                                                           1,735,842                     4.1      1,543,058                  − 11.1      1,414,663                   − 8.3
             Optical Printers                                                                         114,196       − 6.9                   114,829          0.6                    99,822       − 13.1
    Optical Equipment




             Digital MFP (FAX machine, Copier, MFP)                                                   209,636         5.4                   171,087       − 18.4                   128,705       − 24.8
             Bar Code Reader                                                                           20,396      − 23.3                    20,230        − 0.8                    20,207        − 0.1
             Image Scanners                                                                            30,540       − 2.5                    34,772         13.9                    33,913        − 2.5
             Digital Still Camera                                                                     982,343         9.2                   907,826        − 7.6                   858,932        − 5.4
             Digital Camcorder                                                                        356,553       − 5.9                   271,181       − 23.9                   246,767        − 9.0
             Others                                                                                    22,178       130.2                    23,133          4.3                    26,317         13.8
        Photo Detectors                                                                   366,084                    15.0        361,433                   − 1.3        362,205                     0.2
Display Field                                                                           3,574,474                     3.5      3,632,146                     1.6      3,543,839                   − 2.4
        Display Equipment                                                               1,241,530                     8.6      1,291,274                     4.0      1,358,012                     5.2
    Optical Components Optical Equipment




             Flat Panel Display                                                                     1,051,275        10.4                  1,113,542         5.9                  1,183,873         6.3
                  LCD                                                                                 832,287         9.2                    902,515         8.4                    962,413         6.6
                  PDP                                                                                 218,988        15.3                    211,027       − 3.6                    221,460         4.9
             Projection Display                                                                       172,923       − 0.9                    149,219      − 13.7                    158,769         6.4
             Large Screen (60 inches or more)                                                          17,332         4.9                     28,513        64.5                     15,370      − 46.1
        Display Devices                                                                 2,132,461                   − 0.3      2,134,493                     0.1      1,975,186                   − 7.5
             LCD (Panel, Module)                                                                    1,811,761         0.6                  1,820,093         0.5                  1,657,986       − 8.9
             PDP (Module)                                                                             305,000       − 4.7                    298,000       − 2.3                    298,000         0.0
             EL                                                                                        15,700         1.4                     16,400         4.5                     19,200        17.1
        LEDs                                                                             200,483                     16.1       206,379                      2.9       210,641                      2.1
Photovitaic Cell Field                                                                   401,821                      4.6       507,285                     26.2       540,900                      6.6
Laser Processing Field                                                                   469,129                      7.2       368,120                   − 21.5       326,211                   − 11.4
        Laser Processing Equipment                                                       383,221                      4.6       298,851                   − 22.0       257,351                   − 13.9
    Optical Equipment




             CO2 Lasers                                                                                96,384       − 0.4                    74,978       − 22.2                    77,229          3.0
             Solid State Lasers                                                                        47,061       − 0.2                    44,506        − 5.4                    46,217          3.8
             Excimer Lasers                                                                           234,050         7.8                   173,700       − 25.8                   127,750       − 26.5
             Others                                                                                     5,726         8.7                     5,667        − 1.0                     6,155          8.6
        Medical Laser Equipment                                                             8,012                   − 7.8         8,139                      1.6         7,916                    − 2.7
        Oscillators                                                                        77.896                    24.2        61.130                   − 21.5        60,944                    − 0.3
             Gas Lasers                                                                                71,737        23.5                     54,658      − 23.8                     53,665       − 1.8
             Solid State Lasers                                                                         6,159        32.7                      6,472         5.1                      7,279        12.5
Sensing/Measuring Field                                                                  242,335                   − 10.7       250,119                      3.2       256,342                      2.5
        Optical Sensors                                                                  231,714                   − 11.8       240,165                      3.6       245,931                      2.4
        Optical Measuring Instruments                                                     10,621                     19.9         9,954                    − 6.3        10,411                      4.6
Others Field                                                                             142,094                      8.5       117,369                   − 17.4       115,832                    − 1.3
        Hybrid Optical Devices                                                            46,293                    − 9.3        38,856                   − 16.1        39,922                      2.7
    Optical Components




        Optical Fibers, Image Fibers, etc                                                  5,598                      5.5         5,075                    − 9.3         5,142                      1.3
        Photo Detectors                                                                   30,133                     38.5        31,245                      3.7        31,510                      0.8
        Others (Optical Circuits, Micro-Optics, etc)                                      60,070                     13.7        42,193                   − 29.8        39,258                    − 7.0

                                                                                            FY2007 Production Actual            FY2008 Production Estimate           FY2009 Production Prospect
                                                 Product Items
                                                                                          (in million yen)              (%)
                                                                                                              Growth Rate      (in million yen)    Growth Rate
                                                                                                                                                             (%)    (in million yen)              (%)
                                                                                                                                                                                        Growth Rate
    Sub Total for Optoelectronics Equipment                                             4,424,866                        2.3 4,244,400                    − 4.1 4,149,862                      − 2.2
   Sub Total for Optoelectronics Components                                             3,645,598                        3.1 3,720,009                        2.0 3,607,994                    − 3.0
      Total for Optoelectronics Products                                                8,070,464                        2.6 7,964,409                    − 1.3 7,757,856                      − 2.6




                                                                                                                       3
                Figure 1 Contribution of each field to the increase in Domestic Optoelectronic Production



   stimated production for FY 2008: 7,964.4 billion yen,
  E                                                                   comparison between the changes in the size of the
  growth rate: -1.30%                                                 optoelectronic industry and those of the Japanese
     Amidst the global financial crisis, the industry declined         economy and electronics industry. For the last 19 years,
  overall for the first time in three years. Photovoltaic cells        the nominal GDP has stayed at around 500 trillion yen.
  saw rapid growth, and optical communication continued               The production of the electronics industry has also
  to be firm. Also, displays are expected to see growth due            remained steady within the range of 20 trillion yen to 25
  to a strong first half.                                              trillion yen. The output of the optoelectronic industry, on
   rojected production for FY 2009: 7,757.9 billion yen,
  P                                                                   the other hand, was around 80 billion yen in FY1980, but
  growth rate: -2.6%                                                  has continued to post a steady positive growth rate ever
     Overall, a decline is projected for the second consecutive       since, exceeding the 7 trillion yen level 20 years later in
  year. There are expectations for photovoltaic cells with            FY 2000. Affected by the IT recession, the optoelectronics
  the restoration of subsidies also boosting domestic                 industry recorded negative growth in FY 2001 for the first
  demand, optical communication with favorable subscriber             time since the survey started. It then regained positive
  numbers, and demand expected in flat-panel displays                  growth quickly in FY 2002, and achieved strong growth
  looking towards the end of analog broadcasts in 2011.               again in FY 2003. FY 2005 was flat as production shifted
                                                                      overseas and falling prices occurred quickly in some
1.3 Changes in the Domestic Production of the                         industry sectors. However, FY 2006 and FY 2007 saw
      Optoelectronic Industry                                         solid growth, reaching the 8 trillion yen milestone. Both
   Figure 2 shows the changes in the domestic production              FY 2008 and FY 2009 are expected to see declines due to
for the 19 years from FY1991 to FY 2009. Figure 3 shows               the global recession sparked by the financial recession.
the changes in domestic production in the 1980 s from the                 Figure 3 also shows the proportion of optoelectronic
time of the first survey to the present in two sectors, namely,        components relative to the whole. In FY1980,
optoelectronic equipment and optoelectronic components.               optoelectronic components accounted for approximately
   Figure 2 also shows the nominal GDP and the domestic               80% of the total output. Since then, single-mode fibers
output of the electronics industry as a reference for                 and semiconductor lasers have appeared in the market and


