optical communication

2Optoelectronic Industry Trends

Annual Technical Report 2009 OITDA

The Optoelectronic Industry and Technology Development Association (OITDA) was established in 1980, and since then, thanks to a great deal of support and cooperation from the affi liated members and enterprises, OITDA has annually conducted a Survey of the Trends of the Optoelectronic Industry to analyze the current scale of domestic production and estimate future prospects, and at the same time to grasp tendencies and other factors related to optoelectronic resources and optoelectronic industries in other countries. It is highly regarded as basic information on industry trends.The global situation stemming from the U.S. fi nancial uncertainty has brought a sudden halt to the growth until the fi rst half of FY2008. This is presenting challenges we have never experienced before. In this situation, we believe that it is more important than ever to have an accurate grasp of the comprehensive trends in the optoelectronic industry and technology and to prepare mid-term/long-term research and development and business strategies.For the survey of optoelectronic industry trends, the following seven basic policies were set by the Optoelectronic Industry Trend Research Committee and activities were conducted accordingly.1. Conduct activities through seven fi eld-specifi c research

committees;2. For the statistics on domestic production, perform questionnaire

surveys on (1) actual production in FY 2008, (2) estimates for FY 2009 and (3) prospects for FY 2010;

3. Conduct a questionnaire survey on optoelectronic industry resources;

4. Attend the annual meeting of International Optoelectronics Association to study overseas trends in the optoelectronics industry

5. Summarize market trends in the optoelectronics industry in a timely manner and make the information available on OptoNews (Research & Analysis)

6. Continuous discussions about ways to improve the coverage, collection rate, and reliability of the questionnaire survey; and

7. Discussion of the survey items of the questionnaire by fi eld-specifi c research committees and establishing consistency by the Optoelectronic Industry Trend Research Committee.

1. Trends in Domestic Production for the Optoelectronic Industry

1.1 Survey on the Domestic Production of the Optoelectronic IndustryA survey on the domestic production of the optoelectronic industry was conducted as described below.Questionnaire surveys were performed from early October 2009 to the end of January 2010 with the participation of 336 domestic enterprises manufacturing optoelectronic-related products (optoelectronic equipment, components) to determine actual production in FY 2008, estimated production for FY 2009, and prospects for FY 2010. Based on the results of the questionnaire, discussions were conducted by the seven fi eld-specifi c research committees to compile the domestic production of optoelectronic industry.The optoelectronic industry is categorized into the following seven fi elds by combining optoelectronic equipment and components:1. Optical communication: Optical transmission equipment/systems, optical fi ber splicing

equipment, light-emitting equipment, photo detectors, optical fi bers, optical connectors, optical passive equipment, etc.

2. Optical storage: Equipment (read-only and recordable types), media (write once read

many types, rewritable types), semiconductor lasers, etc.3. Input / Output: Optical printers, digital copiers, digital cameras, digital camcorders,

mobile phones with cameras, photo detector arrays, etc.4. Displays: Flat panel displays, projection displays, LED (for displays), etc.5. Photovoltaic energy: Photovoltaic power systems, photovoltaic cells and modules6. Laser processing: Laser processing equipment, medical laser equipment, gas laser,

etc.7. Measuring and sensing: Optical measuring equipment, optical sensing equipment, etc.8. Other: Individual photo detectors for non-communication uses, hybrid

optical equipment, etc.

Mobile phones with cameras and photovoltaic power systems underlined above were added, starting this fi scal year. Though reference surveys were done on mobile phones with cameras in the past, photovoltaic power systems were surveyed only starting this fi scal year, so its survey result is not continuous.

1.2 Survey of Domestic Production in FY 2008, FY 2009 and FY 2010Table 1 (a) shows the actual domestic production in FY 2008, estimated production for FY 2009 and projected production for FY 2010. (For reference, Table 1 (b) shows the total domestic production until the previous fi scal year by categorizing the products). Figure 1 shows the contribution of each fi eld to the increase in the domestic production of the optoelectronic industry over the three years. Actual production recorded in FY 2008: 8,342.6 billion yen, growth

rate: -16.7%Amidst the unprecedented global fi nancial crisis the industry declined overall, but there was positive growth in optical communications equipment, optical disk recording devices and LED.

Estimated production for FY 2009: 7,552.4 billion yen, growth rate: -9.5%Among the numerous fi elds showing a decline, the photovoltaic energy fi eld is booming with 56% growth, whereas the display fi eld is fl at.

Projected production for FY 2010: 7,882.8 billion yen, growth rate: 4.4%Display, photovoltaic energy, laser processing, and measuring and sensing fi elds are forecast to grow, whereas the communication fi eld and optical storage fi eld are forecast to remain fl at.

1.3 Changes in the Domestic Production of the Optoelectronic IndustryFigure 2 shows the changes in the domestic production for the 20 years from FY1991 to FY 2010. Figure 3 shows the changes in domestic production in the 1980s from the time of the fi rst survey to the present in two sectors, namely, optoelectronic equipment and optoelectronic components.Figure 2 also shows the nominal GDP and the domestic output of the electronics industry as a reference for comparison between the changes in the size of the optoelectronic industry and those of the Japanese economy and electronics industry. For the last 19 years, the nominal GDP has stayed at around 500 trillion yen. The production of



Table 1 (a) Domestic Production of the Optoelectronic Inductry (Summary)

Product Items2008FY Production Actual 2009FY Production Estimate 2010FY Production Prospectin million yen Growth Rate(% ) in million yen Growth Rate(% ) in million yen Growth Rate(% )

Optical Communication Field 532,529 0.9 445,219 16.4 443,410 0.4

Optical Equipment

Optical Communications Equipment 257,676 3.6 205,742 20.2 196,527 4.5Truck System (including MUX) 84,139 18.5 57,981 31.1 59,516 2.6Metro System 59,085 27.7 52,397 11.3 46,614 11.0Access System 70,583 37.9 60,397 14.4 53,063 12.1Picture Transmission (CATV, etc) 14,459 5.7 14,198 1.8 15,077 6.2Optical Fiber Ampli er 18,041 3.4 12,755 29.3 16,323 28.0Others 11,369 49.3 8,014 29.5 5,934 26.0

Optical Fiber Splicers 15,394 9.9 13,334 13.4 13,773 3.3

Optical Components

Laser Diodes for Communication 25,294 34.9 13,679 45.9 15,951 16.6LEDs for Communication 1,121 4.5 904 19.4 904 0.0Photo Detectors 3,792 8.2 3,319 12.5 3,745 12.8Optical Transmission Modules 53,638 0.5 42,492 20.8 48,822 14.9Optical Fiber Cables 104,429 5.8 103,822 0.6 102,009 1.7Optical Connectors 29,498 10.2 26,690 9.5 26,932 0.9Hybrid Optical Devices 1,123 33.2 966 14.0 844 12.6Optical Passive Components 35,136 16.4 28,458 19.0 27,890 2.0Optical Circuits 5,428 31.0 5,813 7.1 6,013 3.4

Optical Storage Field 509,988 15.2 390,299 23.5 389,781 0.1

Optical Equipment

Optical Disk 470,181 14.2 359,639 23.5 365,309 1.6

Equipment 401,025 13.4 307,082 23.4 309,470 0.8

Read-only (CD, MD, DVD, BD/HD DVD 232,160 26.9 139,813 39.8 129,474 7.4Recordable (MD, MO, CD, DVD,

BD/HD DVD)168,865 15.9 167,269 0.9 179,996 7.6

Media 48,865 12.2 37,273 23.7 38,346 2.9Others (Optical Head, Processing &

Inspection Equipment)20,291 30.8 15,284 24.7 17,493 14.5

Laser Diodes 39,807 24.9 30,660 23.0 24,472 20.2Input/Output Field 2,897,430 24.8 2,176,017 24.9 2,141,928 1.6

Optical Equipment

Optical I/O Equipment 2,595,657 25.5 1,913,601 26.3 1,901,872 0.6Optical Printers 113,307 0.8 75,063 33.8 82,940 10.5Digital MFP (FAX machine, Copier, MFP) 184,705 11.9 139,137 24.7 131,576 5.4Bar Code Reader 18,315 10.2 14,642 20.1 15,174 3.6Image Scanners 18,295 40.1 16,926 7.5 5,333 68.5Digital Still Camera 922,864 6.1 688,280 25.4 649,063 5.7Digital Camcorder 242,775 31.9 147,749 39.1 181,612 22.9Mobile Phone with Cameras 1,089,710 37.7 826,793 24.1 828,833 0.2Others 5,686 74.4 5,011 11.9 7,341 46.5

Photo Detectors 301,773 17.6 262,416 13.0 240,056 8.5Display Field 3,195,828 10.6 3,202,812 0.2 3,363,566 5.0

