SPIE INDUSTRY UPDATE THE DEFINITIVE GLOBAL BUSINESS RESOURCE FOR THE PHOTONICS INDUSTRY

SPIE INDUSTRY UPDATE THE DEFINITIVE GLOBAL BUSINESS RESOURCE FOR THE PHOTONICS INDUSTRY

SPIE Industry Update San Francisco, CA February 9, 2015 Stephen G. Anderson SPIE 3

In this talk National Photonics Initiative SPIE Industry Analysis 4

National Photonics Initiative Update

NPI Goals Raise awareness about photonics Drive funding and investment in photonics Increase collaboration among industry, government and academia

NPI Task Forces IT/Communications Healthcare Sensors for Energy and the Environment High Power Lasers Education and Workforce development 7

Recent Accomplishments Tom Kalil, OSTP NPI put photonics on the map Testimony before House Science, Space & Technology subcommittee OSTP Fast-Track Action Committee report on optics & photonics NSF dear colleague on optics and photonics Photonics language in three authorization bills Photonics manufacturing institute funding White House BRAIN Initiative collaboration

Integrated-Photonics IMI Strong response from photonics community to funding announcement DOD matching funds of $110 million Finalists announced 30 January. Team leads USC UCF Research Foundation for SUNY (SUNY Polytechnic Institute) Final funding announcement in June SPIE and the NPI will support proposal development and new IP-IMI launch President Obama announcing IP-IMI funding

Photonics Industry Neuroscience Group NPI leadership at the Administration s BRAIN Initiative Re-launch in Washington DC, November 2014 PING on agenda at White House BRAIN event Strong industry coalition in place -$30 million R&D commitment Invited to OSTP roundtable Presented at PCAST in November Invited to lead technology road mapping effort by OSTP

Next Steps Finalize NPI Task Force white papers and look for 2016 budget opportunities Healthcare Sensors for energy and environment High power lasers Education and Workforce development Increase visibility of photonics in DC area Policy maker engagement PR campaign, op-ed pieces and advertisements Washington DC fly-in March 17 & 18 Sign up on the NPI website at www.lightourfuture.org Engage state level government

SPIE Photonics Industry Analysis from components to consumers Photonics Enabled Services Photonics Enabled Products Market Global supply side analysis using company information 12

SPIE s Photonics Industry Analysis Building from Company Information Moving forward Photonics West Core Components 2012 (Global) $84 B 1008 firms 337,049 jobs Worldwide Core Components 2012 $156 B 2748 firms 698,266 jobs Worldwide Enabled Markets Biophotonics 13

Global Photonics Market (2012) Asian, US & EU data suggests that there were ~ 2.2 million jobs in photonics in 2013, worldwide Dip due to /$ ratio, solar & digital camera market contractions SPIE internal estimate ~$480 bn EU est. (SPECTARIS) ~ 380 bn ($430 bn) 14

Core photonic _components & materials Photonic products Photonicenabled products Materials, LEDs, lasers, detectors, image sensors, lenses, prisms, optical filters, gratings, solar cells, fiber LED lamps, cameras, displays, optical scanners, markers advanced manufacturing systems, inspection systems Increasing value Photonics West 2015 2015 SPIE Lighting, internet & datacenters, smart phones, (machine) vision systems, TVs, medical imaging systems 2/12/2015 15

The Photonics Marketplace Photonic products From core components to enabled services $$$$ Core photonic components $$$ $$ $ Photonic-enabled services Photonic-enabled products Photonic products Core photonic components and materials Internet, streaming video and audio (music), cloud storage services, e-commerce Lighting, internet & datacenters, smart phones, (machine) vision systems, TVs, medical imaging systems LED lamps, cameras, displays, optical scanners, markers advanced manufacturing systems, inspection systems LEDs, lasers, detectors, image sensors, lenses, prisms, optical filters, gratings, optical fiber Knowledge generation 16

Building from Company Information Entities active in photonics 4962 Exhibited at one or more of 30+ optics & photonics events worldwide in 2012 (de-duped) Make & ship photonic materials and components? 2748 Excluded entities Educational institutions Government labs Publishers and media outlets Consultants Associations, societies, non-profits Distributors and reps Total sales & jobs? Photonics data review Dun & Bradstreet provides company sales & employee data. For various reasons information is not available for all companies especially outside the USA. Firms without D&B data are assessed using public information combined with regional statistical benchmarks derived during the D&B analysis. Company data is imported into the SPIE database for analysis and review SPIE s Data Analysis Team Out of range data reviewed in-depth Company revenues and employment prorated based on estimates of actual photonics-related sales ( Photonics Factor ) Companies with sales < $10 million assumed to be 100% photonics SPIE SPIE s global estimate of core photonics components industry 17

Core photonic _components & materials Photonicenabled products $156 B Revenues 2750 Companies Materials, LEDs, lasers, detectors, image sensors, lenses, prisms, optical filters, gratings, solar cells, fiber 700,000 Jobs 18

