Read about Industry Consolidation, the Talent Shortage, Special Events, New Reports, and Other Noteworthy News, Opinions & Opportunities
In this Issue:
Is "Consolidation" Good?
Has this happened to you? Someone says, 'There needs to be some consolidation', and everyone nods in agreement. But what does that really mean? And is it good? Now is a good time to ask, because at this writing, three companies are bidding on Coherent: Lumentum, MKS Instruments and II-VI Incorporated.
Coherent goes back to the early days of the laser. It was founded in 1966, growing to USD 1.2 billion in the most recent fiscal year. It offers myriad products (from components to turnkey systems) across a range of technologies (from diode lasers to CO2, excimer, and ultrafast lasers), applications and vertical markets, regions and sales channels (selling to OEMs as well as one-off sales to research labs). It takes a lot of skill to manage all of this complexity while maintaining a quality brand name.
Whichever way it goes, an acquisition will make this one of the largest acquisitions in the history of commercial lasers. There have also been other large acquisitions in recent years, such as II-VI's acquisition of Finisar (in 2019), Lumentum's acquisition of Oclaro (2018), Coherent's acquisition of Rofin-Sinar (2016) and ASML's acquisition of Cymer (2013).
Lumentum moved first, on 19 January, announcing an agreement to acquire Coherent for a value of USD 5.7 billion in cash and stock. On 8 February, MKS made an unsolicited offer to acquire Coherent for USD 6 billion. Then on 12 February, II-VI came with an offer valued at USD 6.5 billion. Lumentum has said that there is little overlap between it and Coherent, and it is willing to divest operations to meet any antitrust concerns, and suggesting that there might be such concerns with MKS's offer. Coherent's board of directors doesn't have to accept the highest offer, but the board should have solid reasons to accept a lower offer.
However this plays out, is it "consolidation"? Wikipedia defines consolidation as the merger and acquisition of many smaller companies into fewer, larger ones (here). But if the two companies have little overlap, many of the business units may operate as before. It might just be a change of the sign over the front door, or not even that. When Trumpf acquired the fiber laser supplier SPI Lasers in 2008, SPI didn't go away. Trumpf kept the operation and the brand name until last year, when it renamed the subsidiary under the Trumpf name.
Some companies are famous for collecting diverse brands and keeping them as federations of business units. The units may continue to operate relatively autonomously, but the central management can bring many benefits that weren't available to a standalone company. Examples include Halma (headquartered in the U.K.) and Idex Corporation (headquartered in Illinois).
And if the newly combined company sells any duplicative operations to a competitor (for example, to avoid antitrust issues), there’s no true consolidation. It just moves the pieces on the board.
There has been a lot of consolidation among system integrators—the companies that assemble optical components into equipment—in several vertical markets: military/aerospace, communications, life sciences and so on. But consolidation of the system-level customers can be bad for component suppliers. It means many suppliers competing for few customers. If one customer emerges as dominant in the market, that customer can impose standards on suppliers that trim profit margins to a minimum.
What people really want is fewer competitors. Having too many competitors can drive down prices and market share, spoiling the market for everyone. But no one wants their competitors to combine forces in a merger; they want them to exit the market altogether, to get out of the way. Their competitors want the same thing, of course, which is exactly the problem: no one wants to be the one to abandon the market. It's a game theory problem.
True consolidation would mean greater concentration of market share among fewer players. That could be a sign of dominant market power, as in the case of Intel's strong share in microprocessors. Or it may mean a maturing and less interesting market as competitors exit the market. This is the case with dye lasers and kilowatt CO2 lasers. There will always be suppliers of mature technologies, but the market doesn’t provide room for many of them.
Is consolidation good? It depends where you’re sitting. If you are part of the newly aggregating company, it should be good, but execution is everything. If your company is not part of that, there are usually many opportunities for fast-moving or niche players. Over the long term, however, incumbent players exit maturing markets, and new players enter emerging ones. Good or bad, you can count on that over the long term.
Source: Leo Cullem, Cartoon Collections.
Industry's Number One Concern, and One Way to Help
The most consistent concern we hear from our industry members is about the talent shortage, which means they can’t find qualified candidates to hire. It's actually a sign of a successful industry, with more open positions than there are people seeking them. But the shortage of available talent drives salaries to levels beyond what many companies can afford and creates an obstacle to company growth. This is therefore Problem Number One for the industry: how do we attract talented students to a career in our industry?
Those of us with a career in our industry take a lot of this for granted. Whether it's the physics of entangled photons or cool applications like robotaxis and augmented reality, we know that the field is always interesting and evolving. But students today have many opportunities, and pursuing optics is just one. For those in fields that depend heavily on academic research, such as life science, many graduates do post-doc after post-doc in pursuit of a career in academia. Those who succeed to graduate with a degree in an optics-related field and want to work in the private sector can get offers from companies like Apple, Facebook and Uber, as well as many outside of optics, particularly in software companies.
