Since 2005, the photonics industry has grown around twice as fast as the national and global gross domestic product by an average of 6 to 7%. Europe — in particular Germany — were also able to claim leading market positions in the core photonics areas. The research rate of almost 10% of revenue emphasizes the innovation potential of photonics. Photonics21 and VDMA have jointly introduced the current industry data at the start of the Laser World of Photonics 2017 trade fair in Munich, Germany.
Photonics grows faster than the GDP
According to Photonics21 and VDMA, the global photonics market grew from 228 billion euro (2005) to 350 billion euro (2011) and up to 447 billion euro in 2015. With a long-term growth rate averaging 7% annually, this is more than the growth of the worldwide gross domestic product by factor of almost two. In Europe, which has now moved up to second place in the world ranking list, photonics production has risen from 44.2 billion euro (2005) to 69.7 billion euro (2015). This means the European photonics industry has grown on average by 4.6% per year.
Photonics companies in Germany generated a total of 31 billion euro in 2016. Eleven billion euro of this alone is attributable to the core photonics areas for industrial equipment. Hence, starting with a volume of 17 billion euro in 2005, the German photonics industry was able to grow by an average of 5.6% per year. The photovoltaics industry has a particular influence on the development of photonics. After record investments initially made photovoltaics into the strongest growth driver of photovoltaics, subsequent massive international competition has led to subdued growth. Without this special effect, photonics would have even grown by an average of 6% in Europe and 6.3% in Germany respectively per year since 2005. The future perspectives of photonics are also very promising. By the year 2020, the VDMA study expects that German photonics production will increase by an average of 6% per year to a total of 39 billion euro.
Leading global market position in core areas
The German and European photonics industry was well able to maintain its leading market position in the core areas of production technology (laser material processing, lithography), image processing and measurement technology, as well as medical technology and life sciences. Both Europe as well as Germany have traditional global market shares in these areas that lie far above the average of the region: in production technology, this is 50% for Europe (around 30% of this is from Germany); in image processing and measurement technology, it is 35% (53% of this is from Germany); in medical technology and life sciences, the amount realized by Europe is 28% (58% of this is from Germany). The global market share of European companies in image processing and measurement technology has increased by 2% since 2011, and the VDMA study verifies for the German industry, that this area registered a full 9% growth in 2016 alone. The relevant drivers are the increased automation and flexibility of manufacturing as well as implementation of digitalization concepts in terms of Industry 4.0.
Research and export rates far above the manufacturing sector
With an average of almost 10% of revenue, the R&D rate of the photonics industry in Germany and Europe is clearly above that of the manufacturing sector with less than 5%. This emphasizes the importance of photonics for growth and innovation as a research-intensive industry sector. According to the VDMA study, the 2016 R&D rate in the communications technology area (15%) is particularly impressive, followed by the areas of production technology (especially lithography), image processing and measurement technology and displays (especially display materials). The European photonics industry also invested almost 10 billion euro in 2015 for direct investments in addition to research and development. The investment volume in new systems (Capex/Revenue) reached 4.6%, as reported by Photonics21 in its study.
The VDMA study emphasized that at a good 70%, the export rate of manufacturers of photonics products was far higher than the average of 48% achieved in the manufacturing sector. The export rate in the photonics sector even increased slightly since 2011, driven in particular by increased sales to Asia in the area of image processing and measurement technology.
China becomes global market leader, Europe takes second place
Shares in the global photonics market have shifted strongly in recent years. In 2015, China displaced the longstanding global market leader Japan with a 26.6% share of production. The countries were still tied in 2011 each with 21.3%. With a market share of 15.5%, Europe nudged out Japan (15.4%) to become the second-largest photonics producer. North America, which lost more than 4% of the global market share between 2005 and 2011, was able to increase its market share to 13.6% in recent years. The market share positions within Europe only shifted slightly. Germany kept its top position with around 41% share of production. It is followed by the Netherlands, which experienced positive development especially in the area of lithography, France, the UK and Italy.
Altogether, there are 301000 people who work directly in the European photonics industry, as substantiated by the study from Photonics21. If the photovoltaics segment is left out, 55000 new jobs have been created in Europe since 2005 despite the financial crisis in the interim. The study from Photonics21 expects continuous job growth up to 313000 employees by the year 2020. According to VDMA, a total of 124000 employees in Germany have been working with manufacturers of photonics products based on the year 2016. Job perspectives are also very good here. By the year 2020, the study expects that an additional 13500 employees will be working in the direct production of photonics products in Germany, which means the workforce will increase up to a total of 137500 employees.