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OSA Corporate Member Newsletter
 
In this Issue:
What the Brexit Means to Photonics
The vote by Britons to exit the European Union means both a little and a lot to photonics. A little because the U.K. is just a small part of the global photonics industry (about 4%), and its strengths in military and other photonics technologies will continue for the time being. A lot because many consequences are unquantifiable and long term. But most of the effects will be confined to UK and Europe. Here's OIDA's view so far.
  • Currency. First there are the nearer term effects of the change in exchange rates and stock values. A fall in the pound means that UK photonics products become less expensive abroad and the UK's photonics imports are more expensive in the UK. It also means that revenues in UK pounds will count less when converted into US dollars for OIDA's reporting purposes.
  • Slower investment and demand. There is the mid-term effect of uncertainty, even if the decision is reversed. Markets don't like uncertainty, so capital equipment buying decisions get delayed and demand slows. There is also the longer term effect on the economies of England, the UK (if it continues to exist), Europe, and to a lesser extent, the global economy.
  • Financing. As difficult as it may be to get financing for photonics companies in the U.S., European photonics executives have complained to OIDA that it is comparatively more difficult to get financing in Europe, and it will likely become even more difficult now. It's possible to start companies, but photonics CEOs say that it's difficult to grow them beyond a small scale. For factors limiting growth, they cite a risk-averse culture, strict labor regulation, and the need to access U.S. markets. If the UK exits the EU, access to the European Investment Fund also dries up for UK companies. This all amounts to tighter credit in what is already a struggling UK economy.
  • R&D. The UK contributes almost 11% of the overall EU budget and receives about 5% back in overall spending. A small part of EU spending is spent on R&D, mainly to the more developed economies. The UK receives about 11% of the EU spending on R&D, so it's in proportion to its overall contribution. The R&D is doled out in competed tenders, but the UK is very competitive in R&D and therefore receives a good share. If the UK exits the EU, the current commitments will likely continue to completion, but future funding will end. This would create a gap in its R&D funding, but the UK would no longer contribute to the EU either. Would the UK fill the gap with its savings, or would it return the money to the taxpayers as an "exit dividend"? It's not clear. But it's not just the money that's at stake. The UK would lose some of its collaboration on projects with other EU countries. That collaboration might be hard to quantify, but it's important in today's globalized research environment.
  • Company relocation. The photonics industry is globalized, but not to the extent of companies like GE, Siemens, or Flextronics. Some photonics companies may have located in the UK to get access to the EU market, but most are small and relatively local. If they are multinational at all, they are also locating in China to get access to that market.
  • Recruiting talent. OIDA estimates that the UK employs about 71,000 people in optics and photonics components and enabled products, about 22% of European photonics employment. The UK should be concerned about recruiting talent for tech companies. Best-in-class companies want to hire best-in-class talent, and that often means foreign graduates or workers. This is an issue even in the photonics industry, where there are relatively few experts in narrow topics like MOCVD growth or integrated photonics design. OIDA supports work visa policies to recruit best-in-class talent for companies. If the UK restricts work visas, or if companies relocate to the continent to maintain their EU footprint, it will limit the competitiveness of the UK industrial ecosystem.
 
Over 90% of European photonics employment is within a 1-2 hour
plane flight of each other in the regions shown here, with about 22%
located in the U.K.
 
Are European taxpayers getting a good ROI for the €155B budget of the European Commission, including €10B R&D?. OIDA's answer is a strong yes, because the ROI should not be measured in direct returns, but in a more integrated European economy and stronger political union. These are relatively small numbers, just a fraction of the $4 trillion U.S. budget. What's €155B euros to avoid another devastating war in Europe? If the UK actually exits the EU, it will be a shortsighted victory for those voters.
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OIDA's Mid-Year Photonics Estimate—a Flat 2016
OIDA presented its mid-year estimate for optics and photonics production at CLEO with a cautious but hopeful projection for the rest of 2016. Using early results, OIDA currently forecasts a flat year for photonics, revised downward from our forecast earlier this year.
 