In fact, a few years ago we asked the question of graduate students in a biophotonics program where their colleagues went after graduation. Several went to post-doc positions, one went to Google to work on artificial intelligence software, one went to a Wall Street firm, and two went to a local craft brewery. We are happy for the graduates to have such opportunities, but it illustrates the challenges for optics companies seeking new talent.
Caroline Connolly, CEO of OptoTest Corporation
We're introducing a five-part series to address this challenge, beginning with our online Focus on Women in Industry. This event will feature a great lineup of seasoned professionals who have agreed to share some stories about the professional life:
- Anjul Loiacono, Double Helix Optics
- Becky Bosco, LightCounting Market Research
- Caroline Connolly, OptoTest Corporation
- Eve Griliches, Cisco Systems
- Jessica Nelson, Optimax Systems
Here's how you can help: Please encourage the students and young professionals in your local community and personal network to attend this series, and ask your favorite optics colleges to announce the program. See here for more information and to register or contact email@example.com.
Welcome New OIDA Members
Register Today for OIDA's Virtual Workshop on Developments in Co-Packaging Technologies for Data Centers
Data centers will increasingly rely on embedded photonics for enhanced connectivity between servers, memory and computational systems. Attend this workshop for a deep look at the critical challenges embedded photonics must overcome to be a viable mass market technology, and learn about the emerging trends for data centers. The workshop covers key topics important to the commercialization of new optical communications components and equipment, particularly for the manufacture of integrated photonics as the next platform for optical communications.
Four interactive panel sessions and two keynote presentations by Rob Stone, Facebook and Larry Dennison, NVIDIA will help you gain a better understanding of the issues that could impact your company—and give you the opportunity to contribute to the discussion. Each panel session will also have a special Meet the Speakers session (limited space/additional fee).
Hear from leading decision makers with responsibility for the development of next generation data centers, who will share their key technology and cost requirements. The workshop will also have speakers from leading photonic companies and service providers who are developing innovative products and advanced manufacturing services to meet these emerging requirements.
Questions for Discussion Include:
- What are the new challenges that co-packaged photonics must overcome to be a viable mass market technology?
- What are the key technology and cost requirements for photonics?
- What is the likely trajectory of the industry toward successful co-packaged photonics?
- What are some of the solutions aimed at meeting the requirements?
- Are there any "showstoppers" in either photonics or electronics that threaten success?
View the program and see who's speaking here.
Register today for this must-attend virtual workshop. Space is limited. OIDA Members who have selected Networking/Events as a benefit category save USD 100 on registration! Not an OIDA Member? For more information on this exclusive benefit and many other year round member benefits, contact Sakshi Sethi at firstname.lastname@example.org or by phone at +1.202.416.1474.
Leveraging OSA's Government Relations to Promote Your OIDA Member Company
Trenton Berg, President, Montana Photonics Industry Alliance, has written an important article on how OIDA members can utilize OSA's Government Relations department to advance their company’s objectives.
OSA Industry Development Associates (OIDA) programming, research, and analyses often look closely within topics of interest to our membership. But our cluster, the Montana Photonics Industry Alliance (MPIA) also provides excellent resources for reaching outside our community to influence policies, funding, and strategic initiatives that directly impact optoelectronic science and technology.
With heightened public attention on the critical roles R&D, education, and technology investments hold for our economy and public health, now is the perfect time for OIDA members to take part in this advocacy programming.
Allocating even a small amount of time and effort to policy outreach can yield remarkably positive results. OIDA members can leverage their resources by working with OSA's Washington DC-based staff to handle the extensive work that goes into advocacy events, including logistics, message development, and publicity. Importantly, OSA/OIDA works to ensure your issues and needs command the attention of government agencies whose decisions drive activities in the US and influence countries around the world.
Read the article here.
Caption: Participants of the 2020 Montana Photonics Industry Alliance round table include: Trenton Berg, President, Montana Photonics Industry Alliance; Jason Yager, VP, Montana Photonics Industry Alliance; Tim Sheehy, President/CEO, Ascent Vision Technologies; Mary Johnson, President/CEO, Wavelength Electronics; Randy Equall, VP of Laser Operations, FLIR Systems; Craig Wall, Market Development Scientist, Montana Instruments; Kris Merkel, President/CEO, S2 Corporation; Jay Wilkins, Operations and Engineering Manager, Elemental Scientific Lasers
Credit: Montana Photonics Industry Alliance
OSA Applied Industrial Optics: Submit Your Research by 24 March
Be part of the prestigious and comprehensive OSA Applied Industrial Optics (AIO) technical program, and ensure that your research is seen by an influential audience. Presenting at AIO provides the opportunity to showcase your work to leaders in your field, and to expand your network of professional connections.
Keynote speakers this year include Michael Oshetski founder and CEO of Micatu, Incorporated.
AIO is a multidisciplinary meeting that focuses on innovative photonics research and its commercial impact — bringing together industry professionals with experience in overcoming the challenges of deploying and commercializing new products with researchers developing cutting-edge technology.
