Optics & Photonics Industry Report 2022
SPIE has been providing a benchmark study for quantifying the complex optics and photonics industry since its initial analysis of the photonics components manufacturing industry was unveiled at Photonics West in 2013. This analysis is assembled from a database built up over several decades and featuring the most comprehensive collection of information and data on companies in the photonics industry. These biennial studies have delivered industry metrics with a robust, consistent, and transparent methodology.
As diverse and dynamic as ever, the photonics industry continues to exhibit impressive growth. The business comprises a diverse set of products and technologies that underpin nine major market segments ranging from advanced manufacturing to consumer and entertainment. Global revenues from all photonics-enabled businesses and services are now projected to account for more than $2.5 Trillion, representing a ~3% share of the >$85 Trillion global economy – as measured by global gross domestic product (GDP) – and the prospects are for continued gains across multiple segments. While supply chain issues associated with the pandemic have recently had an impact, companies continue to report record earnings showing the strength and demand of photonics-enabled products and services.
Underlying the end-use market segments enabled by photonics technology is the global photonics components manufacturing industry. Valued at an annual revenue exceeding $300 billion for the first time, this key element of the global photonics industry has experienced sustained growth in revenues, jobs, and companies. The SPIE Industry Report has tracked, in detail, the core components manufacturing business for a decade and projects an overall compound growth rate (CAGR) approaching 7% through 2020. The number of companies and jobs have also increased at similar rates over this period. These numbers are consistent with other industry reports that continue to show the strength of the global photonics market.
Along with revenue growth in the global photonics industry, there has also been a change in geographical distribution of revenues. SPIE has seen an increasing trend of photonics components revenues shifting towards Asia, as China-based enterprises take a larger share of the components business.
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Light is everywhere, playing a vital role in our daily lives. Energy comes to Earth in the form of sunlight. Light enables plants to synthesize foods. Light is the basis of the technology that enables computers and smartphones to connect over the internet. Light can also be a tool: focused light can cut metals or be used in medicine to perform surgery.
Light-based technology also fuels the world’s economic growth engine. Its applications affect almost every facet of modern life, from weather and climate monitoring to the fabrication of new automobiles, and from advanced agriculture to vision correction.
The monetary value of all the finished goods and services produced worldwide in 2021 (global GDP) amounted to about $96 trillion US dollars.1 The value of light-enabled products and services is estimated to be between $7 trillion and $10 trillion annually, which means the science and application of light—called photonics—represents roughly 11% of the world’s economy.2
Accelerating photonics innovation will continue to drive economic growth and increase its share of the global GDP.
Underpinning all of the light-enabled products and services are fundamental (or core) photonics components, which range from raw materials to image sensors, and from light-emitting diodes (LEDs) to lasers.
This Industry Report provides an in-depth assessment of the global manufacturing infrastructure that produces these basic photonics components. The report offers a unique perspective on the global ecosystem of core photonics components manufacturing, the companies involved, where they are based, their revenues, and the number of jobs created globally by optics and photonics components production. This report also highlights key industry trends.
While it is too early to assess the full economic impact of the pandemic, the repercussions for the photonics industry appear to be moderate compared to many other industry segments. Despite a short-term impact on photonics, we believe that optics and photonics will recover and continue to drive economic growth throughout the world.
Photonics is the science and application of light; it is the technology of generating, controlling, and detecting light. The characteristics of the waves of light or individual photons that make up light can be used to explore the universe, cure diseases, and even solve crimes. Photonics is so ubiquitous in our daily lives that the 21st century has been called the “Age of the Photon.”
Scientists have been studying light for hundreds of years, but it was only in the 17th century that Sir Isaac Newton showed that white light is made of different colors of light. The colors of the rainbow are only a small part of the entire wavelength range of light, called the electromagnetic spectrum. Photonics covers the full electromagnetic spectrum, from gamma rays to radio, including X-rays, ultraviolet (UV), and infrared (IR) light.
Electromagnetic Spectrum
Wavelength (m)
At the beginning of the 20th century, Max Planck, and later Albert Einstein, proposed that light was a wave as well as a particle, a very controversial theory at the time. How can light be two completely different things at the same time? Experimentation later confirmed this duality in the nature of light. The word “photonics” appeared around 1960, which is when Theodore Maiman first demonstrated the laser.
