The exponential growth of China’s photonics industry has been mapped out in a new study published by the photonics technology platform, Photonics21, showing how the country’s global market share has increased from 10% to more than 30% over the past two decades.
The study, entitled Political Steering Processes in China in Core Segments of the Photonics Industry, reveals how China’s political system has steered and funded the industry – subsequently helping it to dwarf the U.S and Europe, each of which have 15% respective shares.
Despite estimates that China’s GDP growth will decrease from ~7% to a steadier ~4% over the next few years, the country’s photonics production is expected to reach €315 billion by 2025.
Realising the need to invest in photonics
With China exceeding other nations, there have been calls from European experts for countries to increase their funding in optics and photonics technologies.
Dr. Lutz Aschke, Photonics21 President, said: “Policymakers must take heed of China’s market and technological leadership. China is penetrating sectors traditionally dominated by Europe, such as laser manufacturing, sensing, optical components and systems. Basic research and enabler processes need to be strengthened and matched by investments in future markets such as Artificial Intelligence (AI). We have to take timely measures.
Aschke added: “Without significant investment, Europe faces the threat of losing ground in this crucial technology sector, which could undermine its economic competitiveness and technological independence. To maintain and defend this position, it is essential for national and European policymakers to prioritise this strategic sector. We need to implement a European strategy on critical materials and components for key industries and technologies to secure a resilient photonics supply chain in Europe. Specifically, research and development activities, as well as the production of photonic components in Europe that are critical to the industry supply chain, should be strengthened.”
Backing China’s regional clusters
The need to keep pace and subsequently close the gap with China has been deemed an urgent issue by those assessing the situation, with information showing that China’s performance has been driven by regional strategies and market demands.
The study by Photonics21 shows that China’s financial backbone consists of local governments, investment institutions, and enterprises. Together, they are projected to contribute around €5 billion for photonics innovations over the next few years, with 70%-80% of funds deriving from investment institutions and enterprises.
Funding the future of photonic development
The research also shows a significant part of China’s success lies in a series of proactive industrial development plans, including Made in China 2025, the 14th Five-Year Plan and Beyond, and the National Science and Technology Plan.
2024 also marked the start of Phase III of the ‘National Integrated Circuit Industry Investment Fund’ (ICF), which has a budget of €39 billion. Importantly, integrated photonics is one of the technologies funded in the third phase of the ICF.
Daniela Bartscher-Herold, Partner at EAC Munich and co-author of the EAC-study, concluded: “Our latest market research reveals that China’s strategic investments leveraged through its regional cluster funds alongside its national funds specifically for integrated photonics have helped the region advance as a critical technology leader. Rather than be left irreversibly behind, it would be advisable for Europe to significantly increase its funding to close this gap in critical technologies. Without substantial investment, the EU risks losing its competitive edge and relinquishing its leadership in this key industry.”
Lead image: VILLO