                                                                  4
                                                                Optoelectronic Industry Trends




   Figure 2 Changes in Domestic Optoelectronic and Electronic Production and Nominal GDP




Figure 3 Changes in Domestic Optoelectronic Production of Equipment/Components (1980-2009)



                                            5
   Figure 4 Changes in the proportion of Optoelectronic Products by field




Figure 5 Changes in Domestic Optoelectronic Production by field (1991-2009)
          *1 FY2008 Economic Outlook and Basic Stance for Economic and Fiscal Management, 1/19/09 (Cabinet Decision)
          *2 World-wide Production Prospect of Electronics and Information Technology Industries, JEITA, 12/19/08




                                          6
                                                                                            Optoelectronic Industry Trends




expanded it. In addition, LCDs and other new                             is favorable due to FTTH uses, and sensing equipment
optoelectronic products have been introduced to the                      demand is also expected related to energy conservation,
market one after another. The optoelectronic industry has                safety and security.
expanded and developed, with the major products                             In the optical communication field, due to the full scale
changing drastically, reaching the present status. During                penetration of FTTH, trunk line systems and metro systems
the first half of the 1980 s, the production of                          are strong in the first half, with strong subscriber numbers
optoelectronic components exceeded that of                               projected in the second half, and optical transmission
optoelectronic equipment; however, since the latter half of              modules are projected to be quickly shifted from low speed
the 1980 s, the share of optoelectronic components has                   class (100 Mb/s to under 1 Gb/s) to high speed class (10
fluctuated between 30% and 40%. In the 2000 s, the                       Gb/s to under 40 Gb/s).
proportion increased to 40-45%, with equal growth is                        The display field is projected to avoid a large decline. It
being seen for optoelectronic components such as display                 has compensated for falling prices by larger sizes and higher
devices and photovoltaic cells, and optoelectronic                       screen quality such as full HD, and is expected to be
equipment such as digital cameras and display equipment.                 supported by factors such as the end of analog broadcasts.
                                                                            In the optical storage field, amidst CD and DVD production
                                                                         being shifted overseas and falling prices, in optical disk
1.4 Changes in Optoelectronic Products by Field                          recording devices, large growth is projected for next
1.4.1 Changes in the Proportion of Optoelectronic Product by             generation DVD focused on Blu-ray Disc (BD).
       Field                                                                For the input/output field, digital cameras maintained
   Figure 4 shows the changes in the proportion of products              favorable growth and almost reached the 1 trillion yen
for the fields comprising the optoelectronic industry. The                milestone in FY 2007. Since FY 2008, compact types began
display field and I/O field account for approximately 70%                  to decline, but single lens reflex types are not projected to
of the whole, but due to the global recession, fields                     fully compensate for this decline.
maintaining their size comprise growing proportions, with                   The laser processing field is easily affected by economic
decreasing proportions for fields affected by the recession.              trends. There are concerns about when the automotive
The photovoltaic cells field saw large growth in FY 2008,                 industry will recover, but earlier recovery is expected in the
with sorting out of the raw materials supply structure and               semiconductor industry, as part of it has already announced
healthy demand in Europe. Optical storage, optical                       large investments.
communication and sensing/measuring were firm, slightly                      As described above, each field is in a different situation.
increasing their proportions. The display field is expected               Reflecting each market s demand, they are not simply
to resist decline in the lead up to the halt in analog broadcasts.       affected by the overall recession, and are trying to incorporate
The input/output field is expected to see large declines in               new technologies to improve the situation.
both growth and proportion, as digital cameras are unable                   Detailed analysis of each field is discussed below in
to maintain their growth, and the primary office uses of                  Sections 2-8.
printers and multifunction peripherals are also greatly
affected by the recession. The laser processing field was                 2.   Trends in the Optical Communication Field
supported by the semiconductor and automotive and other                     In 2008, FTTH subscriber numbers leapt to a leading
manufacturing industries, and is expected to be drastically              position among broadband platforms. The era has changed
affected by the recession.                                               from Fiber to The Home, to Fiber to Every Home
                                                                         (FTEH). The optical communication committee is carrying
1.4.2 Changes in Optoelectronic Production by Field                      out its activities focusing on analysis of market trends of
   Figure 5 shows the changes in the optoelectronic                      the overall optical communication field, and characteristic
production by field for the 19 years from FY1991 to FY2009.               market trends found in product lines in this field.
Over the three years from FY 2007 actual results until the
FY 2009 projection, the fields can be divided into four                   2.1 Optical Communication Equipment
groups: photovoltaic cells saw large growth, the sensing/                   Optical communication equipment production was an
measuring and optical communication fields were firm,                      actual 248.6 billion yen last fiscal year, an 8.7% decline
display and optical storage were flat, and the input/output               year-on-year (YoY). This fiscal year s expected production
and laser processing fields saw large declines.                           (below, this FY ) is 271.5 billion yen, growing 9.2% YoY,
   The photovoltaic cell field saw its silicon materials                  and projected production next fiscal year (next FY) is 277.3
shortage resolved in FY 2007, with large growth in FY 2008               billion yen, for 2.1% growth YoY.
due to European demand. FY 2009 is projected to see                         Last FY s breakdown was: trunk line systems 41.6%,
recovery in both domestic and global demand.                             subscriber system 20.6%, metro systems 18.6%, optical fiber
   The sensing/measuring field temporarily declined in FY                 amplifiers 7.0%, video transmission 6.2%, optical LAN and
2007, but is projected to be firm, as measuring equipment                 optical wireless LAN 2.0%. Along with the growth seen in