Optical Equipment Display Equipment 1,072,858 13.6 1,027,614 4.2 1,062,720 3.4

Flat Panel Display 922,330 12.3 902,235 2.2 933,727 3.5Projection Display 129,505 25.1 101,099 21.9 105,302 4.2Large Screen (60 inches or more) 21,023 21.3 24,280 15.5 23,691 2.4

Display Devices 1,901,286 10.8 1,962,824 3.2 2,025,618 3.2LEDs 221,684 10.6 212,374 4.2 275,228 29.6

Photovoltaic Energy Field 529,084 825,359 56.0 960,333 16.4Solar Power Generation Systems 162,819 384,005 135.8 456,200 18.8Photovoltaic Cell ,Module 366,265 8.8 441,354 20.5 504,133 14.2

Laser Processing Field 371,582 20.8 238,887 35.7 282,895 18.4

Optical Equipment Laser Processing Equipment 302,078 21.2 180,972 40.1 215,034 18.8

CO2 Lasers 83,833 13.0 42,746 49.0 58,436 36.7Solid State Lasers 43,975 6.6 36,346 17.3 51,183 40.8Excimer Lasers 172,955 26.1 100,355 42.0 103,555 3.2Others 1,315 77.0 1,525 16.0 1,860 22.0

Medical Laser Equipment 9,906 23.6 8,973 9.4 9,406 4.8Oscillators 59,598 23.5 48,942 17.9 58,455 19.4

Sensing/Measuring Field 200,321 17.3 179,337 10.5 198,288 10.6Optical Sensors 192,005 17.1 172,612 10.1 190,582 10.4Optical Measuring Instruments 8,316 21.7 6,725 19.1 7,706 14.6

Others Field 105,877 25.5 94,441 10.8 102,579 8.6

Components Hybrid Optical Devices 30,590 33.9 24,625 19.5 27,035 9.8

Optical Fibers, Image Fibers, etc 4,176 25.4 3,777 9.6 3,773 0.1Photo Detectors 28,423 5.7 27,999 1.5 24,331 13.1Others (Optical Circuits, Micro-Optics, etc) 42,688 28.9 38,040 10.9 47,440 24.7


Sub Total for Optoelectronics Equipment 5,086,890 20.3 4,273,217 16.0 4,419,129 3.4Sub Total for Optoelectronics Components 3,255,748 10.7 3,279,154 0.7 3,463,651 5.6Total for Optoelectronics Products 8,342,638 16.7 7,552,370 9.5 7,882,780 4.4

In the photovoltaic generation eld, the amount of production to taled so as not to count the amount of production of the solar cell module included in the system as parts double is as follows


Photovoltaic Cell Field 430,171 637,049 48.1 699,231 9.8

4Annual Technical Report 2009 OITDA

Table 1 (b) Domestic Production of the Optoelectronic Inductry (Conventional Classifi cation ; not include mobile phone with cameras and solar power generation systems)


Optical Communication Field 532,529 0.9 445,219 16.4 443,410 0.4

Optical Equipment

Optical Communications Equipment 257,676 3.6 205,742 20.2 196,527 4.5Truck System (including MUX) 84,139 18.5 57,981 31.1 59,516 2.6Metro System 59,085 27.7 52,397 11.3 46,614 11.0Access System 70,583 37.9 60,397 14.4 53,063 12.1Picture Transmission (CATV, etc) 14,459 5.7 14,198 1.8 15,077 6.2Optical Fiber Ampli er 18,041 3.4 12,755 29.3 16,323 28.0Others 11,369 49.3 8,014 29.5 5,934 26.0

Optical Fiber Splicers 15,394 9.9 13,334 13.4 13,773 3.3

Optical Components

Laser Diodes for Communication 25,294 34.9 13,679 45.9 15,951 16.6LEDs for Communication 1,121 4.5 904 19.4 904 0.0Photo Detectors 3,792 8.2 3,319 12.5 3,745 12.8Optical Transmission Modules 53,638 0.5 42,492 20.8 48,822 14.9Optical Fiber Cables 104,429 5.8 103,822 0.6 102,009 1.7Optical Connectors 29,498 10.2 26,690 9.5 26,932 0.9Hybrid Optical Devices 1,123 33.2 966 14.0 844 12.6Optical Passive Components 35,136 16.4 28,458 19.0 27,890 2.0Optical Circuits 5,428 31.0 5,813 7.1 6,013 3.4

Optical Storage Field 509,988 15.2 390,299 23.5 389,781 0.1

Optical Equipment

Optical Disk 470,181 14.2 359,639 23.5 365,309 1.6

Equipment 401,025 13.4 307,082 23.4 309,470 0.8

Read-only (CD, MD, DVD, BD/HD DVD 232,160 26.9 139,813 39.8 129,474 7.4Recordable (MD, MO, CD, DVD, BD/HD DVD) 168,865 15.9 167,269 0.9 179,996 7.6

Media 48,865 12.2 37,273 23.7 38,346 2.9Others (Optical Head, Processing &

Inspection Equipment)20,291 30.8 15,284 24.7 17,493 14.5

Laser Diodes 39,807 24.9 30,660 23.0 24,472 20.2Input/Output Field 1,807,720 14.0 1,349,224 25.4 1,313,095 2.7

Optical Equipment

Optical I/O Equipment 1,505,947 13.2 1,086,808 27.8 1,073,039 1.3Optical Printers 113,307 0.8 75,063 33.8 82,940 10.5Digital MFP (FAX machine, Copier, MFP) 184,705 11.9 139,137 24.7 131,576 5.4Bar Code Reader 18,315 10.2 14,642 20.1 15,174 3.6Image Scanners 18,295 40.1 16,926 7.5 5,333 68.5Digital Still Camera 922,864 6.1 688,280 25.4 649,063 5.7Digital Camcorder 242,775 31.9 147,749 39.1 181,612 22.9Others 5,686 74.4 5,011 11.9 7,341 46.5

Photo Detectors 301,773 17.6 262,416 13.0 240,056 8.5Display Field 3,195,828 10.6 3,202,812 0.2 3,363,566 5.0

Optical Equipment Display Equipment 1,072,858 13.6 1,027,614 4.2 1,062,720 3.4

Flat Panel Display 922,330 12.3 902,235 2.2 933,727 3.5Projection Display 129,505 25.1 101,099 21.9 105,302 4.2Large Screen (60 inches or more) 21,023 21.3 24,280 15.5 23,691 2.4

Display Devices 1,901,286 10.8 1,962,824 3.2 2,025,618 3.2LEDs 221,684 10.6 212,374 4.2 275,228 29.6

Photovoltaic Cell Field 366,265 8.8 441,354 20.5 504,133 14.2Photovoltaic Cell ,Module 366,265 8.8 441,354 20.5 504,133 14.2

Laser Processing Field 371,582 20.8 238,887 35.7 282,895 18.4

Optical Equipment Laser Processing Equipment 302,078 21.2 180,972 40.1 215,034 18.8

CO2 Lasers 83,833 13.0 42,746 49.0 58,436 36.7Solid State Lasers 43,975 6.6 36,346 17.3 51,183 40.8Excimer Lasers 172,955 26.1 100,355 42.0 103,555 3.2Others 1,315 77.0 1,525 16.0 1,860 22.0

Medical Laser Equipment 9,906 23.6 8,973 9.4 9,406 4.8Oscillators 59,598 23.5 48,942 17.9 58,455 19.4

Sensing/Measuring Field 200,321 17.3 179,337 10.5 198,288 10.6Optical Sensors 192,005 17.1 172,612 10.1 190,582 10.4Optical Measuring Instruments 8,316 21.7 6,725 19.1 7,706 14.6

Others Field 105,877 25.5 94,441 10.8 102,579 8.6

Components Hybrid Optical Devices 30,590 33.9 24,625 19.5 27,035 9.8

Optical Fibers, Image Fibers, etc 4,176 25.4 3,777 9.6 3,773 0.1Photo Detectors 28,423 5.7 27,999 1.5 24,331 13.1Others (Optical Circuits, Micro-Optics, etc) 42,688 28.9 38,040 10.9 47,440 24.7