Even if we cannot see the entire electromagnetic spectrum, visible and invisible light waves are a part of our everyday life. Photonics is everywhere: in consumer electronics (barcode scanners, DVD players, TV remote controls), telecommunications (fiber optics, lasers, switches), health (eye surgery, medical instruments), manufacturing (laser cutting and machining), defense and security (infrared cameras, remote sensing), and entertainment (holography, cinema projection), to name a few examples.
| • | Global annual revenues from production of optics and photonics core components amounted to $302 billion in 2020. | ||||
| • | Production of optics and photonics core components is a global enterprise spanning more than 50 countries. | ||||
| • | 4,842 manufacturing companies produced core components in 2020:
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| • | Core components production employs more than 1.2 million people worldwide. | ||||
| • | The global share of the photonics components market is shifting as dominance of Asia, and specifically China, increases. | ||||
| • | China now employs the largest number of people in the photonics components industry. | ||||
| • | The components industry has shown solid growth above global GDP since 2012.1 | ||||
| • | Global annual revenues for photonics-enabled products exceeded $2.1 trillion in 2021. | ||||
| • | Production of photonics-enabled products generates more than five million jobs worldwide. |
| "In a diverse and ever-changing industry, the comprehensive industry data published by SPIE is a valuable resource for our company." | ||
| – Jay Kumler, President JENOPTIK Optical Systems LLC |
Global photonics components production
Industry Trends: Companies, Revenues, and Jobs
The photonics components production industry has shown steady growth since 2012, the first SPIE study year. With a compound annual revenues growth rate of more than 6.5% between 2012 and 2020, the industry has also grown in terms of the number of producers and has added more jobs every year. Most of the growth during this period has occurred in Asia.
Revenue Growth by Region
Photonics is not a market or an industry but a collection of technologies based on light that creates or enables many end-use applications and markets. However, it is often convenient to talk about the collection of entities that develop, manufacture, and distribute optics and photonics components, systems, and enabled products as the “photonics industry.”
The range and diversity of photonics applications make it difficult to characterize this industry and to assess its economic impact. The industry is global with many large companies, though most are relatively small. Photonics is a powerful driver of the global economic growth engine, and it is gaining significance in the world’s economy.
The photonics value chain
Any assessment of the photonics business must take into account the photonics value chain. That is, the process of taking raw materials and adding value to them through various processes to create a finished product.
Photonics Value Chain
Photonics Value Chain Example
LED Lighting
The photonics value chain starts with raw materials like glass and semiconductor substrates, and progresses through optical components and subsystems to photonics-enabled products such as lighting systems, data centers, and smart phones. The global photonics-enabled marketplace is based on these “end-use” products.
Photonics technologies also underpin a large range of enabled services based on the Internet, which relies on optical fiber to transport its data. These services include cloud computing, streaming video, and e-commerce.
Each level of the value chain has higher value than the previous one, so the total revenues associated with the enabled services, for instance, are much larger than those derived from the core components.
Along this value chain, other industry sectors may benefit and grow from related opportunities like software development.
The complexity of the categories increases with the higher value. For the enabled products, lighting systems serve a different set of end-users with unique market dynamics and regulatory environment than, for instance, medical imaging scanners, or data centers. As a result, each “photonics-enabled” market sector moves independently, which means that measuring the size and impact of each one can be a significant undertaking. SPIE is uniquely positioned to understand and evaluate these markets with our deep understanding of the industry, world-class database, and global footprint.
There is no clear or widely accepted definition of the photonics market or industry, even though thousands of entities use optics and photonics technology every day.
| Many of the largest users of light-based technology do not think of themselves as photonics companies. | ||
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| Governments do a poor job of tracking photonics technology revenues. | ||||
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As a result, although market estimates and economic impact assessments are an essential tool for understanding and promoting the photonics business, the conclusions of such estimates can vary widely.
For this reason, SPIE makes its industry assessments as transparent as possible. We have also worked with multiple other entities worldwide to assist them in making their own national assessments that are consistent in methodology. A major benefit of this approach is that these studies use a common taxonomy and the outcomes can be directly compared, resulting in a globally consistent picture of our industry.
| "Accurately sizing the photonics industry is vital for positioning and leveraging support for our industry with end users, governments and support agencies. SPIE provides a benchmark for quantifying the global photonics industry with a robust, consistent methodology. The result is trusted figures enabling national initiatives, such as ‘UK Photonics: the Hidden Economic Engine’, to put the local economic impact of photonics in a global context." | ||
| – Dr John Lincoln, Chief Executive, The UK Photonics Leadership Group |
The SPIE global industry profile
An apparently simple method of assessing the size of an industry (in terms of revenues) is to sum the value of its products produced. In the auto industry, for instance, one could add up the value of all the cars produced. While this does not account for service and other related revenue-producing activities, it may at least provide an approximate estimate.
This “product-focused” approach is not practical in industries that are more diverse, such as the photonics industry, where there are multiple photonics companies making multiple different components that feed multiple end-use markets.
At SPIE, by focusing on the core components and the companies that produce them, we have been able to leverage our comprehensive understanding of the photonics industry to characterize the global production of photonics components. Our knowledge base includes the most current and comprehensive database of photonics organizations in the world.