                                                                     7
trunk line systems and metro systems, there was especially         a stable growth trend of 10% annually, but due to effects of
large growth in optical fiber amplifiers required in their           subprime problems which began in the U.S. this summer
Wavelength Division Multiplexed transmission systems. This         and global financial problems, differences in demand are
growth resulted from uses in optical submarine repeatered          arising between global regions. There are regions with
transmission systems.                                              declining demand where growth slowed due to investment
                                                                   fundraising problems, and regions with continuing firm
2.2 Optical Transmission Module                                    demand. These offset, resulting in a flat trend for overall
   Domestic production of optical transmission module was          global demand.
53.9 billion yen last FY, growing a large 38.7% YoY. This
FY declined 1.3% YoY to 53.2 billion yen, but next FY is           2.8 Optical Passive Components and Optical Circuit
projected to grow 23.6% YoY to 65.8 billion yen.                        Components
   Domestic production of optical transmission module under           There was a 2.0% YoY decline overall to 34.2 billion yen,
100Mb/s is in a declining trend due to the move to higher          for optical passive components such as optical isolators,
speed communications. From 100 Mb/s to under 1 Gb/s                optical attenuators, optical multiplexers/ demultiplexers and
declined 33.6% YoY to 12.2 billion yen this FY, with next          optical couplers, and optical circuit components such as
FY projected to grow 6.7% YoY to 13.0 billion yen. From            optical switches and optical modulators. This FY grew 2.0%
1 Gb/s to under 10 Gb/s declined 5.4% YoY to 14.7 billion          YoY to 34.9 billion yen, with next FY flat at 34 billion
yen this FY, with next FY projected to grow 24.0% YoY to           yen.
18.2 billion yen. From 10 Gb/s to under 40 Gb/s grew 41.2%
YoY to 21 billion yen this FY, with next FY projected to           3.   Trends in the Optical Storage Field
grow 33.9% YoY to 28.1 billion yen. 40 Gb/s and over grew             The optical storage committee carried out its activities
5.6% YoY to 3.7 billion yen this FY, with next FY projected        focusing on survey of domestic production of optical storage
to grow 30.0% YoY to 4.8 billion yen.                              (mainly optical disk) equipment and media along with the
                                                                   analysis of the results, the examination of characteristic
2.3 Laser Diodes for Communication                                 market topics and reporting thereof. The actual domestic
   Laser diodes were 38.88 billion yen overall last FY,            output of optical disks in FY 2007 was 548.2 billion yen,
growing 17.6% YoY. This FY was 40.28 billion yen, slowing          registering a decrease of 6.4% from the previous year. The
to 3.6% YoY. Next FY is projected at 37.84 billion yen, down       production estimate for FY 2008 is 564.8 billion yen (up by
6.1% YoY.                                                          3.0% over FY 2007) and the prospects for FY 2009 indicate
                                                                   a downward trend to 561.7 billion yen (down by 0.6% over
2.4 Photo Detectors for Communication                              FY 2007).
   Photo detectors for communication were 4.13 billion yen            Until now, products in the field of information storage
last FY, growing 24.3% YoY. This FY was 4.45 billion yen,          have optical disks as disruptive technologies replacing
growing 7% YoY. Next FY is projected at 4.81 billion yen,          records, cassette tapes and VTRs, and hence in FY 2000,
growing 8%.                                                        domestic production of optical disk equipment and media
                                                                   reached a peak of 1,174.8 billion yen. However, due to the
2.5 Optical Fiber                                                  collapse of IT bubble economy, reductions in product prices
   Optical fiber cable declined 9.3% YoY to 110.8 billion           and the progressive shift to production overseas, domestic
yen last FY, slowing from the previous year. This FY grew          output declined for the first time by 25% in FY 2001. The
8.2% to 119.9 billion yen, with next FY projected to grow          years 2002-2003 showed a return to positive growth with
0.6% to 120.7 billion yen.                                         the introduction of DVD recorders and DVD recorders with
                                                                   HDD. However, product prices declined further and more
2.6 Optical Connector                                              production moved overseas in FY 2004 and FY 2005, which
   Optical connectors overall grew 1.1% YoY to 26.8 billion        resulted in declines in domestic output in both FY 2004 and
yen last FY, and grew 12.3% YoY to 30.1 billion yen this           FY 2005. However, it recovered to grow 2.6% in FY 2006
FY. Next FY is projected to decline 5.0% YoY to 28.6 billion       (actual).
yen. It is believed that the volume of optical connector use          As described above, the product markets in the information
increased along with an increase in the number of users due        storage field have experienced several cycles of market
to penetration of broadband services access systems,               expansion as new systems are introduced followed by
especially FTTH.                                                   declines in domestic production caused by continually lower
                                                                   product prices and the transfer overseas of production. In
2.7 Optical Fiber Fusion Splicers                                  FY 2007 to FY 2009, the target years of this survey, there
   Optical fiber fusion splicers overall were 17.09 billion         are the negative factors of continually lower price levels and
yen last FY, growing a large 41.0% YoY. This FY declined           overseas transfer of production sites of BD read-only
2.5% YoY to 16.66 billion yen. The first half of this FY saw        equipment, but these are more than compensated for by the


                                                               8
                                                                                          Optoelectronic Industry Trends




positive impact of the full-scale penetration of next generation       optical technology in the document reader component,
DVD recorders in Japan, resulting in the small amount of               termed inkjet MFP.
expected growth in FY 2008 as mentioned above. HD-DVD                     Also, since FY 2005 actual figures, digital cameras and
dramatically withdrew in 2008, but sales of BD recorders               digital video cameras were respectively classified into two
are expected to grow to over four times the level of last year         types for more detailed analysis of market and product
with terrestrial digital broadcasts and penetration of large           trends: digital cameras were classified into single-lens reflex
flat panel high definition TVs. A progressive transition to              cameras and compact cameras, and digital video cameras
popularly priced models is expected, but continued large               are classified into hi-vision cameras and NTSC cameras.
growth is expected on a volume basis in FY 2009.
   In read-only equipment (CD, MD, DVD, BD & HD DVD),                  4.1 Trends of Domestic Production
FY 2007 decreased only a little YoY due to BD & HD DVD                    The actual production of I/O equipment as a whole in FY
players and game machines which can play BD. But FY                    2007 was 1,735.8 billion yen, registering a 4.1% increase
2008 is expected to see a remarkable decrease in production            from FY 2006. This increase is the result of an increase by
due to lower prices and production shifted overseas. There             5.6% in the production of input equipment, such as digital
is also a large declining trend for CD and MD, with domestic           cameras and digital video cameras, amounting to 1,422
production focused on automobile mounted DVD players                   billion yen, and a decrease by 2.4% in the production of
including car navigation systems, but it is thought that with          output equipment such as optical printers and optical MFPs,
the sale of low price car navigation systems, this declining           amounting to 313.8 billion yen. Domestic production in FY
trend will continue. Read/Write equipment (CDs, MDs,                   2008 and onwards of all types of optical I/O equipment has
DVDs and next-generation DVDs) grew for three consecutive              been affected by the global financial crisis and is predicted
years due to drastic increases in BD/HD DVD recorders (FY              to decline.
2007: up by 210.3%, FY 2008: up by 424.5%), but with the
recession, FY 2009 is projected to grow about 20%, which               4.2 Trend Analysis
may even turn negative depending on the recession s trend.             (1) Optical printers
DVD recorders and DVD recorders with HDD showed                           Domestic production of optical printers in FY 2007
positive growth in FY 2006, but are projected to see continual         declined to 114.2 billion yen, down by 6.9% YoY, but FY
decline starting FY 2007 or FY 2008 due to price reductions            2008 was 114.8, almost the same as the previous year, so
and the progressive shift of production overseas.                      the decline of domestic production appears to have bottomed
   Domestic production of optical storage media is projected           out. However, compared to the previous FY survey, FY 2008
to record an increase of 6.2% in FY 2009 after a decrease              estimated production and the FY 2009 projection are both
of 9.4% in FY 2007 and a 0.2% decline in FY 2008. Large                revised downwards by around 10%.
declines in demand for MD and MO, and continued decline                   The overall market for optical printers achieved high
in domestic production of CD-R and DVD recorders are                   growth on a unit basis in recent years. However, it has been
projected, but domestic production is expected to grow for             affected by recession due to the financial crisis, and 2008
BD with its relatively high technology hurdles and high                global shipment volume decreased YoY, with slowed growth
value added. A specific survey was also done on the                     in China and Asia.
superiority of optical disks in green IT for archive uses, as             Color products have expanded their market, especially in
a trend which should be noted for this FY and the future.              developed countries, but a converging trend is seen for the
                                                                       share of color products in optical printers overall. On the
4.   Input/Output (I/O) Field                                          other hand, small A4 size MFPs are steadily expanding their
   The survey of this field focuses on the market trends,               market.
production trends and characteristics of the products, such            (2) Optical MFP (including digital copiers)
as optical printers, MFPs (including digital copiers), barcode            The domestic production of optical MFPs in FY 2007 was
readers, digital cameras and digital video cameras.                    199.6 billion yen, a slight increase of 0.4% from the previous
   Reflecting the recent shift to multifunction peripherals             year. This may be due to the fact that while the volume of
(MFPs), the survey of digital copiers has been analyzed                shipments in FY 2007 increased over the previous year for
combined with that of MFPs since the FY 2003 actual                    monochrome MFP (by 1.4%) and also significantly increased
figures. The survey of single (non-hybrid) optical facsimiles           for color MFP (by 35.9%), overseas production expanded
was discontinued after the FY 2005 report, taking into                 for both monochrome and color MFP.
account the fact that the domestic production had been                    FY 2008 estimated and FY 2009 projected see declines
reduced to an insignificant level. On the other hand, almost            of over 20% YoY. It is thought that this is because domestic
all MFP products used optical technology for both input and            production at many companies is greatly affected by further
output, but considering the growth of MFPs adopting inkjet             expansion in overseas production, and also by the rapid onset
for output in recent years, this year (FY 2008 survey), our            of full scale recession starting in the U.S. since fall 2008.
surveys started covering inkjet output type MFPs using                 (3) Inkjet MFP