Sub Total for Optoelectronics Equipment 3,834.361 13.3 3,446,424 10.1 3,590,296 4.2Sub Total for Optoelectronics Components 3,255,748 10.7 3,279,154 0.7 3,463,651 5.6Total for Optoelectronics Products 7,090,109 12.1 6,725,577 5.1 7,053,947 4.9



the electronics industry has also remained steady within the range of 20 trillion yen to 25 trillion yen, but was estimated to drop below 15 trillion yen in 2009 and 2010. The output of the optoelectronic industry, on the other hand, was around 80 billion yen in FY1980, but has continued to post a steady positive growth rate ever since, exceeding the 7 trillion yen level 20 years later in FY 2000. Affected by the IT recession, the optoelectronics industry recorded negative growth in FY 2001 for the fi rst time since the survey started but reversed to a rapid growth in FY 2002 (2.7% year-on-year growth) and in FY 2003 it went up once again (29.2% YoY). It was fl at during FY 2004 to 2007, except in FY 2006 (5.3% YoY), as production was shifted overseas and costs were cut, but it has remained solid above 9 trillion yen. Both FY 2008 (1.3% decrease YoY) and FY 2009 (2.6% decrease YoY) continued to show declines in both halves due to the global recession sparked by the fi nancial recession, but it is expected to grow in FY 2010 (4.4% YoY).Figure 3 also shows the proportion of optoelectronic components relative to the whole. In FY1980, optoelectronic components accounted for approximately 80% of the total output. The main products in this breakdown were optical components such as LED for display, optical fi bers for communication (multi mode) and photo detectors and optical equipment like optical printers (gas laser). Since then, single-mode fi bers and solid state (semiconductor) lasers have appeared in the market and expanded it. In addition, LCDs and other new optoelectronic products have been introduced to the market one after another. The optoelectronic industry has expanded and developed, with the major products changing drastically, reaching the present status. During the fi rst half of the 1980s, the production of optoeclectronic components exceeded that of optoelectronic equipment; however, since the latter half of the 1980s, the share of optoelectronic components has fl uctuated between 30% and 40%. In the 2000s, the proportion increased to 30-45%, with equal growth is being seen for optoelectronic components such as display devices or photovoltaic cells and modules, and optoelectronic equipment such as digital cameras, mobile phones with cameras, display equipment and photovoltaic power systems.

1.4 Changes in Optoelectronic Products by Field1.4.1 Changes in the Proportion of Optoelectronic Product by FieldFigure 4 shows the changes in the proportion of products for the fi elds comprising the optoelectronic industry. The display fi eld and I/O fi eld account for approximately 70% of the whole, but due to the global recession, fi elds maintaining their size comprise growing proportions, with decreasing proportions for fi elds affected by the recession. The photovoltaic cells fi eld boosted its proportion greatly in FY 2009 with the restoration of subsidies and onset of the surplus power purchase program. The display fi eld expected to become fi rm also saw a large increase in its proportion in FY 2009. The background to this is that the domestic sales volumes are looking strong due to the continuous fall in unit prices, and also due to the eco point system. Moreover, demand is supported as Japan moves towards the end of analog broadcasts. On the other hand, proportions of the I/O fi eld and laser processing fi eld declined considerably in FY 2009. The I/O fi eld also declined to a great extent as digital cameras are unable to maintain their growth and the primary offi ce uses of printers and multifunction peripherals were also greatly affected by the recession. The laser processing fi eld was supported by the semiconductor and automotive and other manufacturing industries, and has been drastically affected by the recession. Though the laser processing fi eld is expected to regain its lost ground along with the semiconductor industry in FY 2010, the recovery of the I/O fi eld is late, as it is projected to continue its decline.

1.4.2 Changes in Optoelectronic Production by FieldFigure 5 shows the changes in the optoelectronic production by fi eld for the 20 years from FY1991 to FY2010.The drastic slump until FY 2001 in the domestic production of the optoelectronics industry was similar for all fi elds until FY 2000, but the developments differed greatly for each fi eld from 2001 onwards.The display fi eld and I/O fi eld did not decline much in FY 2001, then grew. The laser processing fi eld and measuring and sensing fi eld showed large declines from FY 2001 to FY 2002, but thereafter

0500100015002000 500Billion Yen

FY081640.4 Billion Yen

FY09 (Estimate)790.3 Billion Yen

FY10 (Prospect)330.4 Billion Yen

OthersMeasuring/SensingPhotovoltaic Energy *1Laser ProcessingOptical CommunicationOptical DiskI/O EquipmentDisplay

Figure 1 Contribution of each fi eld to the increase in Domestic Optoelectronic Production

*1 Photovoltaic energy which is the start of the survey item is not included in the increase in OE production for FY08.


29.2

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1.0 1.50.90.9

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16.7 *3

9.5

4.2

4.4

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0.312.0 5.6

2.3 4.66.6

6.1

10.5

0.59.6

18.212.0

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11.4 9.14.3

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009080706050403020100999897969594939291 10

Domestic Production (Trillion Yen)

Estimate

Prospect

Growth Rate compared to the previous year

Domestic Optoelectronic Production (FY)Nominal GDP (FY)*1 (x 1/100)Domestic Electronic Production (CY)*2 (x1/10)

Figure 2 Changes in Domestic Optoelectronic and Electronic Production and Nominal GDP

EquipmentComponentsComponent Ratio

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Fiscal Year

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

(Estimate)

(Prospect)

Figure 3 Changes in Domestic Optoelectronic Production of Equipment/Components (1980-2009)

*1 FY10 Economic Outlook and Basic Stanse for Economic and Fiscal Management, 1/22/10 (Cabinet Decision). *2 World-wide Production Prospect of Electronics and Information Technology Industries, JEITA, 12/16/09.*3 Mobile phone with camera and Solar power generation system whose starting years of the surveys were

respectively FY02 and FY08 are not included in the growth rates of starting years.



0

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Others

Measuring/Sensing

Photovoltaic Energy

Laser Processing

Optical Communication

Optical Disk

I/O Equipment

Display

FY088342.6 BillionYen

FY09 (Estimate)7552.4 BillionYen

FY10 (Prospect)7882.8 BillionYen

38.3%

34.7%

6.4%

6.3%

6.1%

4.5%2.4%1.3%

42.4%

28.8%

5.9%

10.9%

5.2%3.2%2.4%1.3%

42.7%

27.2%

5.6%

12.2%

4.9%3.6%2.5%1.3%

Figure 4 Changes in the proportion of Optoelectronic Products by fi eld

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DisplayI/O EquipmentOptical DiskOptical CommunicationLaser ProcessingMeasuring/SensingPhotovoltaic Energy


09080706050403020100999897969594939291 10

Estimate

Prospect

Figure 5 Changes in Domestic Optoelectronic Production by fi eld (1991-2009)


recovered to the levels of FY 2000. The optical communications fi eld and optical storage fi eld have still not exceeded their FY 2000 levels. The photovoltaic cells fi eld does not yet exceed 2% of the total production value, but it is growing fast. The fi gures of photovoltaic cells and modules are projected to increase to over 6 times the amount in FY2000. Figure 6 shows the overall incremental developments in the photovoltaic cells fi eld together with the statistical fi gures of the photovoltaic power systems which we started collecting this fi scal year.As described above, each fi eld is in a different situation. Refl ecting each markets demand, they are not simply affected by the overall recession, and are trying to incorporate new technologies to improve the situation.Detailed analysis of each fi eld is discussed below in Chapter 2-8.

2. Trends in the Information and Communication Field2.1 General OverviewIt is quite clear that like other fi elds, this fi eld was also badly affected by the global recession. The domestic production fi gures of each fi eld shrunk in FY 2008, and the estimates of FY 2009 also show a negative trend. After NTTs commencement of NGN (Next Generation Network) service, the pause in its related investments is also most likely infl uencing these fi gures. In case of the latter, the negative growth may continue for a year from FY 2009 to FY 2010, but continuous negative growth for three consecutive years is seen in very few categories. Although the projection shows that the next fi scal year will mostly remain fl at or slightly positive in growth as reassuring aspects, closer study reveals some product groups are in a clear long-term declining trend.In FY 2008, long wavelength band (1.3 m, 1.55 m) semiconductor lasers plunged to less than half the level of FY 2007, owing to the shift of production to overseas locations. Since advanced

laser light sources with wavelength-tuning functions became widely used for ROADM (Reconfi gurable Optical Add-Drop Multiplexer) as the precursor of wavelength-division multiplexing transmission systems and photonic networks, long-distance backbone transmission systems have migrated to using multilevel modulation systems such as PSK (Phase-Shift Keying) and QPSK (Quadrature Phase-Shift Keying), triggered by the introduction of 40 Gb/s systems. Since advanced optical components such as coherent transceivers have been developed, once advanced light-emitting/light-receiving elements, evolved from mono-functional devices for simple-lighting/direct modulation or squared detection, have also been developed, they will both be used in practice, resulting in an increase in production. It should be kept in mind that the new coherent system called Digital Coherent aims to digitally realize the pulse equalizing of signals or polarization control etc, which are heretofore processed by using analog optical components such as the conventional dispersion-compensating fi bers.The domestic production of light-emitting elements (semiconductor lasers) and photo-sensitive elements related to short wavelength (0.85 m) band semiconductor lasers has almost stopped, and, as a result, North American and European manufacturers are monopolizing the production.For Optical LAN and Optical wireless LAN items, LAN interface products such as IP routers and Ethernet switches are independently classifi ed as two-way transceivers. In addition, since Optical Link transceivers are designed and manufactured according to de facto standards called MSA (Multi Source Agreement), which are voluntary and mutually agreed on by major vendors, network providers are free to select and purchase short or long wavelength (1.3 m, 1.55 m) products according to their requirements. Because of this, Optical Links can be surveyed, but there is no longer any sense in surveying Optical LANS.The complete transition from analog to terrestrial digital broadcasting