Now in its fifth iteration, our biennial assessment of the photonics components business has enabled SPIE to demonstrate the size and breadth of components production worldwide, the number of jobs created, and an understanding of some of the structural factors like the role of large companies versus small.
Common to all of the photonics-enabled products and end-use markets are the basic raw materials and core optical components that are the building blocks of photonics systems. These core components represent the lowest-value, yet essential, photonics parts in the value chain and include LED and laser chips, optical glass, detectors and image sensors, lenses, prisms, optical filters, gratings, and optical fibers.
The same component can often serve more than one end-use or “enabled” market. For this reason, SPIE has focused its recent industry analysis efforts on the core photonics components business. Our goal is to profile the core components industry in terms of its revenues, geographical diversity, employment, and structure.
Producers profile
The majority of photonics components manufacturers are small- and medium-size entities (SMEs). In fact, about 71% are companies with revenues of less than $10 million. The percentage of SMEs has grown over the years as new companies entered the market.
Company Size Distribution Trend by Revenues
In 2020—based on our selection methodology—there were about 4,840 companies making photonics components. Firms based in Asia accounted for 54% of these, followed by Europe (24%) and North America (21%).
Regional Distribution of Components Producers (2020)
Although the majority of companies are SMEs, larger entities generate most of the revenues. In fact, only 2% of all companies, including such household names as Corning, Nikon, and Carl Zeiss, generated almost three quarters of total revenues in 2020.
Small companies generate less than 3% of global revenues, but they play a vital role in filling the technology innovation pipeline.
Manufacturers Grouped by 2020 Revenue
Revenue per employee
Revenue per employee is a measure of how efficiently a given company is able to utilize its employees. In general, relatively high revenue per employee is a positive sign that suggests the company is operating efficiently.
For established companies, revenue per employee ranges from about $100K/employee to more than $1 million. Examples of photonics companies with revenue per employee at the high end of this range include Dow Chemical (USA), Heraeus (Germany), and Dasan Network (Japan).
In the photonics components industry, the global average revenue per employee for 2020 was about $238,000. There are significant regional variations in this metric.
Producers Grouped by 2020 Revenues per Employee
Age of companies in photonics
Entrepreneurial organizations are an important source of innovation and, ideally, many are destined for growth. Within the photonics components business, SMEs account for a significant majority of the total company count. Age data is available for 2,988 of the SMEs in our 2020 components companies database.
A comparison of the SMEs’ ages over the five iterations of our study shows a relatively constant entry of new companies into the industry.
Historic Trend of SME Age Group Distribution
Global distribution of photonics revenue
SPIE follows a methodology of rolling up a company’s global revenues up to the country where its headquarters is located. Japan is still on top, but photonics revenue growth year-over-year has flattened. China has seen significant growth over the last decade, with a compound annual growth rate of almost 23% for the 2012–2020 period.
Global Distribution of Photonics Revenue
Global distribution of photonics employees
Japan has been trending flat over the past four years for the number of employees employed in the photonics industry. China now employs the largest number of people in the photonics industry, with almost four times its 2012 employees.
Global Distribution of Photonics Employees
The geography of photonics components production
The number of companies and countries involved in photonics components production is growing. In 2020 SPIE tracked 4,842 companies in 50 countries making and selling core photonics components, up 78% since 2012.
The top countries for 2020 in terms of number of companies include China, USA, Germany, and Japan, with USA and China accounting for more than half of all firms producing photonics components.
Company Count by Country
In terms of revenue generation for 2020, however, the top countries include Japan, USA, China, and South Korea. The predominance of large photonics components manufacturers headquartered in Japan—such as Panasonic, Sony, and Sharp—means that Japan’s share of total photonics components revenues is very high. Together, United States and Japan account for more than 55% of the total global components revenues.
Photonics Revenue by Country
The industry has grown to the point that combined demand for lasers and all other photonics components in 2020 underwrote more than 1.2 million jobs worldwide, with 4,842 companies creating a market exceeding $300B in revenue. As employment has grown, so too has the number of countries hosting components manufacturers, making it a truly global industry.
The global nature of photonics industry and the diversity of end-use applications tends to buffer the industry from local economic cycles and leads to more consistent growth over time. The robust nature of the photonics industry was put to test during the global pandemic, but our data shows that the industry weathered the perturbations associated with lockdowns, supply chain, and shipping issues well—it experienced continued growth in 2020, albeit at a reduced level from prior periods.
SPIE data shows 2020 revenues increased 4% over 2018 to $300B. While this growth was slower than the 10 year CAGR of 6.5%, the use of photonics technologies to address the pandemic, as well as increased demand in many markets enabled by photonics, resulted in continued growth.
Revenues are projected to be up in 2021 as employees returned to work, shipments stabilized, and supply-chain managers overcame their various shortages.
Forecast
Looking ahead, SPIE currently forecasts global photonics component revenues for 2022 will end up reaching between $309 and $325 billion.