                                                                   9
   As described above, inkjet output type MFPs using optical            accounted for only about 19%. This increased to 31% in FY
technology in the document reader component are termed                  2001 and then to 45% in FY 2003. After a temporary decline
 inkjet MFP. This was added to the survey, with its survey              to 41% in FY 2005, it is expected to rise to 54% in FY 2007,
and analysis starting this FY.                                          and 57% in FY 2008.
   FY 2007 domestic production of inkjet MFP was 10 billion                Around 38% of MFP production was overseas in FY1999.
yen, only about 1/20 of optical MFP, but it is expected that            It sharply rose to 72% in FY 2002. It then experienced a
FY 2008 saw large growth at 27.8% to 12.8 billion yen,                  temporary decline to 67% in FY 2004, but it is expected to
about 1/12 of optical MFP. A survey also shows that global              rise further to 76% in FY 2007 and 81% in FY 2008.
inkjet MFP shipment value is US$8.5 billion, indicating that            Although the production of digital cameras dropped from
a very large share of production is overseas.                           36% in FY 2003 to 27% in FY 2004, it rose to 51% in FY
(4) Digital cameras and digital video cameras                           2007 and is also expected to be a similar amount in FY 2008.
   Since FY 2005 actual, the survey divides digital cameras             31% of digital video camera production was overseas in FY
into compact type and single lens reflex type. In last FY s              2007, and 47% of optical printers.
survey, FY 2007 was expected to be the first year to reach
the one trillion yen milestone, but FY 2007 actual grew 9.2%            5.   Display Field
to 982.3 billion yen, not quite reaching one trillion yen. Also,        5.1 Results of Analysis of Optoelectronic Industry Trends
the FY 2008 estimate for digital cameras saw the first decline              As a result of analysis and investigation based on a
(7.6%) since the surveys began, and FY 2009 also projects               questionnaire survey sent to related companies, this field s
a 5.4% decline to 858.9 billion yen. The future trend will be           production is as follows. Domestic production of display
watched to see if this is a temporary phenomena due to                  equipment recorded 1,241.5 billion yen (up by 8.6% YoY)
effects of the economic situation, or if it has finally passed           in FY 2007. The estimation for FY 2008 is 1,291.3 billion
its peak and is heading downwards.                                      yen (up by 4.0%) and the prospect for FY 2009 is 1,358.0
   Breaking this down, until last FY, it was driven by demand           billion yen (up by 5.2%). The production of display
for single lens reflex type, but that also lost strength in FY           components was 2,132.5 billion yen (down by 0.3%) in FY
2008, as the decline in compact types dragged overall                   2007, the estimation for FY 2008 is 2,134.5 billion yen (up
production value of digital cameras into a decline.                     by 0.1%) and the prospect for FY 2009 is 1,975.2 billion
   Domestic production of digital video cameras in FY 2007              yen (down by 7.5%). Within display equipment, flat panel
declined 5.9% to 356.6 billion yen. The estimate for FY                 displays are exhibiting especially remarkable growth, with
2008 is a large 23.9% decrease to 271.2 billion yen and the             FY 2008 domestic production expected to be 1,113.5 billion
prospect for FY 2009 is also a 9.0% decrease. Since FY 2006             yen, achieving a 5.9% annual growth rate. Considering the
actual, domestic production has been surveyed in two                    rapidly falling prices for LCD and PDP, we presume the
categories: traditional models (equivalent to NTSC) and                 growth in units produced is even greater.
high-definition models (equivalent to Hi-V). Looking at this             (1) LCD equipment and components
breakdown, production of Hi-V cameras is increasing                        The steadily growing domestic production of LCD
remarkably and is projected to exceed that of NTSC cameras              equipment and components changed dramatically due to the
in FY 2009.                                                             economic recession which suddenly arose in the second half
(5) Image scanners                                                      of 2008. One after another, major foreign and domestic
   FY 2007 domestic production declined 2.5% to 30.5                    manufacturers of LCD panels reduced production as had
billion yen. FY 2008 is expected to grow 13.9% to 34.8                  been previously unseen, and are moving to shrink and
billion yen. It does not appear that domestic production will           restructure production lines, with review and postponement
grow, but inkjet MFP incorporate flatbed scanners, and units             of new investment plans. Also, stagnant demand for
which do not appear in these statistics are being shipped.              equipment has led to falling prices in the market and worse
However, there are many low price products, so it is assumed            earnings for manufacturers of display equipment and panels,
that they are being produced overseas.                                  and has also affected related parts and material manufacturers,
                                                                        greatly slowing the entire LCD industry.
4.3 Trends of Overseas Production                                          1) Equipment: Domestic production of LC TVs has grown
   In this field production has been largely shifted abroad;             from 733.1 billion yen in FY 2007, to 807.1 billion yen (up
thus, the domestic production does not accurately reflect the            10.1% YoY) estimated in FY 2008, and 887.9 billion yen
entire output of domestic manufactures. To solve this, four             (up 10.0%) projected for FY 2009. Domestic production of
categories, domestic production, overseas production,                   LCD monitors was 99.1 billion yen in FY 2007, decreasing
 domestic shipment and overseas shipment have been                      3.8% to 95.4 billion yen in FY 2008, projected to decrease
investigated since FY 2000. This categorization may have                a further 21.9% to 74.5 billion yen in FY 2009. These several
imposed a greater burden on the respondents, but the                    years, production has become mainly by overseas
information obtained is of great value.                                 manufacturers, with decreasing domestic production.
   In FY1999, overseas production of I/O equipment                         2) Components: Domestic production of active-matrix LCA