1,400

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080706050403020100999897969594939291 10

PV Cell and Modules

PV Energy Total *1

(Estimate)

(Prospect)

Figure 6 Changes in Domestic PV Energy Production (FY2000 = 100)

*1 Simple production sum of the solar power generation system as a equipment and PV cells and modules as components.



is rapidly approaching, and there will not be a decline in the trend for large amounts of legal and illegal video content to fl ow through the network. Additionally, due to the infl uence of continuing concerns about an epidemic of super-fl u, companies refrained from business trips to ensure their employees safety and consequently cut-costs. In conjunction with this, teleworking is certainly being adopted from the viewpoint of encouraging women to participate in society. This movement is consistent with the trend towards cloud computing. Therefore, the communication traffi c demand typically epitomized by images and videos will continue to grow. Domestic broadband service will be continuously upgraded and also extended to various regions. As a result, the production of optical-related products will be steady.

2.2 Trends by FieldThe optical transmission equipment/systems fi eld slightly increased in sales to 257.6 billion yen in FY 2008 (3.6% year-on-year growth), compared with 248.6 billion yen (-8.7% y/y) in FY 2007, and is estimated to decline to 205.7 billion yen (-20.2% y/y) in FY 2009 and 196.5 billion yen in FY 2010 (-4.5% y/y).Sales in the optical transmission links fi eld amounted to 53.6 billion yen in FY 2008 (-0.5% y/y), similar to the 53.9 billion yen in FY 2007 (+38.7% y/y), but is estimated to decline to 42.4 billion yen in FY 2009 (-20.8% y/y) and increase to 48.8 billion yen in FY 2010 (+14.9% y/y).Sales of Laser Diodes (LDs) for communications totaled 25.2 billion yen overall in FY 2008 (-34.9% y/y) and 13.6 billion yen in FY 2009 (-45.9% y/y), for 2 years of consecutive decline. In FY 2010 they are estimated to increase to 15.9 billion yen (+16.6% y/y).Regarding the photo-sensitive elements for communications, their sales amounted to 3.7 billion yen in FY 2008 (-8.2% y/y), down from 4.1 billion yen in FY 2007 (+24.3% y/y). In FY 2009 sales are estimated to decline further to 3.3 billion yen (-12.5% y/y), but recover to their FY 2008 level in FY 2010 at 3.7 billion yen (+12.8% y/y).Optical fi ber cables declined in sales to 104.4 billion yen in FY 2008 (-5.8% y/y), and are estimated to slightly decline steadily to 103.8 billion yen in FY 2009 (-0.6% y/y), and 102.0 billion yen in FY 2010 (-1.7% y/y).Optical connectors grew in sales to 29.4 billion yen in FY 2008 (+10.2% y/y), but are estimated to decline to 26.6 billion yen in FY 2009 (-9.5% y/y) and then to be fl at at 26.9 billion yen in FY 2010 (+0.9% y/y).Optical fi ber fusion splicers showed consecutive declines in sales to 15.3 billion yen in FY 2008 (-9.9% y/y) and 13.3 billion yen in FY 2009 (-13.4% y/y), but are estimated to grow to 13.7 billion yen in FY 2010 (+3.3% y/y).Optical passive components such as optical isolators, optical attenuators, optical multiplexers/demultiplexers and optical couplers, and optical interconnect devices such as optical switches and optical modulators overall increased in sales to 40.5 billion yen in FY 2008 (+18% y/y), but are estimated to decline to 34.2 billion yen in FY 2009 (-16% y/y), and 33.9 billion yen in FY 2010 (-1.1% y/y).

3. Trends in the Optical Storage FieldAs an ongoing activity, the optical storage committee executed its Survey of domestic production of optical storage (mainly optical disk) equipment and media along with the analysis of the results, the examination of characteristic market topics and reporting thereof. The actual domestic output of optical disks in FY 2008 was 470.2 billion yen, registering a decrease of 14.2% from the previous year. The

production estimate for FY 2009 was 359.6 billion yen (down by 23.5% from FY 2008), and FY 2010 is projected to be almost fl at at 365.3 billion yen (up by 1.6% over FY 2009).In FY 2000, domestic production of optical disk equipment and media reached a peak of 1,174.8 billion yen. Until then, optical disks grew as disruptive technologies replacing cassette tapes and VTRs. However, due to the demise of IT bubble economy, lower prices and the shift to production overseas, domestic output value showed a large 25% decline in FY 2001. The years 2002-2003 showed a return to growth with the introduction of DVD recorders. However, in FY 2004 and FY 2005, these prices also declined and production moved overseas, which resulted in a reversal to declines in domestic output value.It recovered to grow 2.6% in FY 2006, with the appearance of BD (Blu-ray Disc) and HDDVD. However, the market for MO and MD continued to fall, product prices of CD and DVD declined further, and large amounts of production moved overseas, thus despite the sudden growth of BD in FY 2007 to FY 2008 which came to comprise 60% of video recorder volume in the 2008 year-end sales period, domestic production of optical storage (disk) equipment and media continued to decline. This was largely affected by the replacement of external recording devices with fl ash memory as the destructive technology in FY 2006.Thus the domestic production of CD/DVD underwent a sharp decline. On the other hand, the production volume of BD (Blu-ray Disc) is anticipated to increase following on CD/DVD. The domestic production of recorders is showing a quick transition to BD recorders from DVD recorders, but BD penetration in PC usage has only begun, and production value is not growing enough to cover the decline in CD/DVD. Lower prices of BD players in North America is bringing rapid growth, but domestic manufacturers who have large market shares have been producing overseas since entering the market, thus this growth does not show in domestic production value fi gures. Prices of BD products are forecast to decline in the coming years, but production volume growth is expected to exceed that decline. Thus FY 2010 is forecast to rebound to growth in domestic production value.The domestic production of read-only equipment (CD, MD, DVD, BD) was 232.2 billion yen in FY 2008 (down 26.9% YoY). This declining trend continued to slump in FY 2009 which reeled under the impact of declining demand in the second half of FY 2008, as production decreased to 139.8 billion yen (down 39.8% YoY). FY 2010 is forecast to see slower decline (down 7.4% YoY), based on a moderate economic recovery. Domestic production value of BD players and game machines which can play BD showed a sudden increase in FY 2007, but these also declined sharply in FY 2008, and it is predicted to dramatically decrease from FY 2009 onwards due to lower prices and production shifting overseas. This declining trend continued in production of CDs and MDs because of the shift to memory audio using semiconductors or HDD, and with the growth of cheaper portable car navigation systems, it seems that automobile mounted DVD players including car navigation systems will also continue to show a declining trend hereafter.In the optical disk read/write equipment category, BD recorders and BD read/write drives accounted for about 75% of total actual domestic production value in FY 2008, equivalent to 125.2 billion yen. In FY 2009, this trend became stronger, with BD recorders quickly replacing the video recorders being sold in Japan. The strong sales of high defi nition digital broadcast compatible fl at panel TVs is thought to be one of the reasons for their demand being pushed up. Also, major domestic PC manufacturers launched several PC models with recordable


BD drives, but viewed globally, we see that the demand for recording BD equipment was concentrated only in Japan. These high value added products for the domestic market also faced lower prices which create pressure for lower prices, and production is starting to shift overseas. Sales will continue growing on a volume basis, but it is thought that the growth rate of domestic production volume will slow. Actually, in FY 2009, domestic production of all categories was 166.3 billion yen, and of this, BD related was estimated at 145.7 billion yen. The corresponding production values in FY 2010 are projected to be 179.2 billion yen and 173.4 billion yen, as it is thought that almost all production will be concentrated on BD related equipment.Large declines for MD and MO are projected in the coming years, and the slack in demand for CD-R and recordable DVDs is predicted to bring about a sharp decline in the domestic production value of optical storage media. Though the domestic production of BD will increase, the overall downward trend is projected to continue from its declines in FY 2008 (12.2%) and FY 2009 (23.7%). However, FY 2010 is projected to increase slightly, as growth in domestic production of BD is expected to overcome the decline in other media.The FY 2009 report considers the survey results given above, and the describes our market trends analysis by product type, for (1) Read-only equipment, (2) Read/Write equipment, and (3) Rankings of media. Lastly, as noteworthy trends of this fi scal year and future trends, this reports on surveys done from the viewpoints of (1) Important roles the optical disk industry plays in archiving, (2) Industrial applications, and (3) Medical applications.