Learn more, view the topics and submit your paper by 24 March.
OIDA Corporate Member Special Offer—2021 Innovation School
Successful companies harness the entrepreneurial/intrapreneurial spirit within their employees and leverage it for greater success.
Now in its fifth year, the 2021 Innovation School hosted by the OSA Foundation will be virtual from 5 - 9 April 2021. This five-day interactive program will be a jam-packed week with virtual teams, impactful workshops, networking, mentor sessions, and engagement from industry leaders. As an OIDA Corporate member, you and your team can skip the application process and register to attend the 2021 Innovation School.
2021 CLEO to Engage Global Audience with All-Virtual Format
CLEO, the world-renowned conference for laser science and photonics applications, will be presented in an all-virtual format, 09 — 14 May 2021. This approach will accommodate speakers and attendees from across the globe with live and on-demand content.
The conference will feature over 2,000 technical presentations of invited and tutorial speakers and contributed talks, plus Special Symposia, Workshops, Applications & Technology Topical Reviews, Short Courses, special events and four distinguished plenary speakers. The plenary speakers, representing academia and industry, will address advancements in quantum information science and technologies, quantum computing and optical communications. The plenaries scheduled for Tuesday, 11 May and Wednesday, 12 May will be presented live with a recorded archive available later for on-demand viewing.
A virtual exhibition will include industry-focused sessions and companies showcasing market-ready technologies in all areas of lasers and photonics. Opportunities to engage with exhibitors and learn about their new products and technologies will be available.
Learn more about CLEO, the premier conference on lasers and electro-optics.
Frontiers in Optics + Laser Science Announces 2021 Dates, Location and Hybrid Format
Frontiers in Optics + Laser Science, OSA’s Annual Meeting, is returning to its original Washington, DC, location: The Washington Hilton. The conference will be presented over five days: 31 October - 04 November 2021. The conference will be held in a hybrid format, which includes in-person and virtual components. Speakers will have the option to present onsite or online. Attendees that participate virtually will be able to view technical sessions live, online or access recorded, archived sessions later on demand.
The Technical Conference is supplemented by four themes that leverage the intersection between science and applications — the end result is intended to illustrate the research within the technology.
2021 Themes: Connecting Research and Applications
- Autonomous Systems
- Machine Learning
- Quantum Technologies
- Virtual Reality and Augmented Vision
The technical content is complemented by the Science + Industry Showcase, an exhibition with leading optics companies, technology product demonstrations and industry-focused show floor programs. In addition, poster sessions will be held in the exhibition, with a select number presented in electronic, media-rich formats.
Learn more about FiO.
Digital Programming Now Available Live and On-Demand
OIDA management and OIDA members have produced a series of webinars and two virtual Technology Showcases that are available at no charge. We encourage you to browse our growing list of upcoming events and view on-demand recordings as they become available. And there is much more! Check out the OSA We Are On webpage for more high quality webinars on career development from the OSA Foundation and the OSA Career Lab.
New Market & Technology Reports Available to OIDA Members
Industry leaders worldwide are planning their strategy for 2021 and beyond. A winning strategy is driven by intelligence. OIDA Members have exclusive—and complimentary—access to OIDA Market Update reports. Have you downloaded our newest industry reports?
Two new reports have recently been posted:
OIDA members have free access to all reports. We encourage you to browse the OIDA Publications and Reports Center to see everything available to you.
RSVP for Virtual OIDA Member Benefit Orientation
RSVP for OIDA's member benefit overview orientation. This is an opportunity to learn more 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 and need a quick refresh or are transitioning to the new OIDA membership model — 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.
From PhD to CEO: Making An Exciting Leap Into Business
Ever wondered what challenges you might face when not only transitioning to industry after graduating, but actually setting up your own business? In this webinar series, young European entrepreneurs share their stories on moving from the lab into the executive office. This series is a joint initiative of The Optical Society (OSA) and the EPS Young Minds Program. Its objective is to foster innovation & entrepreneurship amongst young physicists and providing insight into the European start-up culture. View more information about the series, including dates, speakers and registration links online here.
Showcase Your Company's Useful Techniques: Submit to Applied Optics' Engineering and Laboratory Notes
Applied Optics (AO) publishes Engineering and Laboratory Notes (E&L Notes)—brief, concise articles that share useful laboratory techniques and practical engineering approaches in the applied optics field. Topics range from design and analysis, to fabrication and integration, alignment, testing, and calibration of optical systems. E&L Notes offers a unique way to publish useful techniques from your engineering notebook in Applied Optics. Read more about E&L Notes and suitable topics for submission and learn about how to submit your contribution.
Invitation to Join the OIDA Optics and Photonics Industry LinkedIn Group
Join 4,000+ 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!
Questions or Suggestions about OIDA Member Benefits?
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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.
Inrad Optics, Chair-Elect
Plymouth Grating Laboratory, Inc.
Cedric F. Lam,
Double Helix Optics
Optimax Systems, Inc.