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					Hong Kong Optoelectronics Association’s (HKOEA) Reply to ITC on
 “Consultation Paper – New Strategy of Innovation and Technology
             (The Opto-electronics (OE) R&D Center)
                        (August 30, 2004)

To : Mr. Anthony Wong
Commissioner for Innovation and Technology

Dear Anthony,
After HKOEA received the “Consultation Paper on New Strategy of Innovation and
Technology Development”, we had organized a series of meetings and discussion
sessions with our association members. As a result, we strongly recommend that the
government should establish an OE R&D Center in Hong Kong. OE is a right
market, right industry, and it is the right time for Hong Kong companies to enter and
expand it into an industry cluster.

Our proposed theme for the center is “PhotonicsHome” and we will have “OE-living”
as a result. We will focus on consumer optoelectronics applications where we can
leverage Hong Kong and Pearl River Delta advantage in low cost large volume
manufacturing, with large market access at the same time. Our technology domain is
opto-electronics which will apply to everyone’s daily lives. It also means we are
focused on low cost large volume products.

Our key application areas are:
1. Short Distant Networking (SDN); and
2. Solid State Lighting (SSL); plus
Optical Sensor and Laser Technology (OSLT) for consumer and industrial

Market Trend:
OE market is a high growth and high value added market. The worldwide market
starts to pick up after the telecom sector down turn in 2000, and it has grown at 20%
rate in 2003 and 2004. It is expected to reach 72B (USD) revenue on OE component
market. (Opto-electronics Industry Development Association - OIDA 2003 OE market
                        Worldwide Optoelectronic Market Estimates 97- 03

   $ Billion

                           1997      1999      2000          2001     2002      2003
                                    Source: OIDA Market Reports 1998 - 2003

As far as China is concerned, Guangdong province alone in the years 2001, 2002,
2003 the OE revenues are 47B (RMB), 53B, 62B repestively, and it is expected that
the revenue in 2004 will be around 71B. Its revenue grew at 15%-20% rate in the
last 4 years, and it is expected the growth will continue (source from GZOEMA 2004
China OE market survey). OE industry is one of GuangDong’s three largest
industries. Guangdong OE industry is also ranked number 1 in China.

                        Guangdong Optoelectronic Market Estimates

                   80                                                         71
   Revenue (RMB)

                   60                         53


                             2001            2002              2003           2004

Hong Kong has already had some very successful companies entering into this
industry in the past years, e.g. SAE, LTK, Cotco, PM. The recent success in the
spin-off of Acasia Technologies reconfirms the huge opportunity in OE market for
Hong Kong technology companies.

HKOEA and Guangzhou Optics & Optoelectronics Industry Association have already
initiated a strategic agreement in the area of solid state lighting which has attracted
support from the Hong Kong and Guangzhou industry as well as Guangzhou

Hong Kong OE Technology and Human Resources:
Hong Kong has invested in OE technology for a long time. There are well
established technology research and human resource training in universities and
institutes. Important research projects are being conducted in major universities in
Hong Kong which include OE material, components, and network applications. The
Hong Kong Science and Technology Park has established a Photonics Center to
provide infrastructure support to the OE industry development in Hong Kong. The
Hong Kong Applied Science and Technology Research Institute (ASTRI) has a well
established OE research group which has demonstrated its capability in
commercializing R&D result into industry.

We would like to support the government to form an OE R&D center based on the
focused areas – SDN, SLL and OSLT. We have got strong support from major
companies in Hong Kong participating at the individual project level.

We recommend ASTRI as a host organization so that we can leverage their support
infrastructure and well established corporate governance. There will be two types of
projects: the core projects and the application specific projects. The industry will
participate in the application specific projects with substantial funding support. The
possible core technology projects are OEIC, optical devices, optical packaging and
sensor technology. The possible projects with industry participation are Polymer
Optical Fiber (POF), home networking devices, SSL with high power LED for
lighting product design.

Companies who have expressed interest in participating into these projects are :
Acasia Technologies,
Advanced Packaging Technology,
ASM International,
Bookham Technology,
COTCO International,
Diffractive Optics,
Epi Light,
Furukawa Electric
JV Photonics,
LPI Precision Optics,
LTK Industries,
Micro Electronics,
National Semiconductor
Optik Technology
Optowise Technologies
Photonics Manufacturing Solutions,
Rohm and Haas Electronic Materials Asia
SAE Magnetics (H.K.),
Sanwa Technologies ,
Wong’s electronics,
Strong Base
Clever Motion

We strongly believe the creation of the OE R&D Center will have tremendous
benefits to Hong Kong by aligning the industry and academic OE resources. The
combined expertise will be instrumental to meet the challenges of the growing OE
activities in the world and especially in driving the relevant industry in Mainland
China. We must catch this great opportunity.

The market is ready, Hong Kong is ready, and we are ready!

Yours Truly

Daniel Lau

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