4. Input/Output [I/O] FieldThe survey of this fi eld focuses on the market trends, production trends and characteristics of the products, such as optical printers, MFPs (including digital copiers), barcode readers, digital cameras and digital video cameras. Refl ecting the recent shift to multifunction peripherals (MFPs), the survey of digital copiers has been analyzed combined with that of MFPs since the FY 2003 actual fi gures. The survey of single (non-hybrid) optical facsimiles was discontinued after the FY 2005 report, taking into account the fact that the domestic production had been reduced to an insignifi cant level.On the other hand, almost all MFP products used optical technology for both input and output, but considering the growth of MFPs adopting inkjet for output in recent years, from FY 2008, our surveys started covering inkjet output type MFPs using optical technology in the document reader component, termed and classifi ed as inkjet MFP.Also, since FY 2005 actual fi gures, the analysis and survey is done with digital cameras classifi ed into single-lens refl ex cameras and compact cameras, and digital video cameras classifi ed into hi-vision cameras and NTSC cameras.

4.1 Trends of Domestic ProductionThe actual production of I/O equipment as a whole in FY 2008 was 1,505.9 billion yen, registering a 13.2% decrease from FY 2007. This decrease is not only the result of the global recession of FY 2008 but also because of the transfer of production overseas.

4.2 Trends of Domestic Production(1) Optical printersDomestic production of optical printers in FY 2008 declined to 113.3 billion yen, down by 0.8% Year on Year (YoY). Thus FY 2008 was almost fl at, but the estimate for FY 2009 is 75.1 billion yen, showing a large 33.8% decline. It is projected to grow by 10.5% in FY 2010, it

is at a low level. The overall market for optical printers achieved high growth on a unit basis in recent years. However, it has been affected by the fi nancial crisis, and 2008 global shipment volume decreased YoY for the fi rst time in several years. Emerging countries had supported growth, but like other countries, sudden declines were seen there also in 2008.(2) Optical MFP (including digital copiers)The domestic production of optical MFPs in FY 2008 was 172.9 billion yen, a decrease of 13.4% YoY, but the fi gures have soared above last fi scal years projection of 158.3 billion yen. It was estimated to decline 25.2% in FY 2009 and the projection for FY 2010 was an approximate 6.3% decline YoY. The ratio of domestic production of high speed machinery is comparatively greater, which is thought to be a result of companies seeing less impact of the recession on this industry.(3) Inkjet MFPAs described earlier, inkjet output type MFPs using optical technology in the document reader component are termed inkjet MFP. This was added to the survey, with its survey and analysis starting from last FY.FY 2008 domestic production of inkjet MFP which has grown fast in recent years was 11.8 billion yen, only about 1/15 of optical MFP, showing an increase of 17.9%. However, FY 2009 is estimated to have declined by 17.3% to 9.8 billion yen. The survey also shows that global inkjet MFP shipment value is US$8.0 billion, indicating that the global recession had comparatively less impact on optical printers.(4) Digital cameras and digital video camerasSince FY 2005 actual, the survey divides digital cameras into compact type and single lens refl ex type. FY 2008 actual grew 24.8% in single lens refl ex cameras but despite this, for the fi rst time since these surveys began it decreased by 6.1% to 922.9 billion yen, due to the decline in compact type. It is estimated that FY 2009 digital cameras will further decline by 25.4%, and FY 2010 is also projected to decline 5.7% to 649.1 billion yen.Domestic production of digital video cameras in FY 2008 also declined 31.9% YoY to 242.8 billion yen. FY 2009 is estimated to decline further to 147.7 billion yen, but FY 2010 is projected to increase 22.9% to 181.6 billion yen. FY 2008 actual showed a reversal as traditional models (equivalent to NTSC) declined 59.8% to 103.7 billion yen and high-defi nition models (equivalent to Hi-V) grew 40.7% to 139.1 billion yen. This gap is projected to grow wider in the coming years.(5) Barcode ReadersDomestic production of barcode readers in FY 2008 declined 10.2% to 18.3 billion yen. FY 2009 is estimated to have decreased by 20.1% to 14.6 billion yen, but FY 2010 is projected to increase slightly to 15.2 billion yen.(6) Image scannersFY 2008 domestic production slumped 40.1% to 18.3 billion yen. FY 2009 estimates showed a 7.5% decline to 16.9 billion yen. The production of image scanners will probably shift overseas, to meet demands for cutting costs and along with the transfer abroad of production of digital copiers, which are a main application.

4.3 Trends of Overseas ProductionIn order to correctly survey the production of all domestic manufacturers of this fi eld, the Production value and Shipment value of both domestic and overseas production have been investigated from FY 2000.

11

Optoelectronic Industry Trends


In FY 1999, overseas production of all I/O equipment accounted for only about 19%. This increased to 47% in FY 2003, decreased once to 41% in FY 2005, but grew to 50% in FY 2008, and is estimated at 60% in FY 2010.Around 38% of MFP production was overseas in FY 1999. It rose to 81% in FY 2008 and is projected to rise to 87% in FY 2010. The ratio for digital cameras was 36% in FY 2003, but it rose to 44% in FY 2008 and is projected to rise to 57% in FY 2010. Each company is focusing on single lens refl ex type, which has a higher rate of profi tability, with most of the production being done in Japan. The production of compact cameras is being transferred overseas. 27% of production of digital video cameras was overseas in FY 2008, and 81% of optical printer production was overseas in the same year.

5. Display Field5.1 Industrial Trends in the Entire Display FieldAs a result of analysis and investigation based on a questionnaire survey sent to related companies, this fi elds production is as follows. The domestic production for the entire display fi eld was greatly affected by the sudden recession resulting from the fi nancial crisis, and FY 2008 actual showed a decline of 10.6% to 3, 195.8 billion yen. In FY 2009, it is estimated to have recovered slightly from the downturn by growing 0.2% to 3,202.8 billion yen. The FY 2010 projection is 5.0% growth to 3, 363.6 billion yen.

(1) LCD equipment and componentsDue to the global recession, the 2008 domestic market saw the set of products which drive the market (LCD TVs, PCs, mobile phones, etc.) suffering from a steady decline in demand as well as unit prices, compelling each manufacturer to reduce operating rates or stop production temporarily. Coming into FY 2009, inventory adjustments progressed starting from the components market, and production in each company also gradually began picking up since spring. However, each company is focusing on upgrading and restructuring their business to survive through the slack period, because they estimate that it will take a long time to recover from the downturn and improve profi ts. 1) Equipment: Domestic production of LCD TVs was 710.6 billion yen in FY 2008 (down 3.1% Year-on-Year) and 700.8 billion yen in FY 2009 (down 1.4% YoY), which was below the projection as of last year. The market is projected to rebound in FY 2010 partly due to the continued effects of eco points, and projected to grow to 757.1 billion yen (up 8.0% YoY), and also slight growth on a volume basis. Looking at the global economy, the demand for LCD TVs is growing in emerging countries, and there are hopes that this combined with the domestic market will expand the entire market. 2) Components: Domestic production of active-matrix LCA panels in FY 2007 was 1,698.9 billion yen (up 1.4%), with FY 2008 estimated at 1,720.2 billion yen (up 1.3%), and FY 2009 projected at 1,562.4 billion yen (down 9.2%). Domestic production of passive type LCA panels in FY 2007 was 112.9 billion yen (down 10.1%), with FY 2008 estimated at 99.9 billion yen (down 11.5%), and FY 2009 projected at 95.6 billion yen (down 4.3%). Production has progressively shifted overseas, with domestic production in a declining trend these several years, and it is thought this trend will continue.Domestic production of active-matrix LCD panels in FY 2008 was 1,554.8 billion yen (down 8.5%), with FY 2009 estimated at 1,593.5 billion yen (up 2.5%), and FY 2010 projected at 1,633.4 billion yen

(up 2.5%). South Korean and Taiwan manufacturers already comprise almost all production for monitors and laptop PCs. Domestic production of TVs is projected to rise as the production of large mother glass is in full swing in Japan, because of the growing global market for TVs.

(2) PDP equipment and componentsIn FY 2008, the plasma display (PDP) TV market was affected by the global economic recession and slumped 34%. In FY 2009, with the eco point system and approaching switch to digital broadcasts, robust demand propped up production volume, and though the prices declined it recovered by 10.1%. PDP panels were mainly manufactured by one company in Japan and 2 companies in South Korea, and the recovery of domestic production was sluggish in comparison to South Korea which was supported by the weaker won. With the drop in U.S. demand, expansion in emerging markets like China and India is expected to bring a shift to low priced products.