Much of the decline so far this year is from soft markets in displays, photovoltaics, LED lighting, and consumer imaging. Slower demand led to inventories and falling prices. The strengthening dollar further weakens how the revenues are recorded by OIDA, since these revenues are mostly earned in Asian currencies. OIDA expects some recovery of demand and stabilizing prices later in 2016. A softening dollar compared to Asian currencies would also raise the value as reported by OIDA. This recovery later in 2016 could bring the year even or even ahead with 2015.
 
The effect in 2016 of the Brexit vote will be to delay some orders of capital equipment and strengthen the US dollar, at least with respect to the UK pound and the euro. The UK is just a small part of the global photonics economy, but the fear is that the vote will almost certainly tip the UK into recession, and perhaps the EU as well, as it struggles to recover from recession and one political crisis after another. This, combined with China's ongoing debt issues, and continuing low oil and commodity prices, could tip the global economy again into a major recession.

However, recall that there was also lots of gloomy talk in January this year that China's debt would collapse into an all-out crisis. Yet, by mid-2016 the global economy is still hanging together. The Brexit vote clearly adds uncertainty to the global economy, and markets don't like uncertainty. But China is also a great concern, and for now China's technology sector is still stronger than its overall economy.

More details on OIDA's market tracking appear in the OIDA Market Update.
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Ray Kurzweil and Stephen Chu on the Future of Technology
Inventor and author Ray Kurzweil spoke about artificial intelligence (AI) and his "law of accelerating returns" at OSA's centennial Light the Future speaker series last month at CLEO2016. The law features the logarithmic pace of change in technology. For example, as performance steadily improves, and prices steadily decline, the overall performance per unit price improves at a rapid growth rate, and constant growth rates are exponential, by definition. The law is counter-intuitive, however, because humans tend to think in linear time scales, not exponential. We think of progress as 1, 2, 3,... rather than 1, 2, 4,... It only takes 10 "doublings" to reach 1,000X improvement, and only 20 doublings to reach 1 million times improvement.

Kurzweil's ideas are not without controversy, notwithstanding his mostly sympathetic techie audience. It's OIDA's view that exponential trends in technology performance apply only until they don't, at which time improvements slow and the overall trend takes on the shape of an "S" curve, a family of curves known in technology forecasting as sigmoid curves. A key question becomes: Where lies the inflection point where growth begins to slow?

Kurzweil spoke in detail about the human neocortex and its hierarchy of layers that enable higher level thinking. Computing can already mimic some of the low layers, and we will eventually master more layers, making computers more "intelligent."

Former Secretary of Energy and Nobel Prize winner Stephen Chu moderated the Q&A session with Kurzweil, raising such questions as whether technology advances will exclude the economic "have nots." Kurzweil considers himself a futurist and said that he addressed some of these questions in his books, but he came across as generally neutral to optimistic about the role of technology in our future. For example, he doesn't see AI as an "us vs. them" question, because we will always incorporate robotics and AI as extensions of ourselves. And it doesn't matter if we implant technology or carry it in our pocket, the effect is the same.

Optics and photonics fits into this by helping to enable the technology progression, whether in miniature displays and cameras or through optical data links in and between data centers. In the Q&A, Kurzweil was asked if the trend from centralized mainframes to distributed personal computing is coming full circle with cloud computing. Kurzweil pointed out that no, it's another evolution entirely. Cloud computing is in fact distributed geographically through redundancy, only giving the illusion of centrality.

Kurzweil made key inventions in the flatbed scanner, music synthesizer, and other products, is author of numerous books, has a position at Google on AI, and is co-founder of the Singularity University. OSA's centennial Light the Future speaker series continues through 2016. More information is available here.
 
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Welcome New Industry Members Top
OIDA's Executive Forum at the Laser Applications Conference (LAC)
The Laser Applications Conference (LAC) is a new industry conference on Laser Applications at the OSA Lasers Congress. The event takes place 30 October-3 November 2016 in Boston, MA, US. The conference will also include an OIDA Executive Forum on 3 November. The OIDA Executive Forum provides attendees with an exclusive opportunity to hear insider perspectives in an uncensored environment, while participating in high-level networking.

