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LIDAR Companies: Whether to be a Cheetah or a Hyena
The message from the OIDA Forum on Optics in Autonomy was that the schedule for self-driving cars is taking longer than expected. That's not a surprise, but the investors are catching on. In the words of Alexei Andreev of Autotech Ventures, each LIDAR supplier needs to consider whether it wants to be a "cheetah" or a "hyena." East African cheetahs prefer large but fast-moving Thomson gazelles, while hyenas are known for scavenging whatever they find. Likewise, the self-driving car market is a large but hard-to-catch prize, while smaller opportunities may be more suited for many LIDAR companies today.
The U.S. market is the most open to innovation in this segment, led by companies like Waymo, but U.S. companies may have aimed too high by targeting Level 5 driverless capability. The global opportunities require a more incremental approach, by adding more and more ADAS (Advanced Driver Assistance Systems) features. This builds trust in automation while suppliers further develop the necessary technologies. (For more detail on the progress at each level of autonomy, see these EE Times articles here and here.)
Until recently, companies were breathlessly claiming that production was coming soon. As we reported in the May OIDA Newsletter, Elon Musk recently claimed that Tesla would be operating a fleet of robotaxis by the end of 2019. But more recently, he was rumored to be unhappy that employees said they can't meet the timelines that Musk set for the technology, and several of the software team are said to have left Tesla (here). He has dismissed the need for LIDAR in autonomous cars, but he may be right about that, insofar as Tesla's near- to mid-term future is concerned. Tesla continues to gather valuable driving data while increasing the level of autonomy. By the time LIDAR is necessary, Tesla may be a very different company. Like an wrecked vehicle, it might be sold off in pieces, including hardware, software, and data.
The self-driving car is a speculative opportunity, but why has the mood suddenly gone from bravado to skepticism? Jin Shang of Guangzhou Automotive Corporation (GAC) said that GAC expects to have Level 3 vehicles in mass production by 2020 or shortly after. But a key issue is the safety of the software, which isn't mature yet. Amir Bar-Niv of Aquantia pointed out that the Boeing 787 can land itself with 14-18 million lines of code, while Level 3 vehicles already have about 50 million lines of code, and 100 million lines of code are expected for Level 4. Even hardware can be so software-intense that struggling LIDAR companies may be eventually stripped of their hardware and sold for their software expertise.
Anand Joshi of market research firm Tractica expects Level 2.5 or 3 soon, but not Level 3.5 or 4, and reaching Level 5 might never happen. After all, full Level 5 autonomy is probably not necessary to save lives on streets and highways. There are also the matters of insurance (including insurance to protect against computer hacking) and government regulation. Most important is trust, as the entire transportation network relies on trust.
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 Source: Anand Joshi, Tractica (OIDA Forum on Optics in Autonomy, 2019).
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Shang said that LIDAR is still not an auto-grade product, and is too expensive. Where LIDAR is used, the choice of which LIDAR technology to use may vary by the level of autonomy, and what is ready. While everyone agrees that the autonomous systems improve by including LIDAR, LIDAR may not be necessary until Level 4, which may be ten years away.
Short component lifetimes are not a showstopper. Early vehicles will be for robotaxi and other types of fleets, where the use might be 8,000 hours per year, as compared to 8,000 hours of system life for a typical car. Fleet vehicle operators can tolerate greater maintenance costs, including tuning and replacement of technology. But autos are so complex that the failure rates of specific parts may nonetheless need to be in the range of a few FITs (defined as one failure per billion hours), and over the usual wide range of environmental conditions required for the auto industry.
So what are LIDAR suppliers to do? An example of a "hyena" opportunity is autonomous mining equipment (here), aimed at improving safety and alleviate shortages of skilled drivers. Companies have operated this equipment autonomously in the field for several years already. A mining truck costs US$ 5-10 million, so an additional US$ 100K LIDAR subsystem to help make it autonomous can still achieve a return on investment that would be wildly unrealistic even for personal vehicles operated by fleets (such as Uber).
John Dexheimer (in figure), a longtime OIDA member and key planner for the event, has more perspectives here. The event was held on 27 June 2019 in San Jose, California, with help from sponsor Laser Components. The event was collocated with Sensors Expo 2019 and the OSA Optical Sensors and Sensing Congress. OIDA members can access the presentations here.
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Three Charts of China's Economic Growth
China seems to come up in almost every conversation in optics and photonics, whether it's about customers and competitors, or government R&D programs and trade policies. OIDA briefly examined China's economic growth in its recent OIDA Market Update (here), with some highlights below.
First, China's overall economic growth is slowing, from double digit growth in ten years ago to near 6% per year today, as shown in the figure. That would be considered strong growth in higher-income countries, even a matter of concern. But while it's expected that China's now-large economy will grow more slowly as it settles among the world's largest economies, current growth may be too slow to support the needs of its population, particularly the migration of citizens to major cities and the steady graduation of young workers to the workforce.
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 Source: IMF World Economic Outlook (April 2019).
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The next figure shows the quarter-by-quarter growth for the Chinese economy overall (in blue, left axis). Questions have been raised whether the Chinese government's estimates are accurate, and some economists have suggested that the overall growth rate is actually a couple percentage points less than what is reported, or perhaps even less than that. But there seems to be few doubts about the trend, even if the reported values are inflated.