The Photonics Marketplace Photonic products From components to enabled services Not to scale $$$$ Core photonic components $$$ Core components $156 billion $$ $ Photonic-enabled services Photonic-enabled products Photonic products Core photonic components and materials Internet, streaming video and audio (music), cloud storage services Lighting, internet & datacenters, smart phones, (machine) vision systems, TVs, medical imaging systems LED lamps, cameras, displays, optical scanners, markers advanced manufacturing systems, inspection systems LEDs, lasers, detectors, image sensors, lenses, prisms, optical filters, gratings, optical fiber Knowledge generation 19

1600 1400 Global Core Photonics Components Suppliers Grouped by Size >75% of photonics components firms are <$10 million 1200 Number of Companies 1000 800 600 400 SPIE Internal data 200 0 < $1M $1M - $10M $11M - $50M $51M - $500M $500M - $1B > $1B Company size 20

Global Core Photonics Components Suppliers Grouped by Size with Sales 1600 60% Number of Companies 1400 1200 1000 800 600 2132 companies with photonics revenues < $10 M produce ~4% of total sales 69 companies with photonics revenues > $500 M produce >72% of total sales 50% 40% 30% 20% % of Total Global Revenues 400 200 0 < $1M $1M - $10M $11M - $50M $51M - $500M $500M - $1B > $1B Company size 10% 0% SPIE Internal data 21

Global Core Photonics Components Suppliers Grouped by Size with Jobs 1600 60% 1400 50% Number of Companies 1200 1000 800 600 40% 30% 20% % of Total Employees 400 200 0 < $1M $1M - $10M $11M-$50M $51M-$500M $501-$1B >$1B Company size 10% 0% SPIE Internal data <10% of companies employ ~77% of the workforce 22

Global Core Photonics Components Suppliers Grouped by Sales/ Employee 1400 Average = $223,000 1200 1000 Number of Companies 800 600 SPIE Internal data 400 200 0 < $50K $50K - $100K $101K - $250K $251K - $500K $501K - $1M > $1M Sales / employee 23

Global Core Photonics Components Suppliers Grouped by Sales/Employee with Rev. Distribution 1400 $223,000 50% Number of Companies 1200 1000 800 600 About 80% of all firms have sales/employee below $250K (31% of total sales) 45% 40% <5% companies have sales/employee of more than 35% $500K. (26% of total sales) 30% 25% 20% % of Total Revenue 400 200 0 < $50K $50K - $100K $101K - $250K $251K - $500K $501K - $1M > $1M Sales / employee ~21% of firms operate above avge profitability & produce 70% of all sales 24 15% 10% 5% 0% SPIE Internal data

Global Core Photonics Components Suppliers Age Distribution of Small Firms Age of Company (in Years) 50 or More Yrs 40-49 30-39 20-29 15-19 10-14 5-10 SPIE Internal data 3-5 Less Than 3 Yrs - 50 100 150 200 250 300 350 400 Companies with < $10 M in Revenue in 2012 60% of 1756 smaller companies are older than 10 years 25

The Geography of Photonics Components Production 2750 firms span more than 46 countries 26

The Geography of Photonics Components Production 2 Company count by country 2750 Firms Revenues by country $156 B USA Germany Japan China France UK Taiwan Canada Switzerland Other SPIE Internal data Japan USA Germany China Taiwan France UK Italy Switzerland Other 27

Enabled Market Segments Communication, Information Processing & Storage Consumer & Entertainment Defense, Security, Law Enforcement Biomedical, Medical Imaging, Health Care (Biophotonics) CORE Optics and Photonics Suppliers Lighting & Displays Not to scale Solar PV & Alternative Energy Semiconductor Processing/ Manufacturing Sensing, Monitoring, Measurement & Control Photonics West 2015 2015 SPIE 2/12/2015 28

Biophotonics-Enabled Marketplace Sources: Multiple including UC Davis, GIA, and SPIE Internal $91 B Revenues 269 Companies 281,000 Jobs Communication, Information Processing & Storage Biophotonics Enabled Market Solar PV & Alternative Energy Consumer & Entertainment CORE Optics and Photonics Suppliers Semiconductor Processing/ Manufacturing Defense, Security, Law Enforcement Lighting & Displays Sensing, Monitoring, Measurement & Control Photonics West 2015 2015 SPIE 2/12/2015 29

Sources: Multiple including UC Davis, GIA, and SPIE Internal Global Biophotonics Enabled Market Suppliers Grouped by Size Number of Companies 80 70 60 50 40 30 20 10 - < $1M $1M - $10M $11M - $50M $51M - $500M $501M - $1B > $1B Company size Average sales/employee (global) $310,000 30

The Geography of Biophotonics Company count by country 269 Firms Revenues by country $91 B USA Japan United Kingdom Germany Canada Netherlands Israel Switzerland France Italy Ireland ROW (15 countries) USA Japan Germany Netherlands Switzerland Ireland United Kingdom France Canada Italy Israel ROW (15 countries) 31