                                                                   10
                                                                                           Optoelectronic Industry Trends




panels in FY 2007 was 1,698.9 billion yen (up 1.4%), with              cinema screens in 2,125 theaters globally. It is said there are
FY 2008 estimated at 1,720.2 billion yen (up 1.3%), and FY             about 120,000 screens in the world, and this is less than 6%
2009 projected at 1,562.4 billion yen (down 9.2%). Domestic            of all screens, but in the U.S., more than 10% of all screens
production of passive type LCA panels in FY 2007 was 112.9             have converted to digital: 4,887 screens at 841 theaters. On
billion yen (down 10.1%), with FY 2008 estimated at 99.9               the other hand, Japan has 100 screens in 65 theaters. Almost
billion yen (down 11.5%), and FY 2009 projected at 95.6                all Hollywood movies can be delivered digitally, and with
billion yen (down 4.3%). Production has progressively shifted          lower priced equipment and introduction of a virtual print
overseas, with domestic production in a declining trend these          fee (VPF) model to help initial installation costs for the
several years, and it is thought this trend will continue.             theater, they will penetrate rapidly, with half of all screens
(2) PDP equipment and components                                       globally converting to digital by 2013, for a potential market
   The PDP TV market was firm in the first half of FY 2008               projected to be $8 billion.
with the special demand for the Beijing Olympics, possibly
with wider recognition that PDP has high picture quality.              6.   Photovoltaic Energy Field
However, since the second half of FY 2008, it has been                    Photovoltaic cells are expected to provide vast amount
affected by the sudden economic recession.                             of non-polluting energy, and are positioned as one of the
   1) Display: The production of 219.0 billion yen (up by              most important future energy sources in Japan s energy
15.3%) recorded in FY 2007 is expected to rise to 211.0                strategy.
billion yen (down by 3.6%) in FY 2008 and projected to                    In addition, various climate changes which are omens of
move up to 221.5 billion yen (up by 4.9%) in FY 2009.                  global warming are frequently reported, and at the G8 Toyako
   2) Components: The production of 305.0 billion yen (down            Summit held in July 2008, an international agreement was
by 4.7%) recorded in FY 2007 is expected to decrease to                formed to cut global CO2 emissions 50% by 2050. Ahead
298.0 billion yen (down by 2.3%) in FY 2008 but projected              of the summit, then Prime Minister Fukuda who served as
to be flat at 298.0 billion yen in FY 2009.                             the G8 Summit Chairman announced the Fukuda Vision
(3) Organic EL display components                                      immediately before the summit, establishing Cool Earth 50
   In FY 2008, active-matrix organic EL display components             (energy innovation technology plan) for Japan to cut CO2
(AMOLED) also came to be adopted in photo frames, One                  emissions by 60-80%.
Seg.-TVs and portable game devices. On the other hand,                    The New Energy and Industrial Technology Development
growth slowed for passive matrix (PMOLED). There is the                Organization (NEDO) compiled the PV Roadmap toward
sudden economic recession, but there are also mass                     2030 (PV2030) in 2004, which identifies the forthcoming
production plans at multiple manufacturers, so continued               period through 2030 as the formation stage for public
growth in domestic production is projected.                            awareness and confidence to develop PV power generation
   Domestic production of organic EL display components                to serve as one of the major energy resources in response to
in FY 2007 was 15.6 billion yen (up 1.4%), with FY 2008                energy resources/global environment issues. To that end,
estimated at 16.3 billion yen (up 4.5%), and FY 2009                   efforts for technological development are being made to
projected at 18.9 billion yen (up 16.0%).                              achieve conversion efficiency levels of 25% and to realize
(4) Projection display equipment                                       costs similar to that for general use (7 yen/kWh).
   FY 2007 domestic production was about 172.9 billion                    In this situation, an initiative is being launched for specific
yen (down 0.9%), but FY 2008 is estimated to decline 13.7%             technology development of photovoltaic cells, seeking a
to 149.2 billion yen, due to rapidly falling prices, production        large contribution to cutting global warming gas CO2
shift to overseas, and the suddenly worsening global                   emissions in half. Also, to cut in half the costs of housing
economic situation. FY 2009 is projected to grow 6.4% to               PV system costs which was in the Fukuda Vision, housing
158.8 due to promotion of penetration in educational uses              PV systems recovered with this fiscal year s first extra budget.
and new developments.                                                  This is expected to be a large stimulus for the stagnant
(5) Large display equipment                                            domestic market.
   FY 2007 domestic production was about 17.3 billion yen
(up 4.9%), and FY 2008 recorded its highest ever 28.5 billion          6.1 Market Analysis
yen (estimated up 65%), due to special demand for the                     The total shipment of PV cells from Japan in FY 2007
Beijing Olympics. In contrast, FY 2009 is projected to be              was 911.6 MW, up by 40 MW or 4.6% year-on-year (YoY).
15.4 billion yen (down 46%). This is due to a slump after              The decline in FY 2006 was not repeated, and it rebounded
the special demand, and large impact from the global                   above the previous record shipments in FY 2005. The main
recession.                                                             cause for this is that overseas export markets grew strongly,
                                                                       although the domestic housing PV power system market
5.2 Trends to Note This Fiscal Year                                    continued to shrink. The PV system penetration support
   This fiscal year, we surveyed the digital cinema trend.              project by the government has spread from the Ministry of
As of beginning of February 2009, there were 7,336 digital             Economy, Trade and Industry to the Ministry of the