The Chinese government estimates that the IT sector is growing much more rapidly than the overall economy, and increasingly so, even with a slowing rate in the last few quarters. The figure shows IT sector (in red, right axis), where "IT" refers to what the government calls the Information, Transmission, Software, and Information Technology sector. A lot of optics and photonics products sell into this sector, such as for optical communications. Growth rates of 20-30% per year usually happen only in small market segments as they are taking off. Indeed, the sector is only about 4.3% of the Chinese economy today, suggesting there is more growth to come.
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 Source: National Bureau of Statistics of China (June 2019). All data in constant prices, seasonally adjusted, and annualized.
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The previous charts show the growth rates, but consider what this means for the trajectory of the overall economy, shown in the final figure (in red), compared to the U.S. economy (in blue). Even with slowing growth, the Chinese economy is rapidly approaching the size of the U.S. economy in nominal terms (that is, as measured in U.S. dollars). In other words, 6% growth per year adds up. And even if China's growth slows further, it's not likely to slow to the rate of the U.S. economy for many years.
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 Source: OIDA (June 2019), from IMF data.
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The figure also shows the Chinese economy as measured in purchasing price parity (PPP) dollars, also called international dollars. PPP dollars compare output without the effect of currency exchange rates. In that case, China passed the U.S. in total economic output about five years ago. But consider that China has about 4X the population of the U.S., meaning that the U.S. output per capita is still several times larger than China's.
For more details, OIDA members can obtain the full OIDA Market Update here.
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Welcome New OIDA Members
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New! 2 Complimentary Webinars Sponsored by OIDA Member Luminate
Accelerate your optics, photonics, and imaging startup with two complimentary webinars.
Wednesday, August 21 at 1:00 PM ET :
How Luminate Can Help Entrepreneurs Accelerate Optics, Photonics, and Imaging-Enabled Applications
Learn more.
Thursday, September 12 at 1:00 PM ET :
Advancing Optics, Photonics, and Imaging Technologies Using Resources in the Rochester Region
Learn more.
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Sponsored by:
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Presented by:
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RSVP for OIDA Member Benefits Orientation Webinar on 7 August
RSVP for OIDA's member benefits overview orientation webinar on 7 August at 13:00 EDT. This is an opportunity to learn about key membership benefits you and your company should be taking advantage of and explore how to maximize performance and grow your business.
Whether you have been an active member for years or you are new to OIDA — this orientation is a must-attend! Please feel free to share this with your colleagues. When you join OIDA, everyone at your organization becomes a member.
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Thank You to OIDA Members Who Participated in Our OIDA/OSAF Professional Development & Networking Lunch and Learn Event
Many thanks to the OIDA members who volunteered their time to participate at our Professional Development & Networking Lunch and Learn event on 25 June at Laser Munich. This program provided students and early career professionals with a unique opportunity to interact with key industry and academic leaders. Member executives shared their professional journey, and provided useful tips to the students. Students had an opportunity to discuss their ongoing research and career plans with the attending leaders. This event will be held again on 18 September at FiO in Washington, D.C.. If you are interested in participating email us at email OIDA@OSA.ORG.
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 Left to right: 1. Michael Feinberg, Vice President of Marketing and Sales, Boston Micromachines Corporation 2. Donald A. Pearson II, Vice President Sales, Apre Instuments 3. Joachim Sacher, Managing Director, Sacher Lasertechnik GmbH 4. Jürgen Niederhofer, General Manager, MKS Instruments
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New! OSA Career Lab: Advancing Mid-Mangers Summit at FiO
This one-of-a-kind Summit provides an opportunity, in a small group setting, for mid-level professionals to enhance and develop the leadership skills, relationships, and effectiveness that distinguish them in their professions and enable them to make more meaningful contributions to the teams and organizations they lead and serve.
Participants will gain:
- Valuable insights from leading CEOs across the field of Optics and Photonics
- Enhanced leadership and management skills
- Strategies for making an impact when they return to their day-to-day jobs
- A renewed commitment to their jobs, teams, and the field
- A foundation for engaging in post-institute work over the course of 6-9 months towards a leadership certificate
- A roadmap of next steps in their career
To register, select the option for this workshop when registering for FiO. This program is free for OSA members and US$ 200 for non-members.
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You're Invited: OSA Member Reception in Sapporo, Japan
Friday, 20 September, Sapporo, Hokkaido, Japan
Please join OSA 2015 President Philip Russell at an OSA Member Reception on 20 September in Sapporo, Hokkaido, Japan. For more information and to RSVP, email RSVPOSAevent@osa.org. This event is co-located with the OSA/JSAP Joint English-language Symposia and the Japan Society of Applied Physics (JSAP) Autumn Meeting.
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Invitation to Join the OIDA Optics and Photonics Industry LinkedIn Group
Join 3,000+ of your colleagues in our OIDA 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!
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OIDA (OSA Industry Development Associates) Council
Thank you to the volunteers who oversee the programs and services available to the Industry Community.
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• Claudio Mazzali,
Corning Research &
Development Corp, Chair
• Simin Cai,
Go!Foton, Chair Elect
• John Dexheimer,
LightWave Advisors, Inc.
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• Turan Erdogan,
Plymouth Grating
Laboratory, Inc.
• Amy Eskilson,
Inrad Optics
• Christoph S. Harder,
SwissPhotonics
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• Inge Kabert,
Thorlabs Inc.
• Frederick J. Leonberger,
EOvation Advisors LLC
• Debbie Wilson,
Lumentum Operations Inc.
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OIDA panelists Yvonne Lutsch (
