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SPIE Professional April 2012

Taiwan Photonics Industry Prospers

Despite the economic recession, Taiwan’s photonics industry has a hopeful outlook on the future.

By Peter T.C. Shih

Image of LED farming in Taiwan

As a leading manufacturing base of photonics products such as LCD panels, LEDs, DVD discs/players, photovoltaic systems, and fiber optics for a worldwide market, Taiwan plays a pivotal role in finding solutions for a better world. Specifically, photonics technologies are powering the move from an “Information Society” to an “Ecological Society,” where new opto-electronic applications in lighting, energy, communications, and biophotonics are meeting the major challenges of our society.

Despite a global economic recession that has lasted several years, Taiwan’s photonics industry remains hopeful about the future and anticipates making major contributions to the welfare of mankind in the coming years.


PV and LED manufacturing are expected to lead the next stage of growth for Taiwan photonics.
Economic ups and downs

After the economic recession began in 2008, the Taiwan photonics industry experienced two years of negative growth. It then rebounded in 2010 to the same level as that of 2007.

The resurgence in 2010 went way beyond expectations, and production values approached 73 billion USD, with Taiwan holding a 17% global share of the photonics market.

The fast growth of 2010 didn’t last long as the U.S. economy slowed down and the European debt crisis continued. These negative factors caused Taiwan photonics to fall back again. It was estimated that the production value of the Taiwan photonics industry in 2011 could at best maintain the same scale as that of 2010 (See figure 1 below). Even with the current trend, it is projected that the Taiwan photonics market will pass 100 billion USD before 2015.

LCD panel makers thrive in Taiwan

Taiwan manufacturers have been heavily involved in photonics businesses for some three decades. Before the 1990s, the Taiwan photonics industry had an annual production value of less than 1 billion USD and focused on optical lens production and LED packaging. During the 1990s, the photonics industry enjoyed fast growth along with a surge in IT markets. During that time, Taiwan was among the top three sellers/producers of image sensors, scanners, and CD-ROMs.

When the dotcom bubble burst in the early 2000s, Taiwan avoided the industry downturn, thanks to the prosperous LCD panel, DVD disc/player, and digital still-camera (DSC) industries, which helped the photonics market grow to 10 billion USD. Since then, LCD panel makers have brought another wave of growth and boosted the total production output to more than 70 billion USD.

As of December 2011, OEM (original equipment manufacturer) production values of LCD panels, LED packaging, solar cells, DSCs, and DVD discs/players ranked in the top three globally. It is also noteworthy that Taiwan OEMs hold a 20% share of the global LED packaging market.

Taiwan’s flat panel display (FPD) industry, led by AUO and Chimei Innolux, has the largest share among all sectors in the photonics industry. Approximately 40% of the FPDs in the global market are from Taiwan manufacturers.

In addition to local enterprises, the Taiwan FPD industry includes many multinational companies such as Corning, 3M, Applied Materials, Merck, and ULVAC. Together they cooperate to form a comprehensive FPD supply chain in Taiwan.

Green photonic products catching up

As the FPD industry matures with flat growth, people are now turning to PV and LED lighting for the next stage of growth. A few Taiwan PV manufacturers, such as Motech and Gintechand, LED companies such as epi wafer maker EPISTAR, LED packaging stars Everlight and Liteon, and LED lighting provider Delta, have tapped into the global market and earned their top positions through fierce competition.

Even the world-renowned semiconductor giant TSMC and the largest electronics manufacturing services company Foxconn are making their way into the LED and PV industries. The current constitution of the Taiwan photonics industry is about to change, with the LED and PV share of the photonics market projected to increase while the FPD share decreases (See Figure 2 below).

Taiwan photonics business model

In the high-tech industry value chain, the United States is often the one to discover the basic principle of new photonics technology and invent new prototypes, followed by Japan creating technology applications and commercialization, and then Taiwan doing mass production and lowering the costs. Taiwan has set a paradigm for other regions in Asia, allowing many more consumers to own photonics-enabled products than would otherwise be possible.

In Mainland China, Taiwan companies skilled at production management invest and set up their factories there, manufacturing products for global brands such as Apple, Sony, and HP. The flexibility and fast response of Taiwan corporations are the reason these companies can provide the high value-added and fine electronics products for the global market.

The main reason for Taiwan’s excellent capability in manufacturing is that this land cultivates a skilled and educated professional workforce, especially in the semiconductor field. These people continue to contribute their skills to the PV and LED industry, the so-called green-energy industry. These experts, including those educated and professionally trained in Taiwan and those who received a high level of education abroad, are encouraged to contribute their outstanding skills in photonics by various measures set by the government, and some suggested by the writer through the Photonics Industry and Technology Development Association (PIDA) of Taiwan.

One example of the government promoting the photonics industry is the successful establishment of three science parks.