(3) Organic EL display componentsDomestic production of EL display components in FY 2008 was about 1.0 billion yen, a sharp decline by 93.5% from 15.6 billion yen in FY 2007. It grew by 79.5% to 1.83 billion yen in FY 2009. Growth of 17.7% to 2.15 billion yen is projected in FY 2010, and it is expected to recover gradually. Organic EL is mainly used in mini displays such as in mobile phones, OneSeg TVs and photo frames. Now products using AMOLED have also entered the market. However, South Korean and Taiwan manufacturers have large shares of total production, with very little production in Japan.

(4) Projection display equipmentDomestic production of projection display equipment in FY 2008 was about 129.5 billion yen, with FY 2009 estimated at 101.1 billion yen. In addition to the slump in demand because of worse global economic conditions, there were inventory adjustments, production shifted overseas, rapidly falling market prices, and the dead market for rear projectors, resulting in more than a 20% decline for 2 years in a row. FY 2010 is projected to grow to 105.3 billion yen due to the increase in demand from promotion of penetration in educational uses in emerging countries, and will continue to recover in the coming years.

(5) Large display equipmentThe domestic production of large display equipment in FY 2009 is estimated to have increased 15.5% to about 24.3 billion yen. Though there were apprehensions of a setback in investments due to the recession, big events such as the Beijing Olympics contributed to the estimated increase. With the gradual recovery of the economy and the growth of the market for digital signage, FY 2010 production is expected to remain at almost the same level (projection: about 23.7 billion yen).

5.2 Trends to Note This Fiscal YearThis fi scal year, we surveyed the Organic EL Display Industry Trends. The domestic organic EL industry is seeing business develop in special fi elds gaining added value, such as passive type used in automobiles. For active type, development is focusing on high functionality and high performance panels for the high-end market, with the aim of commercialization. Market needs are also moving in this direction, and with the remarkable evolution and development of


LCD technology, its growth is on the rise banishing all doubts concerning whether OLED would dominate LCDs. Active type requires large TFT back planes, and manufacturers will have varying degrees of competitive edge over the others depending on whether they are able to secure this and how they are secure it. It is thought that restructuring business in order to secure back planes for LCDs will inevitably be a dominant issue for the organic EL business. Based on this, we see a start to weeding out and mergers among the businesses of domestic display panel manufacturers. Since the beginning of FY 2008, Sharp has roped in not only Sony and Toshiba to ensure a steady supply of LCD modules, but also brought Pioneer under its umbrella to solidify its foundation for entering the organic EL business. Canon has joined hands with Hitachi and hit upon a strategy for the G4 line used in LCDs to be turned towards use in organic EL. Panasonic is not only focused on PDP, as it has brought IPS Alpha Technology, Ltd. under its umbrella for LCDs also. Panasonic is also investing over 100 billion yen in factory construction, aiming to increase its factory capacity. These can be viewed as strategies which will lead into the organic EL business in the future.

6. Trends in Photovoltaic Energy Field6.1 Shipments Status in FY 2008Total shipments of PV cells from Japan in FY 2008 as shown in Table2 were 1,120.5 MW, up by 22.9% year-on-year (YoY). The negative result in FY2006 has rebounded to two consecutive years of positive growth, and FY2008 annual shipment volume reached 1 GW for the fi rst time. The main causes for this were the rebound since FY 2006 in the domestic housing PV power system market which was a cause of decline, and overseas export markets grew strongly. The PV system penetration support project by the government has spread from the Ministry of Economy, Trade, and Industry to the Ministry of the Environment and other government agencies and local governments, but there is a weak effect on domestic market stimulation. On the other hand, PV cell manufacturers in Japan keep investing in facilities to increase production capacity, and new manufacturing entrants are expanding production, along with progress in new expansion plans.In terms of application fi elds, consumer usage was 0.4MW which was about fl at YoY. The power sector grew past 1,000 MW to 1,119.0 MW, an increase of 23.1 MW YoY. The power sectors share of total shipments has risen to nearly 100%, as Japans PV cell supply structure is being driven by the power sector. Shipments for research use and other fi elds (including captive power generation) were only 1.1 MW.

In terms of materials, as shown in Table 3, polycrystalline-Si type grew 22.7% YoY to 632.9 MW, growing to 600 MW levels. Single- crystal Si type saw a decline for the second consecutive year since FY 2007, but once again turned to positive growth increasing by 17.1% to 363.1 MW. The single-crystal Si type introduced in FY 1999 was a-Si/ single crystal Si, with high energy conversion effi ciency, a new type of single crystal Si has become a focus in PV cells and production volume of this type is continuously increasing. On the other hand, the a-Si type saw repeated slight increases and decreases until FY 2000, but full-fl edged adoption also started in the sector for power generation use, and the improvement of production capacity is underway, expanding favorably. In FY 2008, the shipment volume was 124.5 MW, growing 45.5% YoY, reaching the immediate target of 100 MW for the fi rst time, regaining its former growth. Harsh competition is unfolding between a-Si type and CdTe type PV cells in overseas power generation markets. Judging from the current production capacity and

future expansion plans, Crystal Si type holds an absolute advantage for its supply system. However, with strong demand from U.S. and European mega solar power generation systems, efforts aiming towards cost cutting and improvement in energy conversion effi ciency are continuing. In addition, production by new entrants on a small scale has just started for CIS type or CIGS type PV cells, but full-scale production will start in FY 2009.

In terms of domestic and external demand areas, as shown in Table 4, domestic shipments grew 12.8% YoY to 236.8 MW, while shipments overseas grew 25.9% to 883.7 MW, on the verge of reaching 900 MW. Domestic shipments shrunk from 23.0% of overall shipments, down to 22.1%, while shipments overseas rose from 77.0% to 78.9%. Exports to the U.S. and Europe began in 2001, and are increasingly full scale each year, in an environment of very quick demand growth in European markets, mainly Germany and Spain, with dramatic changes since 2003. Shipments overseas to the U.S. were 166.5 MW, Europe was 620.2 MW, and others were 97.1 MW, as Europe surpassed 600 MW. Due to introduction and expansion of PV generation systems on a global scale, the PV cell business in Japan is not only focusing on Japan, as it strengthens its expansion in the global market focused on Europe and the U.S.

6.2 PV Power Generation Industry Size: Actual, Estimates and Projections

Looking at the size of the solar power generation industry until today, astounding growth continued till FY 2005 due to implementation of various introductory support projects and introductory environmental improvement projects for new energy by the Japanese government. But the domestic market lost its vitality in FY 2006 with a decrease of 1.48%, applying a big brake to the growth seen until then. There was large growth in exports mainly to Europe in FY 2007 and FY 2008, with the size of the PV power generation industry expanding to 430.1 billion yen in FY 2008. In FY 2009, due to the revival of subsidies to residential solar power systems and launching of the new surplus power purchase system, the domestic market was revitalized and as the overseas market is also favorable, an increase of 48.1% to 637.0 billion yen is estimated. In addition, while the demand for solar power generation systems is projected to continue expanding in domestic and overseas markets in FY 2010, as the prices are expected to decline, the size of the PV industry in FY 2010 is projected to increase by 9.8% to 699.2 billion yen.

7. TRENDS OF LASER PROCESSING FIELD7.1 GENERALLooking at the trend in the laser processing fi eld, due to the global recession triggered in the U.S. in the late 2008, it reversed to a big decline in FY 2008 and in addition its effects are estimated to have grown, with a large decline estimated for the second consecutive year in FY 2009. On the other hand, signs of economic recovery can be seen in the second half of FY 2009, in the semiconductor and LCD industries, and is projected to increase in FY 2010.In terms of shares of laser processing equipment fi eld according to the estimated value in FY 2009, there were only minor changes up to FY 2008, but while the proportion of laser equipment for medical use is still small, it has increased nearly 1.6 times from 2.7% in FY 2008 to 4.7%. This seems to be because compared to the large decline in the volume of production of laser application equipments due to the effects of recession, that effect had less impact on laser equipment for medical

13



uses. As a result, the share of each sector is: excimer laser applications 52.8%, carbon dioxide laser 22.5%, and solid-state laser 19.1%. In addition, the difference between the shares of carbon dioxide laser and solid-state laser was nearly 1.7 times in FY 2008, but in FY 2009 the difference is negligible.