                                                                  11
Environment and other government agencies and local                           overseas focus. Exports to the U.S. and Europe began in
governments, but same as in FY 2006, there is a weak effect                   2001, and are increasingly full scale each year, in an
on domestic market stimulation. On the other hand, PV cell                    environment of very quick demand growth in European
manufacturers in Japan keep investing in facilities to increase               markets, mainly Germany and Spain, with dramatic changes
production capacity, and new manufacturing entrants are                       since 2003. Shipments overseas to the U.S. were 132.5 MW,
starting production, along with progress in new expansion                     Europe was 498.2 MW, and others were 71.0 MW. Europe
plans.                                                                        almost reached 500 MW. The PV cell business in Japan
   Shipments for FY 2008 are expected to increase 26% for                     shows a shift to global-scale business expansion targeting
both shipment volume and value. There was a large 37.5%                       global markets, instead of being confined to the Japanese
YoY increase by the third quarter.                                            market, due to the introduction of PV generation systems
   Table 2 shows the shipment volume and the composition                      on a world-wide scale.
by materials in FY 2007. Crystal Si type is becoming the
main material for power generation uses. Polycrystalline-Si                   6.2 Overseas Trends
type grew 2.6% YoY to 516.0 MW, maintaining its 500 MW                           The major topics in 2007 include:
level. Single-crystal Si type annual production did not go                    (1) The annual installed photovoltaic power of the 20 IEA
beyond the 300 MW level, for a second consecutive year of                         member countries increased from 1,423 MW to 2,257
decline. On the other hand, amorphous-Si type saw repeated                        MW, exceeding 2 GW for the first time;
slight increases and decreases until the year 2000, but full-                 (2) Germany increased the annual installed photovoltaic
fledged adoption also started in the sector for power                              power from 830 MW to 1,135 MW, leading the expansion
generation uses, and the improvement of production capacity                       trend of installed photovoltaic power of the world;
is underway, with a goal of expanding its scale to 100MW.                     (3) In terms of accumulated installed power, Germany
FY2007 shipment volume was 85.6 MW, growing 69.6%                                 achieved 3,862MW, holding the top rank in the world
YoY, regaining its former growth. Amorphous-Si type has                           for three consecutive years;
begun competing with crystal Si type in the power generation                  (4) Spain installed 512 MW that year, and was ranked second
market. Judging from the current production capacity and                          in the world, next to Germany;
future expansion plans, the Crystal Si type holds an absolute                 (5) Japan s annual installed power volume was third in the
advantage for its supply system. Still, with strong demand                        world at 210.4 MW, passed by Spain. Japan s cumulative
from U.S. and European mega solar power generation                                installed power reached 1,919 MW, but only Japan is
systems, drastic reinforcement of the production capacity                         declining, falling far behind in installation growth.
for the amorphous-Si type is continuing.                                      (6) Annual installed power in the US increased from 145
   FY 2007 shipments in terms of volume and ratio by                              MW to 207 MW, coming close to Japan s.
destination are shown in Table 3. Domestic shipments                          (7) In terms of annual growth rate, Italy (461%), Spain
declined 21.7% YoY to 209.9 MW, while shipments overseas                          (422%), France (187%), Switzerland (150%), Korea
rose 16.3% YoY to 701.7 MW, achieving 700 MW for the                              (102%) and the U.S. (42%) have shown the largest
first time. Domestic shipments shrunk from 30.8% of overall                        increases.
shipments, down to 23.0%, while shipments overseas rose                          The speed of installation and expansion of photovoltaic
from 69.2% to 77.0%. The drive for Japan s photovoltaic                       power generation systems is accelerating in Europe and
cell supply system is shifting from mainly domestic to an                     Korea where a feed-in tariff system is adopted. With the
                                                                              addition of the U.S, it is expected that the installation and
Table 2 Shipment by Material Type and Their Percentages                       expansion trend will gain momentum from 2008 onwards.
                Si             Si             a-Si and
                                                                Total
             Monocrystal   Polycrystal         others                         7.   Market Trends of Laser Processing Field
Shipment                                                                         The items surveyed by the research committee in this field
                 310.0          516.0             85.6           911.6
(MW/year)                                                                     are mostly medical laser equipment, material-processing
                                                                              laser equipment and laser oscillators. Medical laser
Percentage       34.0%         56.6%             9.4%            100%
                                                                              equipment uses various gas lasers and solid-state lasers, and
                                                                              the survey is made by classifying them by medical field,
                                                                              such as ophthalmology, surgery and dental treatment, pain
 Table 3 Shipment by Destination and Their Percentages                        relief and other (cosmetic, etc.). The usage of material-
                                                                              processing laser equipment covers an increasingly wide
                           for Domestic                  for Export
                                                                              range from heavy industry, such as rebar, bridge and
Shipment                                                                      shipbuilding, to light industry, such as electronics, IC wafer,
                                    209.9                        701.7
(MW/year)                                                                     engineering plastics, etc., and the lasers used in these
                                                                              industries are overlapping and complex. Thus, in order to
Percentage                              23%                       77%
                                                                              make it easier to grasp the industrial trends, analysis is made


                                                                         12
                                                                                           Optoelectronic Industry Trends




by type of laser, such as carbon dioxide gas laser, solid-state           Production of solid-state laser equipment in FY 2007
laser, excimer laser, etc.                                             declined 0.2% YoY to 47 billion yen, but FY 2008 is
   Total laser equipment production continued growing until            estimated to decline 5.4% to 44.5 billion yen. Amidst slowing
FY 2007, marking 391.2 billion yen, almost reaching the                capital investment by IT industries and semiconductor related
400 billion yen level, but FY 2008 was affected in the second          companies, this is projected to rise slightly due to low cost
half by the deep recession, and is estimated to decline 21.5%          and ecology related capital investments such as for
YoY to 306.9 billion yen. FY 2009 is projected to decline a            photovoltaic cells and battery vehicles which may become
further 13.5% to 265.2 billion yen. In shares by sector,               globally competitive in the future, with FY 2009 growing
excimer laser equipment for material processing comprise               3.8% to 46.2 billion yen. As a trend of solid-state laser
about 57% of the total, and below that the shares continue             equipment, full scale increased production of hybrid and
to be 24% for carbon dioxide gas lasers, and solid-state lasers        battery vehicles is an important pillar for environmental
14%. Shares by sector have not changed, but this laser                 friendly and global warming prevention measures. In the
equipment for materials processing is important production             welding sector, amidst full scale increased production of
processing equipment used in many processing sectors, and              rechargeable batteries for vehicles, welding of cases and
the reality is that effects of the economic slowdown                   electrodes for Lithium-ion batteries often uses a welding
mentioned above are appearing remarkably in almost all                 process by fiber transmittable solid-state lasers, which is
sectors.                                                               expected to see large growth.
                                                                          In the trimming and repair sector, photovoltaic cells are
7.1 Medical Laser Equipment                                            attracting attention. Laser patterning processing equipment
   The medical laser equipment sector is being pressed by              performs the main process for thin film photovoltaic cells.
overseas products, and its severe condition continues                  Harmonic solid-state lasers with Q-SW pulse oscillation are
unchanged. Estimated production for FY 2008 is slightly up             essential, and are expected to see large growth.
by 1.6% YoY, but FY 2009 is being dragged down by the                     Production of excimer laser equipment grew to 234 billion
economic slowdown, projected to decline 2.7% YoY to                    yen in FY 2007, but FY 2008 is estimated to decline 25.8%
approximately 7.9 billion yen. Viewed by sector, FY 2008               YoY to 173.7 billion yen. FY 2009 is projected to decline
laser equipment for surgery and ophthalmology are estimated            further by 26.5% to 127.7 billion yen. However, in the
to have grown slightly by over 3%, lasers for dental treatment         annealing sector, while crystal annealing equipment has seen
grew slightly by 1.8%, and lasers for pain relief were at the          large decreases, there are also positive stories, with Korean
same level YoY. Lasers for dental treatment which comprise             panel manufacturers projected to restart investing in FY
a large share are also projected to decline 2.6% in FY 2009;           2009, and in lithography uses, the world s largest CPU
Lasers for cosmetic use are easily influenced by the economy,           manufacturer decided in FY 2009 to introduce leading edge
and are projected to see a large 36.2% decline. Despite the            semiconductor manufacturing facilities for 32nm resolution,
economic recession, lasers are expected to see broader use             and announced large investments, etc. As a trend of excimer
in medical treatments.                                                 lasers, there is progress in development of patterning
                                                                       technology by non-thermal processing excimer lasers, which
7.2 Laser Materials Processing Equipment                               are effective in fabrication of thin film silicon photovoltaic
   Production of carbon dioxide gas laser equipment was                cells. If processing technologies utilizing the characteristics
initially expected to pass 100 billion yen in FY 2007, but             of excimer laser equipment become established, it may lead
fell far short, at about 96.3 billion yen. Furthermore, FY             to large future growth.
2008 is estimated to see a large 22.2% YoY decline to 74.9
billion yen. Carbon dioxide gas laser equipment is struggling          7.3 Oscillators
to boost exports due to the strong yen, and is battling harsh             A trend of carbon dioxide gas laser oscillators is their
conditions due to the economic slowdown mentioned above,               application in drivers for extreme ultra-violet (EUV) light
but is projected to grow by about 3.0% to 77.2 billion yen             sources used in next generation semiconductor lithography
in FY 2009. As a trend of carbon dioxide gas laser equipment,          equipment. EUV light source drivers link carbon dioxide
the cutting processing machine sector is benefitting from               gas lasers in a series, and amplify pulse laser light to the 10
growth in emerging markets, and there is active development            kW level. By illuminating tin droplets in amplified pulse
of various functions, even assuming untrained workers. For             laser light, one can generate 13.5 nm wavelength ultra-short
example, for higher speed processing machines, more than               ultraviolet rays. Development of conventional EUV light
increasing processing speed itself which is determined by              source drivers was progressing focused on solid-state lasers,
physical phenomena, each company is putting effort into                but in the case of solid-state lasers, many pump modules are
technology development in order to shorten total processing            required, and application of carbon dioxide lasers has been
time including automated functions such as for setup work.             attained as a solution for cost and quality issues.
Also, use of thermal stress for cutting FPD glass is attracting           As a trend of solid-state laser oscillators, there is progress
attention as a new use.                                                in higher power for secondary harmonics and tertiary