The LAC will focus on two main topic areas; Materials Processing and High Intensity Lasers for Applications. Materials Processing will include advanced applications for industrial use. High Intensity Lasers for Applications will include applications in defense, scientific research, and energy markets. One of the themes of this meeting will be to initiate discussions on what engineering and production advances are needed to translate promising technological advances into marketable products. Learn more about the conference and exhibition.
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Laser Congress Exhibition to Host 70+ Exhibitors
Over 70 companies from industry, universities, research institutions and national labs are expected to showcase their products and services at the new OSA Laser Congress Exhibition. The event will take place 31 October to 3 November in Boston, Massachusetts, US and will feature the latest advances in solid-state laser development and related technologies. For the first time, the OSA Laser Congress will feature programming designed to couple research with product requirements. 500+ attendees walking the exhibits will see a comprehensive display of technological solutions. Will your company be represented?

OSA Industry Development Associates Members receive a special member discount on exhibit space. Click here to view the Laser Congress Exhibitor List. To join the list of exhibitors contact exhibitsales@osa.org or phone +1.202.416.1474. Learn more.
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New OIDA Roadmap Report on Optical Interconnects for Extreme-Scale Computing Now Available to OSA Industry Development Associates Members
OSA hosted an incubator meeting on optics in extreme-scale computing in August 2015, sponsored by the U.S. Department of Energy to inform the planning of its own co-funding of technology to enable the next generation of high-performance computing (HPC) procurements of the future. This OIDA Roadmap Report examines the topic and includes several relevant documents:
  • OIDA roadmap report documenting the findings from the 2015 event.
  • Materials from the Obama Administration's new National Strategic Computing Initiative (NSCI)
  • Summary of European Commission projects in HPC and exascale computing
  • Trade press article summarizing China's exascale computing effort
  • Photonics and Electronics Technology for Extreme Scale Computing (PETE)
    Workshop Summary Report (2012)
Read the Report Now
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Write the Future and Win $500
Have you dreamed of walking on Mars? Now you can with VR googles! Tell us your vision of the optics-enabled future. Enter the "Write the Future" story contest by submitting a fictional story (300 to 500 words) by 31 July 2016. Selected winner(s) will have his/her story published in Optics & Photonics News. First place winner will receive a cash prize of $500 and a free trip to FiO, OSA's 100th Annual Meeting, 17-21 October in Rochester, NY, USA, where the winner will be recognized. Learn more.
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Light Years Ahead: Innovators Illuminate the Future of Imaging and Applied Optics in Industry and Medicine
Joseph Izatt, Duke University, and Bernard Kress, Microsoft
Imaging & Applied Optics Congress
26 July 2016
18:30 — 20:00
Kongresshaus Stadthalle
Heidelberg, Germany
osa.org/ligththefuture

Optical technologies have a rich history of applications in medicine, from the invention of eyeglasses and optical microscopes to the latest developments in automated laser surgery and fluorescence-based genome sequencing/genotyping technologies. Virtual and Augmented Reality products have been in development for decades and are finally showing promise for a myriad of applications. Join OSA for its Light the Future Speaker Series with entrepreneurs Joseph Izatt and Bernard Kress as they explore the future of imaging and applied optics.
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Want to get even more insight and access to great discussions about optics and photonics?
Join 3,000 of your colleagues in our Optics & Photonics Industry Network LinkedIn Group. This one-of-a-kind Forum for Industry lets you participate in discussions about cutting-edge issues. Extend your professional network. Exchange information about problems, ideas and solutions. Collaborate with experts in your field. Now is the perfect time to build a relationship with fellow optics and photonics professionals!
Linkedin Link Now...
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Forward this message to your colleagues.

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OSA Industry Development Committee
Thank you to the volunteers who oversee the programs and services available to the Industry Community.
 • Alex Fong,
    Gooch & Housego, Chair

 • Jean-Michel Pelaprat,
    Figulus, Past Chair

 • Henrik Skov
    Andersen,
    Ibsen Photonics

 • Simin Cai,
    Go!Foton		 • John Dexheimer,
    Lightwave Advisors

 • James Fisher,
    Newport

 • Fred Leonberger,
    EOvation
    Technologies, LLC

 • Claudio Mazzali,
    Corning, Inc.		  • Mike Mielke,
    Trumpf

 • Martin Seifert,
    Nufern

 • Costel Subran,
    Opton Laser
    International

 • Christoph Harder,
    Harder and Partner,
    Liasison
Image for keeping the session alive