7.2 APPLIED LASER PRODUCTION EQUIPMENTThe production of carbon dioxide laser equipment in FY 2008 decreased by 13.0% Year-on-Year (YoY), and plunged 49.0% in FY 2009. This decline is thought to be a result of the protracted economic slump and adverse conditions created by the strong yen in the electrical equipment, automotive, and industrial equipment sectors. On the other hand, the exports to China were favorable, and as economic recovery can be seen in FPD and semiconductor related fi elds, in FY 2010 the growth rate is projected to be 36.7%.Solid state equipment laser production decreased by 6.6% in FY2008, and a large 17.3% decline is also projected in FY 2009. However, that reduction is less than for carbon dioxide lasers and as a result, while the value of carbon dioxide laser production was nearly double that of solid state in FY 2007, they were almost the same in FY 2009. Responses project a large growth of 40.8% in FY 2010. This projection is due to the continuing capital investments in rechargeable batteries and solar cells which are green products, and the expected capital investments in the semiconductor industry and LCD industry which have recovered in the second half of FY 2009.The value of production of excimer laser application equipment had steadily increased till FY 2007, but greatly decreased in FY 2008 and FY 2009. Although it is expected to increase in FY2010, its projected growth rate is only 3.2%, rather small compared to production of carbon dioxide laser or solid state laser application equipment.Semiconductor laser direct processing equipment declined a large 95.6% YoY in FY 2008. In FY 2009, as a result of recovery of tailored

blanking welding machines for sheet metal in automotive uses, an increase of 491.8% was seen, but it is still about 74% below its FY 2007 level. In FY 2010, growth of 37.9% is projected, but it would still be about 64% below its FY 2007 level. As long as the automotive industry does not fully recover, recovery to its FY 2007 levels is diffi cult.Fiber laser application equipment has seen a 25.3% increase YoY in production in FY 2008. It is notable that this grew while production of most laser application equipment declined. In FY 2009 it declined 2.4%. However, this was a small decline compared to production of other laser application equipment, and the FY 2010 projection is 18.2% growth. In the future, with the introduction of applications such as laser markers and welding large rechargeable battery containers for automobiles, rapid growth is expected in the value of production of fi ber laser application equipment.

7.3 Medical Laser EquipmentThe production value of laser equipment for medical uses has less annual variation than laser application equipment for production uses. Dental laser equipment comprises over 50% of all medical lasers, and was thought to face extremely harsh market conditions, but in fact it increased in FY 2008. Also, expansion was seen in FY 2008 for eye laser equipment and laser equipment for surgical uses. In FY 2009, due to effects of the economic recession, there was a slight decline of 9.4%, but this is a smaller percent than for laser applications in production equipment, suggesting that it is an area less affected by the economic downturn. On the other hand, the medical use laser fi eld faces special circumstances in which approval is required from the country, and there is low probability of development of new laser equipment for medical uses requiring clinical trials in the future, thus it is diffi cult to predict large growth.

Table 2 Shipment of PV cells by use in FY2006 to FY2008

usageFY2006 FY2007 FY2008 growth

amount(MW)

growthrate(%)

shipment(MW)

share(%)

shipment(MW)

share(%)

shipment(MW)

share(%)

consumer 0.3 0.0 0.3 0.0 0.4 0.0 0.1 47.7power

generation 870.1 99.8 909.2 99.7 1,119.0 99.9 209.8 23.1

for research use and other 1.2 0.1 2.1 0.2 1.1 0.1 -1.0 -48.6

Total 871.6 100.0 911.6 100.0 1,120.5 100.0 208.9 22.9

Table 3 Shipment of PV cells by material type in FY2006 to FY2008


amount(MW)

growsrate(%)

shipment(MW)

share(%)

shipment(MW)

share(%)

shipment(MW)

share(%)

Single- crystal Si 318.3 36.5 310.0 34.0 363.1 32.4 53.1 17.1

polycrystalline-Si 502.8 57.7 516.0 56.6 632.9 56.5 116.9 22.7

a-Si and others 50.5 5.8 85.6 9.4 124.5 11.1 39.0 45.5Total 871.6 100.0 911.6 100.0 1,120.5 100.0 209.0 22.9

Table 4 Shipment of PV cells by destination in FY2006 to FY2008


amount(MW)

growsrate(%)

shipment(MW)

share(%)

shipment(MW)

share(%)

shipment(MW)

share(%)

For domestic 268.2 30.8 209.9 23.0 236.8 21.1 26.9 12.8For export 603.5 69.2 701.7 77.0 883.7 78.9 182.0 25.9

Total 871.6 100.0 911.6 100.0 1,120.5 100.0 209.0 22.9


7.4 LASER OSCILLATORSThe basic trend in carbon dioxide laser oscillators is similar to that in carbon dioxide laser application equipment for production uses. The application of solid state laser oscillators has greatly expanded, ranging from micromachining to welding and cutting, due to shorter wavelengths by wavelength conversion, and due to high effi ciency and high output power by LD excitation in recent years. YAG and YVO4 have larger demand. Capital investment in the semiconductor and LCD markets for excimer laser oscillators has cooled off, and in FY 2008 it is lower than the estimates in the previous report. In addition, due to the delay in economic recovery, it is much lower in FY 2009 than in the previous reports projection. However, starting in the second half of FY 2009, signs of economic recovery were seen and it is projected to rebound to 15.4% growth in FY 2010. Fiber laser oscillators grew 63.1% YoY in FY 2009. While reduction in production can be seen across the board in the other laser oscillators due to the effects of the economic recession, it is exhibiting very large growth similar to applied production equipment. In FY 2010, growth of 105.7% is projected and it is expected to grow even further in the future. Overseas manufacture has comprised more than 95% of fi ber lasers until now, but in recent years Japanese manufacturers have achieved better quality and Japanese products are also being used. Therefore, the domestic production value of fi ber lasers is expected to steadily increase in the future.

8. Sensing/Measuring FieldThe subjects surveyed in this fi eld are optical measuring equipment and optical sensing equipment. Optical measuring equipment measures the basic properties of light, such as light energy, frequency, polarization, intensity distribution, periodic waveform and propagation characteristics, and products related to light sources for measurement. Optical sensing instruments are all sensors and sensing equipment that make use of some properties of light, such as intensity, phase, polarization, wavelength, and frequency. These subjects cover a wide range and are sensitive to technological advancement. To ensure consistency over successive surveys products are classifi ed according to usage, operating principle, production technology, etc., and as a result, committee members with specialized knowledge in various fi elds spent a lot of time and effort on long discussions, etc. to decide survey items and to select companies.Optical measuring equipment, using wavelengths in the region from visible light to near-infrared, such as spectrum analyzers, Optical Time Domain Refl ectometers (OTDRs), power meters, waveform measuring equipment and optical fi ber transmission characteristics measuring equipment etc. including all equipment which essentially measure various characteristics of light, with large industrial size applications mainly using these for installation and maintenance of optical communications network systems. Consequently, the production value of such equipment is closely related to the expansion of optical communication networks. In particular, certain demand is expected due to the spread of optical access systems along with development in internet, telephone, and digital broadcast networks. Also, it seems new optical measuring devices will be necessary in development of optical devices using silicon photonics. Even in fi elds other than optical communication and optical electronics, certain demand is expected in the future in fi elds such as strain measurement equipment for large structures, environment and medical fi elds, etc. In FY 2008, there was a large 21.7% decrease to 8,316 million yen in results. FY 2009 is estimated to be down 19.1%, and 2010 is projected to be up 14.6%. It is expected that recovery will take time.

Optical sensing equipment indicates all sensors and equipment which use the various properties of light in some form. Although the scale of production of individual products is certainly not large, there are various types of optical sensing instruments which meet a wide range of needs of R&D and production units, consumer uses, etc. Consequently, production capital investment strongly infl uences the demand for photoelectric switches, human body sensors, radiation thermometers, infrared cameras, rotary encoders, linear scales, length sensors, sensors for electric current/ voltage/ magnetic fi eld/ electric fi eld, sensors for vibration/ pressure/ acoustics, infrared cameras, laser microscopes, surface inspection equipment, image sensing equipment, speed sensors, color sensors, etc. FY2008 results declined 17.1% to 192,005 million yen. It seems this was because of the reluctance in making large capital investments in factories and buildings etc. FY2009 is estimated to have declined 10.1%, and FY2010 is projected to grow 10.4%. Demand is expected for sensing devices in safety, security, and environmental fi elds. It is thought that production of mono-functional sensor type parts will move overseas, but it is hoped that domestic production of integral multi-functional value added sensing devices will increase.Measuring and sensing instruments account for approximately 3.0% of the domestic optoelectronic industry, amounting to 200,321 million yen. However, these instruments are the basis for all types of industrial machinery and also essential for development of new production equipment, investments in new production facilities and infrastructure development like optical communication networks. Once an investment is made, in case of recession there is a tendency to use them without renewal for quite some time. In this fi scal year the results for laser microscopes were up 2.3%, in FY 2009 is estimated to be up 25.2%, and it is projected to grow by 9.2% in FY 2010. Based on this situation, laser microscope was picked as a noteworthy future trend. It is thought that new functional applications will progress in the fi elds of life sciences and manufacturing industry, and these high value-added new sensing devices will drive demand.Continuing from last fi scal year, this fi scal year also had investigation and review of items for improving survey accuracy, and of items covered by surveys. First, the defi nition, scope, and precaution notes of each questionnaire item were revised to be more clear, specifi c, and distinct from other items. Also, the surveyed items with low response rates were reviewed. The committee individually examined whether the corresponding products were manufactured, and the survey targets were selected/discarded. Categories which seemed diffi cult for respondents to decide on, and items with little response variety, were consolidated or rearranged. There are problems such as obtaining answers from several companies thought to have large market shares, and isolating the amount of domestic production due to shifting production locations overseas.Items for which the situation is understood by the committee are being modifi ed to improve accuracy, and depending on the items, information is exchanged with external survey agencies, and compared with other statistical data. Efforts are thus being made to obtain more accurate survey results.

