Photonics growing through diversification into life sciences, defence and security

Rebounding telecom crash

The Canadian photonics sector appears to be making solid gains following the destructive shockwaves created by the telecom meltdown. Solid growth trends — particularly in the life sciences and defence and security sectors — have elevated hopes that the pervasive impact of photonics may translate into diversified strength and increased sales.

That diversification was strongly evident at the recent photonics gathering in Ottawa — a triple offering by Photonics North, the 3rd Annual Symposium on Photonics Commercialization and the International Conference on Application of Photonic Technology. Canada may be a minor player in the global photonics sector, but areas of niche strength offer significant potential for research capacity and industrial application.

Over the past several years, photonics has advanced as a platform technology and is now ideally positioned for lower-cost applications. As a result, many new applications are responding to market demand. But the academic community has yet to fully appreciate the influence of the market in determining which applications can be transferred to industry.

"Canada has an excellent track record in biomedical. There's a lot of potential there and Canada is next door to the largest consumer market," says Dr Eugene Arthurs, executive director of SPIE, a 52-year-old not-for-profit education organization focused on optics and photonics. "But most of the expertise resides in the academic community and there's a lack of real market influence. I hear a lot about ways to transfer technology but has anybody stood back and asked whether anybody wants the technology?"

For Canada to play in the rapidly emerging field of life sciences, it must join niche strengths with areas of competitive advantage. That entails addressing the entire cost structure underpinning medicine.

"I've advocated photonics specialization that is aimed particularly at ways of saving money — cost reduction," says Arthurs. "If you haven't got competitive advantage, don't compete. That has to be applied to the commercialization of research."

While a wide array of advances in biophotonics are addressing the exploding life sciences market, the prospects of telecom are also rebounding as a flood of new bandwidth-heavy applications gain momentum.

One technological breakthrough that can provide competitive advantage in the telecom sphere is the photonic integrated circuit (PIC) which marries the world of electronics (digital) with optics (analog). Sunnyvale CA-based Infinera Corp has developed large-scale PICs, allowing for dozens of distinct optical components to be integrated on to a single device.

Dr David Welch, Infinera's founder and chief marketing and strategy officer, spoke at the 3rd Annual Executive Symposium of Photonics Commercialization. He says the combination of market pull, photonics integration and enabling digital optical networks can create need and market opportunity by reducing the cost structure and enhancing product reliability.

"It's still all about the bits. It's not about wavelengths. They're only a tool to realize architectural bandwidth ... You need an inexpensive transfer from photons to electrons," says Welch. "PIC shipments are exploding and it's the same for LEDs and silicon. All of these improvements are due to market pull expressed in the increase in bandwidth demand."

The day after Welch spoke in Ottawa, Infinera made its debut on the NASDAQ stock exchange with an initial public offering that raised more than US$200 million.

national photonics study underway

For Canada's photonics capacity to be effectively exploited, there must be a better understanding of key research, industrial and educational strengths. The Canadian Photonics Consortium (CPC) is embarking on a major study of the Canadian photonics sector to assess the state of the industry which is currently comprised of approximately 300 firms for which photonics is a dominant or significant component of their business. It will build on a new report released by the Quebec Photonic Network (QPN) and utilize the methodology employed for a comprehensive study conducted by the UK Department of Trade and Industry (DTI).

The Quebec study shows that telecom — once the dominant area of photonics application and the primary driver of its growth — now represents 23% of employment, followed by defence and security (19%), life sciences (17%), manufacturing (14%) scientific and optical systems (14%), and space and aerospace (7%).

The Quebec photonics industry is comprised of 104 companies with total employment of nearly 5,000 and 2006 revenues estimated at $600 million. Two-thirds of firms are small (1-50 employees) and there are only three firms with more than 300 staff.

"Photonics has shrugged off the technology bust. It took a while for the sector to get its voice and morale back but the optical industry is now growing at 15-30% a year," says CPC executive director Mike Scott. "For the primary photonics industry, the study will look at people, sales, R&D and exports. We also need to understand the implications for education."

The national photonics study will utilize the new Quebec data and augment them with data from various sources including data provided by the Ontario Centres of Excellence. British Columbia data will be gathering with possible assistance from Western Economic Diversification Canada.

The cost of the $150,000 study will only partly be covered by government. Industry Canada has agreed to cover the costs of the resulting report's translation into French. In contrast, the UK study's $300,000 price tag was picked up by DTI.

ottawa rebounding

Scott says one indication of the resurgence of photonics is the state of the sector in Ottawa. Prior to the telecom meltdown, Ottawa was home to two optical giants — Nortel Networks Corp and JDS Uniphase. Nortel has largely withdrawn from the optical space while JDS has moved operations to California. But others firms have hung on and new ones are emerging.

"Ottawa's photonics industry is in moderately good health but we always hear about the failures," says Scott. "Look at Enablence. It recently raised a lot of money with its products for fibre-to-the home.

A developer of transceivers for optical modems, Enablence Technologies Inc recently boosted its total financing to $33 million with a $15-million private placement. It was founded in 2004 to commercialize Planar Lightwave Circuit technology for integrated optical components.

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