                                                                  13
harmonics, and YAG lasers have entered the UV laser light               communication networks. Until the first half of 2000, aiming
market previously monopolized by excimer lasers. There is               for leadership in the communications industry, optical fiber
also progress in applications of picosecond lasers and                  communication networks had been steadily expanding. With
femtosecond lasers in fine processing, drilling and cutting,             expanded production capacity for optical communications
and also, unique femtosecond processing businesses such                 equipment and optical components, domestic optical
as protein crystallization and frictionless cylinders have              measurement instruments-related companies made large
started to become established, and if there is progress in              scale investments benefiting from the demand expansion.
higher laser output and lower cost, it is expected that new             At the same time, demand for the instruments for research
processing markets will form.                                           and development and production lines grew rapidly.
   As a trend of excimer laser oscillators, in the lithography          However, since the second half of 2000, these experienced
sector, there is progress in ArF immersion lithography such             an abrupt slowdown due to the collapse of the IT bubble,
as enhanced fine pattern resolution performance and higher               which had a grave impact on both domestic and global
power, working for further productivity enhancements                    production. The situation has shown a gradual recovery since
(higher throughput and higher uptime). Through such                     2003, and it grew 19.9% in this fiscal year s survey, far above
improvement efforts, the characteristic of excimer laser as             the previous fiscal year s projection. A factor contributing
a light source which can cheaply supply UV light is being               to an increase in demand for optical measuring instruments
looked at anew, and development of new applications has                 is the penetration of FTTH services throughout the world.
begun in various sectors.                                               The transition of optical communication networks to the
   As a trend in other oscillators, there is continuing progress        next-generation systems is also a positive contributor to good
with fiber lasers. There is more active development of fiber              performance. Along with this movement, the demand for
lasers, especially in laser manufacturers, fiber manufacturers,          the measuring equipment to support the development of
universities and research institutes, both overseas and in              systems and devices that control ultra-high speed optical
Japan. At academic conferences, seminars, etc, there are                networks is projected to increase. It is thought that there will
growing numbers of announcements using fiber lasers in                   be a temporary slowdown due to effects of the recession,
development of femtosecond and picosecond lasers and laser              but relatively stable demand is expected.
processing by high quality beams. There are hopes that in                  Optical sensing equipment indicates all sensors and
the future, shorter wavelengths of pulse fiber lasers for                equipment which use the various properties of light in some
precision processing will become scopes, resolving long                 form. Although the scale of production of individual products
term reliability issues for high peak power such as light               is certainly not large, there are various types of optical
resistance and photo darkening.                                         sensing instruments which meet a wide range of needs of
                                                                        R&D and production units, consumer uses, etc. Consequently,
8.   Sensing/Measuring Field                                            production facility investment strongly influences the demand
   The subjects surveyed in this field are optical measuring             for photoelectric switches, human body sensors, temperature
equipment and optical sensing equipment. Optical measuring              sensors, radiation thermometers, rotary encoders, linear
equipment includes equipment to measure the basic                       scales, length sensors, sensors for electric current/ voltage/
properties of light, such as light energy, frequency, waveform          magnetic field/ electric field, sensors for vibration/ pressure/
and propagation characteristics, and products related to light          acoustics, infrared cameras, laser microscopes, surface
sources for measurement. Optical sensing instruments                    inspection equipment, image sensing equipment, speed
include all sensors and sensing equipment that make use of              sensors, color sensors, etc. Growth is estimated for this fiscal
some properties of light, such as intensity, phase, wavelength          year, but due to recessionary sentiment resulting from U.S.
and frequency. These subjects cover a wide range and are                subprime loan bankruptcies in the second half of FY 2007,
sensitive to technological advancement. To ensure                       facilities investment has been held back, resulting in an
consistency over successive surveys products are classified              11.8% decline. Among sensing equipment, there was a large
according to usage, operating principle, production                     decline in industrial applications such as photoelectric
technology, etc., and as a result, committee members with               switches, temperature sensors, radiation thermometers, length
specialized knowledge in various fields spent a lot of time              sensors, sensors for electric current/ voltage/ magnetic field/
and effort on long discussions, etc. to decide survey items             electric field, vibration/ pressure/ acoustic sensors, and
and to select companies.                                                surface inspection equipment. However, building and
   Optical measuring equipment, such as spectrum analyzers,             residential sensors such as fire/smoke sensors and human
Optical Time Domain Reflectometers (OTDRs), power                        body sensors are maintaining their growth trends as devices
meters, waveform measuring equipment and optical fiber                   close to consumers. Continued growth is expected for crime
transmission characteristics measuring equipment, is mainly             prevention and safety related equipment, such as infrared
used for installation and maintenance of optical                        cameras, and their applications.
communications systems. Consequently, the production of                    Measuring and sensing instruments account for
such equipment is closely related to the expansion of optical           approximately 3.0% of the domestic optoelectronic industry,


                                                                   14
                                                                                         Optoelectronic Industry Trends