9. Trends of Resources for Optoelectronics Industry9.1 IntroductionAlong with the survey on the domestic production, the number of full-time employees and the number of researchers engaged in R&D and the amount of investment in R&D are surveyed. As in the previous fi scal year, a quantitative questionnaire survey to obtain the fi gures for estimates for FY 2009 was conducted. Also, a quantitative questionnaire

15



survey was performed to determine whether there was an increase, decrease, or stayed the same compared to the previous year for the estimates for FY 2009 and prospects for FY 2010. The following is the results from 68 companies that have responded to all the questionnaire items.

9.2 Industrial Resources of FY 2009 (Estimate)With regard to human resources, the median number of full-time employees at the 68 companies was from 100 to 149, with 20 to 39 researchers. Comparing among the same cumulative number of companies, it is thought that about 1/5 to 1/3 of full-time employees are R&D workers.Looking at funding, the median amount invested by 68 responding companies in research and development was 100 to under 200 million yen, with domestic production of 5 to under 10 billion yen. Comparing among the same cumulative number of companies, it is thought that about 1/30 to 1/10 of domestic production value is invested in R&D.

9.3 Increase/Decrease from the Previous Year (Estimate for FY 2009, Prospect for FY 2010)

(1) Number of full-time employees12 of the companies responded that the number of fulltime employees increased in FY 2009 compared to the previous fi scal year (2008), 49 responded the same, and 7 reported a decrease. 10 companies intend to increase personnel in FY 2010 from this year (2009), 34 maintaining the same level, and 24 companies intend to decrease.The tendency of change of the top three responses is (FY 2009 FY 2010):1) Same Same (28 companies)2) Same Decrease (14 companies)3) Same Increase (7 companies)

(2) Number of researchers10 of the companies responded that the number of researchers increased in FY 2009 compared to the previous fi scal year (2008), 51 responded the same, and 7 reported a decrease. 10 companies intend to increase researchers in FY 2010 from this year (2009), 43 maintaining the same level, and 15 companies intend to decrease.The tendency of change of the top three responses is (FY 2009 FY 2010):1) Same Same (38 companies)2) Same Decrease (7 companies)3) Same Increase (6 companies)

(3) Amount of R&D investment13 of the companies responded that they increase investment in FY 2009 compared to the previous fi scal year (2008), 44 responded the same, and 11 reported a decrease. 8 companies intend to increase R&D investment in FY 2010 from this year (2009), 29 maintaining the same level, and 31 companies intend to decrease.The tendency of change of the top three responses is (FY 2009 FY 2010):1) Same Same (24 companies)2) Same Decrease (16companies)3) Decrease Decrease (8 companies)

(4) Domestic production (Reference)31 of the companies responded that domestic production increased in FY 2009 compared to the previous fi scal year (2008), 25 responded

the same, and 12 reported a decrease. 12 companies expect production to increase in FY 2010 from this year (2009), 11 maintaining the same level, and 45 companies expect it to decrease.The tendency of change of the top three responses is (FY 2009 FY 2010):1) Increase Decrease (20 companies)2) Same Decrease (16 companies)3) Decrease Decrease Same (9 companies)

10. International Trends Observed at the Meeting of IOA10.1 ntroductionThe International Optoelectronics Association is comprised of 12 organizations in the world. It held its 14th annual meeting in October 2009 in Gwangju, South Korea. All groups acknowledged optical technology as an effective trump card in terms of environmental response, and this observation has been coming more into focus since the previous fi scal year. The materials published by each group mentioned international trends of the optoelectronic industry, with the focus being on the optoelectronic industry as a whole, displays and high luminance LED.Also, the defi nition of categories in optoelectronics industry varies for each organization, and a comparison in a strict sense with OITDA data is not possible.

10.2 Overall Optical Industry Trends10.2.1 Global Optical Industry (from OIDA and PIDA)OIDA (USA) does not do a trends survey in its country, but it gathers various reports and announces global optoelectronics industry trends including a projection out to 10 years. The announcements in this IOA meeting were focused on optical components. Amongst these, the fl at panel display, that forms the volume market segment in terms of money, is expanding at 3.9% per year. On the other hand, solid-state illumination, that forms a small portion of the market in monetary terms, has the highest annual growth rate of 38%. Environmentally friendly optical components typifi ed by solid-state illumination and solar cells comprised 13.3% of all optical products in 2008, and are expected to comprise 54% of the market share in 2020. Amongst these, solar cells are expected to grow at 9% per year, and high luminance LED at 19.5% per year.Each year, PIDA (Taiwan) also makes fi ve year trends projection concerning the global optoelectronics industry, including results. Its projection for the global optoelectronic industry, market size in 2011 is $390 billion, and $168.8 billion for fl at panel displays.

10.2.2 Optoelectronic industry in each countryPIDA forecasted the production of Taiwans optoelectronic industry to drop to 52.2 billion Taiwan dollars in 2009, and a recovery to 73 billion Taiwanese dollars is expected in 2011. The Taiwan optoelectronic industry production bottomed out in the 1st quarter of 2009 (less than half of 4th quarter 2007), and started showing clear signs of recovery in results from the 2nd quarter onwards. Viewed by product, TFT-LCD panels are the highest contributor in production value. However, these results are characterized by variety, with solar cells, digital cameras, optical disks, LED related, etc.According to the forecast by EPIC (EU), the European optoelectronic industry size was 56.5 billion euro in 2007, and was expected to decrease to 52 billion euro in 2008 due to the recession. As for actual results of each European country, Opterch-Net (Germany) announced 16.5 billion euro in 2007 for the German optoelectronic industry size. Moreover,


Swisslaser.net (Switzerland) announced Switzerlands optoelectronic industrys domestic production value in 2008 to be 3 billion Swiss francs, of which 45% was from laser materials processing. The direction for growth in laser processing lies in fi ber lasers and high output semiconductor lasers.

10.3 Trends by Product Sector10.3.1 Global Solid-State Lighting (High Brightness LED) Market Trends

(from OIDA, EPIC, PIDA)OIDA projects that solid-state lighting will comprise 43% of the illumination market in 2020, and within solid-state lighting, OLED will grow to 12% by 2020. It also projects that the high brightness LED market will exceed $18 billion in 2020, and is projected to comprise 88% of the market with its 3 applications: illumination applications which are projected to exceed 7 billion dollars, automobiles, and mobiles.PIDA emphasized price reductions for white LED as major precondition for its entry into illumination applications, and the importance of its use in large quantities for liquid crystal backlight applications. The liquid crystal, which is a main component of note-type PCs, has shown a remarkable market penetration, and in the high brightness LED application-specifi c market, it is expected to expand from 2% in FY 2008 to 37% in FY 2013. Moreover, the market penetration of LED into the common illumination market, excluding the liquid crystal backlight, is expected to be 11% by 2012, and within that 33% in street light applications.

According to EPIC (EU), production of high brightness LED was $4.5 billion in 2007. It is estimated to fall by 20~25% in 2009, down to its level in 2004. As for the growth between 2009 ~ 2012, EPIC foresees a growing importance of liquid crystal backlight applications, which are expected to grow by 200% during this period.

10.3.2 Global Trends in Display Market (According to OIDA and PIDA)OIDA announced its projections for the global market for displays by display type until 2020. Overall display value is expected to reach $180 billion in 2019, twice the amount achieved in 2005. Viewed by type, there is no change in LCDs position as no. 1 (with more than 70% share), and it is expected to grow an average 2.5% per year in 2009~2020. Amongst displays, OLED is expected to have grow rapidly at 29.8% per year, to a nearly 10% market share. On the other hand, PDP is expected to be sluggish, with the projection of OLED surpassing PDP around 2016. CRT will decrease from 10% in 2005, to a 3% share in 2020. OITDA does not survey CRTs.PIDA projected the global market for FPD until the year 2011. It is projected see negative growth in 2009, and recover in 2010, reaching $168.8 billion in 2011. Moreover, PIDA forecasted the production value for public information displays ($14.8 billion: 2011), touch panels ($6 billion: 2012), 3D displays ($1.1 billion: 2011), electronic paper ($700 million: 2012), showing the Taiwanese industrys approach that encourages assertive development of new FPD applications.

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