Aside from the original OEM model, enterprises are putting much emphasis on R&D to seek technology breakthroughs and more IP ownership. Furthermore, more Taiwan brands are visible in the global market, such as Acer, HTC, and BenQ, since more companies realize that having their own brands is the way to sustainability.

The huge potential and business opportunities of the Mainland China market attract the attention of Taiwan photonics industry, which now sees the Economic Cooperation Framework Agreement (ECFA) signed in 2010 as a bridge to the vast opto-electronics market. From the perspective of multinational enterprises, Taiwan also acts as an important channel to the Mainland China market under this trade agreement.

Hopeful decade ahead for Taiwan photonics

The 21st century is the era when people will shake off dependence on fossil fuels and embrace green/renewable energy. Photonics technologies are one of the driving factors. Every few years, a new mainstream product leads the photonics industry to a new peak. For example, in the early 2000s, photonics technologies were applied in products such as mobile phone display panels, LCD TVs, and building-integrated photovoltaic (BIPV) systems. For the next decade, the growth wave lies in lighting, energy, communication, and biophotonics to meet the challenges of ecological and environmental issues.

These newly emerged applications help boost the scale of the photonics industry and turn a new page for the industry. For example, in the early stages of the global photonics industry, laser- and optics-driven applications contributed to tens of billions USD of annual production output. Later, IT and communication-related photonics products helped the industry cross over the 100 billion USD mark.


 Green energy has been the major focus of the Taiwan photonics industry in recent years, illustrated by high-concentration photovoltaic (HCPV) systems and LED farming (above).

Now, consumer products and new green-energy businesses should further lift the production value to pass beyond 1 trillion USD around 2020.

As stated earlier, human society is advancing from an “Information Society” to an “Ecological Society.” One important concept of this Ecological Society is that energy saving is more important than power generation.

Either way, photonics technology plays a critical role in pushing the realization of both and to enhance the development of a green economy and ecology.

In fulfilling the goal of replacing fossil fuels with green energy, the photonics industry will see its role gradually transform from a hardware manufacturing/sales industry into an industry based on designs, creative ideas, and services. Advanced photonics technologies, such as nano-photonics, silicon photonics, organic photonics, biophotonics, and tera-photonics will emerge on the global stage to realize this new era.

Let there be light!

The economic recession sweeping across the globe is a great challenge to both the global and the Taiwan photonics industries. Nevertheless, photonics technologies and green energy are expected to advance and contribute to the welfare of mankind.

The 21st century marks the very beginning of the green energy wave, which should create a new future when combined with photonics technology.

Photonics technologies bring new life to everything. As we often say, photonics for better economy, for better ecology, for better living, and better life. Let there be light!

SPIE Fellow Peter Shih is the founder and executive director of the Photonics Industry and Technology Development Association (PIDA) in Taipei, Taiwan. Known as the father of opto-electronics and photonics in Taiwan, Shih has a PhD in applied physics from Grenoble University (France) and has twice served as chairman and co-chair of Photonics Taiwan.

 


 

PIDA represents Taiwan's photonics industry

The Photonics Industry and Technology Development Association (PIDA) of Taiwan was established by Peter Shih in 1983, at a time when the opto-electronics industry was in its infancy.


Peter Shih (right) briefed Taiwan President Ma Yingjeou with the latest market intelligence done by PIDA during the exhibition at the 2011 Photonics Festival in Taiwan. “Changes brought by photonics technology are obviously making people’s lives better than ever,” the president said.

With support from the Taiwanese government, PIDA provides research, analysis, and marketing services to the photonics industry as well as exhibitions, conferences, and publications.

With up to 200,000 people in Taiwan employed directly or indirectly in local photonics industries (approximately 9% of the total population), Shih says that Taiwan is one of the few places in the world where ‘photonics’ has truly become a household name.


Science Parks in Taiwan

Taiwan’s government-financed science parks are magnets for high-tech industries and professionals.

The island has three core science parks, with integrated circuits (IC) and opto-electronics accounting for some 90% of revenues.

Hsinchu Science Park in the north was the first of its kind when it was set up in 1980. Like the others, it is composed of several separate parks with hundreds of companies engaging in R&D of ICs, computers, electro-communications, biotechnology, and other photonics technologies.

The Hsinchu Science Park alone contributes 4.5% of Taiwan’s GDP and employs 72% of the Hsinchu City labor force.

Central Taiwan Science Park was established in 2003 and now has a complete supply chain for opto-electronics and semiconductor chips.

The Southern Taiwan Science Park, established in 1996, is an IC industry cluster and opto-electronics hub that is home to Corning Taiwan, HannStar Display Corp., and more than 100 other high-tech firms employing nearly 50,000 people.

More info: Science Parks in Taiwan

 


Have a question or comment about this article? Write to us at spieprofessional@spie.org.

 

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DOI: 10.1117/2.4201204.04

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