The forecast was developed in April of 2022 and incorporates many factors across the global industry including pandemic-driven demand for test and measurement systems, inflation, supply-chain challenges, the worldwide chip shortage, the conflict in Ukraine, and interest-rate and federal reserve policy changes to curb inflation. Depending on the applications served, some companies were forecast to have significant growth while others were expected to have declining revenues as they battled their various business challenges.
Photonics Forecast 2022
Forecasts for 2022 revenues are extrapolated from a review of industry analysts’ predictions for 198 public companies in the SPIE database representing ~59% of total photonics component revenues for 2020.
In summary, the photonics industry has experienced a decade of consistent growth even under the duress of a global pandemic. There are certainly many challenges ahead that can adversely affect the global economy, however the global nature and diversity of the end-use applications enabled by photonics results in an extremely resilient industry.
The photonics components manufacturing industry underpins ten major “photonics-enabled” or end-use market segments. Each segment encompasses products based on photonics technologies that address different markets.
These major market segments range from the consumer products segment (smartphones and TVs, for instance) to the advanced manufacturing segment (such as 3D printing) and to healthcare and life sciences (like DNA sequencing and medical imaging).
Each of these major market segments is significant in its own right and comprises many smaller sectors. Each market moves independently of the others, but all are dependent on photonics.
Many of the enabled market segments are large enough to justify their own studies focused only on that segment. This makes sense because the factors affecting each of these markets are very different so the trends differ, as do the end-user characteristics.
Nonetheless, it is useful to understand the full impact of a technology area like photonics by looking across all its markets. Hence, many governments track the overall photonics marketplace to gain insight into the impact of photonics on their country’s economic well-being.4
| "Data is important. Collecting it and analyzing it can be hard work. As a regional industry group, we are able to quantify data from our membership, but when we need to show where we are positioned in the global economy, SPIE’s market research is without parallel. We share it with our regional and federal political delegations, with the DoD, and with other stakeholders to validate the importance of our industry." | ||
| – Tom Battley, Executive Director, New York Photonics Industry Association |
Enabled markets economic impact
SPIE completed its first in-depth assessment of the entire photonics-enabled marketplace for 2012. The total revenues of the photonics-enabled markets in 2012 was $1.5 trillion.
Enabled Markets Economic Impact 2021
Global Total $2.12 Trillion
The most recent review valued the 2021 photonics-enabled marketplace at $2.1 trillion—an increase of 40% over the nine-year period, and a compound annual growth rate of 3.9%. Total worldwide employment was more than five million.
Enabled Markets Revenue Trends by Segment
Enabled markets segment trends
The ten major photonics-enabled market segments exhibit different growth rates over time as market conditions change. Fluctuations in total segment revenues from year to year are a function of demand for the end-use products, and of their pricing. It is important to note that in commodity areas like solar panels or consumer products, price erosion can sometimes undermine revenue growth even as unit product sales increase.
Enabled Markets Segment Trends
| The top four growth segments based on compound annual growth rates between 2019 and 2021 were: | ||||||||
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SPIE’s broad range of annual photonics-related activities, including Photonics West—the world’s largest annual photonics technologies event—provides us with unmatched insight into the technology trends and pace of global photonics innovation across almost all of the end-use markets.
This unique industry insight leads us to expect that photonics technology will advance at a rate and in ways that will continue to outpace the effects of price erosion in commodity areas while new technologies are adopted in others.
| Examples include: | ||||||||||||||||||||
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These and many other areas of photonics technologies are covered at multiple SPIE events annually (see page 30). Plus, SPIE publishes the largest collection of optics and photonics applied research—technical papers, reports, and presentations—more than 560,000—in the SPIE Digital Library.
SPIE provides a comprehensive set of business resources for its industry members and partners. Our resources facilitate the growth of organizations working with photonics by fostering entrepreneurship, recognizing innovation, advocating for industry, creating networking opportunities, and connecting sellers with buyers.
| These industry resources include: | ||||||||||||||||||||
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SPIE routinely provides support for domestic assessment of photonics industries in many countries. We also regularly present business information and market updates worldwide. This map illustrates the global reach of our industry-support activities.
| 1 | www.imf.org/external/datamapper/NGDPD@WEO/WEOWORLD |
| 2 | National Academy of Sciences Report: Optics & Photonics: Essential Technologies for our Nation. |
| 3 | The NAICS (North American Industry Classification System) is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the US business economy. A similar system exists for the same purpose in Europe called NACE (Nomenclature des Activités Économiques dans la Communauté Européenne). |
| 4 | Governments that routinely track photonics include the EU (Photonics21), Japan (OITDA), Korea (KAPID), and Taiwan (PIDA). |
Details of the methodology used to compile the information in this booklet can be found online at spie.org/market-intelligence.