amounting to 242,225 million yen. However, these                       number of companies, it is thought that about 1/30 to 1/10
instruments are the basis for all types of industrial equipment        of domestic production value is invested in R&D.
and also essential for development of new industrial
equipment and infrastructure development. Once an                      9.3 Increase/Decrease from the Previous Year (Estimate for
investment is made, it is not likely to require renewal for                  FY 2008, Prospect for FY 2009)
quite some time because they are general purpose.                      (1) Number of full-time employees
    Safety laser scanners are attracting attention as a future            11 of the companies responded that the number of full-
trend. The survey classified these as laser radars. These are           time employees increased in FY 2008 compared to the
optical application products written into machine safety               previous fiscal year (2007), 37 responded the same, and 14
standards, along with light curtains, etc.                             reported a decrease. 16 companies intend to increase
   Among sensing equipment, sensors in particular are like             personnel in FY 2009 from this year (2008), 34 maintaining
parts. Their production locations are steadily shifting                the same level, and 12 companies intend to decrease.
overseas, thus the response rate is declining, resulting in               The tendency of change of the top three responses is (FY
lower survey accuracy. This fiscal year, the following                  2008      FY 2009):
investigation and review was done in an attempt to improve                1) Same      Same (26 companies)
accuracy. The survey form wrote more concrete definitions,                 2) Increase     Increase (7 companies)
scope and caution notes, and was revised to clarify differences           3) Same Increase (6 companies), Decrease Decrease
between items. For product items with particularly low                       (also 6 companies).
accuracy, surveyed companies were reviewed. Specifically,               (2) Number of researchers
we removed data of companies which are not thought to be                  10 of the companies responded that the number of
producing that product, while companies thought to be                  researchers increased in FY 2008 compared to the previous
producing them were added to the survey. Production volume             fiscal year (2007), 42 responded the same, and 9 reported a
data of companies which did not respond was estimated                  decrease. 14 companies intend to increase researchers in FY
from the data which replied to each item, but the data of              2009 from this year (2008), 39 maintaining the same level,
companies with small estimated production and without                  and 9 companies intend to decrease.
response over the past several years had their data removed,              The tendency of change of the top three responses is (FY
as companies not producing that product. A production                  2008      FY 2009):
estimate was not made for equipment categorized as Other.                 1) Same      Same (35 companies)
We will continue to investigate improvement for survey                    2) Same      Increase (7 companies)
accuracy.                                                                 3) Increase     Increase (6 companies)
                                                                       (3) Amount of R&D investment
9.   Trends of Resources for Optoelectronics Industry                     11 of the companies responded that they increase
9.1 Introduction                                                       investment in FY 2008 compared to the previous fiscal year
   Along with the survey on the domestic production, the               (2007), 42 responded the same, and 9 reported a decrease.
number of full-time employees and the number of researchers            22 companies intend to increase R&D investment in FY
engaged in R&D and the amount of investment in R&D are                 2009 from this year (2008), 27 maintaining the same level,
surveyed. As in the previous fiscal year, a quantitative                and 13 companies intend to decrease.
questionnaire survey to obtain the figures for estimates for               The tendency of change of the top three responses is (FY
FY 2008 was conducted. Also, a quantitative questionnaire              2008      FY 2009):
survey was performed to determine whether there was an                    1) Same      Same (22 companies)
 increase, decrease, or stayed the same compared to the                   2) Same      Increase (13 companies)
previous year for the estimates for FY 2008 and prospects                 3) Increase     Increase (8 companies)
for FY 2009. The following is the results from 62 companies            (4) Domestic production
that have responded to all the questionnaire items.                       19 of the companies responded that domestic production
                                                                       increased in FY 2008 compared to the previous fiscal year
9.2 Industrial Resources of FY 2008 (Estimate)                         (2007), 20 responded the same, and 23 reported a decrease.
   With regard to human resources, the median number of                21 companies expect production to increase in FY 2009
full-time employees at the 62 companies was from 150 to                from this year (2008), 13 maintaining the same level, and
199, with 50 to 59 researchers. Comparing among the same               28 companies expect it to decrease.
cumulative number of companies, it is thought that about                  The tendency of change of the top three responses is (FY
1/5 to 1/3 of full-time employees are R&D workers.                     2008      FY 2009):
   Looking at funding, the median amount invested by 62                   1) Decrease      Decrease (13 companies)
responding companies in research and development was 100                  2) Increase     Increase (11 companies)
to under 500 million yen, with domestic production of 5 to                3) Same Same (8 companies), Same Decrease (also
under 10 billion yen. Comparing among the same cumulative                    8 companies)


                                                                  15
10. International Trends Observed at the Meeting of                     fluorescent lights) will replace incandescents by 2012, and
    IOA                                                                 if LEDs cannot enter into residential use by then, they will
10.1 Introduction                                                       be unable to enter. In turn, EPIC and PIDA state that
   The International Optoelectronics Association is comprised           emphasis should be placed on external lighting, and project
of 11 organizations in the world. It held its 13th annual               a market size in 2012 of 3.8 billion euro (EPIC) or $4.6
meeting in October 2008 in Melbourne. Each organization                 billion (PIDA).
is strengthening initiatives, for the photovoltaic sector which
has begun to see large demand for environmental reasons,                10.3.2 Korea’s LED Market Trends (from KAPID)
and wanting to understand trends from today looking forward               KAPID projected that LED sales volume/ number of
10 years in the future for solid-state lighting which has               companies will grow from $8.1 billion/205 companies in
illumination efficiency similar to fluorescent lighting.                  2005, to $21.9 billion/ 374 companies in 2009. Also,
Focusing on these two sectors, the international trends in              KAPID s home base of Gwangju means light state in
the optoelectronics industry are described based on the                 Chinese characters, and Gwangju has introduced a large
documents presented by individual organizations.                        project in its aim to be the Light City. $300 million will be
   There were already financial insecurities when the meeting            invested over five years, focused on LED development
was held, but one should consider that the spread of the                centers.
global recession is not reflected in the data of each
organization. Also, the definition of categories in                      10.3.3 China’s Solid-State Lighting Market Trends (from
optoelectronics industry varies for each organization, and a                   HKOEA)
comparison in a strict sense with OITDA data is not                        As development and production bases for solid-state
possible.                                                               lighting, five regions are attracting attention: Nanchang,
10.2 Overall Optical Industry Trends                                    Xiamen, Shenzhen, Shanghai and Dalian.
10.2.1 Global Optical Industry (from OIDA and PIDA)
   OIDA (USA) does not do a trends survey in its country,               10.4 Photovoltaic Trends
but it gathers various reports and announces global                     10.4.1 Global Photovoltaic Market Trends (from OIDA and
optoelectronics industry trends including a projection out                     PIDA)
to 10 years. Its projection for the global optoelectronics                OIDA projects that photovoltaic modules and systems
industry in 2018 is $630 billion of optoelectronic equipment,           will pass $100 billion in 2013. PIDA projects the same in
and $610 billion of optoelectronic parts.                               2010.
   Each year, PIDA (Taiwan) also makes five year trends
projection concerning the global optoelectronics industry,              10.4.2Taiwan’s Photovoltaic Trends (from PIDA)
including results. Its projection for the global optoelectronics           FPD is the driving force for optoelectronic production in
industry market size in 2010 is $520 billion.                           Taiwan, comprising over 60%. This is a characteristic of
   The values for the entire optoelectronic industry projected          Taiwan s optoelectronic industry, but looking at YoY growth
by OIDA and PIDA almost match the Optoelectronic                        rates in 2007, photovoltaic cell related were ranked the top
Industry Future Vision (November 2004) published by                     4, and are expected to grow by 600% from 2006 to 2010.
OITDA.
                                                                        10.4.3 Australia’s Photovoltaic Trends (from OIA)
10.3 Solid-State Lighting (High Brightness LED) Trends                     Victoria State (around Melbourne) receives more annual
10.3.1 Global Solid-State Lighting (High Brightness LED)                sunlight than Barcelona, Spain. Presently, only small scale
       Market Trends (from OIDA, EPIC, PIDA)                            power generation systems are operating, but there is a plan
   OIDA projects that solid-state lighting will comprise 30%            for a solar power system which will be 150 MW when fully
of the illumination market in 2016, and within solid-state              operational.
lighting, OLED will grow to 10% by 2018. It also projects
that the high brightness LED market will exceed $20 billion
in 2018.
   On the other hand, from a perspective which differs from
OIDA, EPIC (EU) sounds a warning that CFL (compact




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