Technical Insight
Data storage keeps laser diode market buoyant
The laser diode market has undergone drastic changes in size and shape since the heady days of 2000, when telecom lasers were in high demand. Data storage is now the dominant application, as Jon Newey finds out when looking at the latest figures from Strategies Unlimited.
The market for laser diodes in 2002 presented a mixture of good and bad news, depending on the application. According to research from Strategies Unlimited, the overall market contracted by 16% in 2002 to $2.4 billion due to a steep drop in demand for telecommunications lasers. However, that figure masked impressive growth in the market for lasers for optical data storage. At the Lasers and Optoelectronics Marketplace Seminar in San Jose, CA, in January, Robert Steele, Strategies Unlimited s director of optoelectronics, revealed that revenue from lasers for optical storage grew by 82% to $1.4 billion in 2002. Optical data storage applications accounted for 58% of the total laser diode market, driven by consumer acceptance of the DVD format. This growth meant that sales of lasers for optical storage surpassed those of telecom lasers, and are forecast to maintain the leading position in 2003.
Other application sectors, which include pump lasers for diode-pumped solid-state lasers (DPSSLs), barcode scanners, laser pointers, and medical and printing applications, accounted for 14% of the market with revenues of $348 million in 2002. This was a decline of 8% compared with the 2001 figure, although the market for pump lasers in DPSSLs showed healthy growth.
With modest growth expected to return to the fiber-optic components market this year (Compound Semiconductor January/February 2003 p24), and the continued acceptance of DVD technologies, the overall laser diode market is predicted to grow by 17% in 2003 to $2.81 billion.
Telecommunications
The telecom laser market fell by 61% from $1.72 billion in 2001 to $665 million in 2002. In 2002, telecom lasers accounted for 28% of the total diode laser market, while in 2000, that figure was 83%. Transmission lasers fared slightly better than pump lasers for optical amplifiers in 2002. Revenue from transmission sources fell by 50% to $600 million, while pump source revenue fell by 87.5% to $65 million.
The differences in performance arise because optical amplifiers are deployed in long-haul systems, an area in which there was very little build activity in 2002. Transmission sources have benefited from demand in the more active short-haul area, and also from modifications to increase the capacity of existing links by adding channels.
The forecast for telecom lasers in 2003 is for 33% growth to $885 million, still below 1996 levels. Revenue from transmission sources will grow by 30% to $780 million, with pump laser revenue growing by 62% to $105 million.
A related area that is included in the "other" category is lasers for short-reach optical communications such as local-area networks (LANs). The market for LANs and storage-area networks (SANs) has not suffered as badly from the over-investment and high inventory levels that the telecom market is now paying for. However, capital spending among the corporations that use SANs and LANs has been put on hold due to falling corporate profits. The impact on the laser diode market has been a reduction in sales of transceivers that use 850 nm VCSELs and 1310 nm edge-emitting lasers. Revenues from such lasers fell by 35% to $79 million in 2002, and continued economic uncertainty means that the market is expected to remain flat in 2003.
Optical storage
Just as the CD-based optical storage market saturated and began to decline, along came DVD to lift volumes again. Total sales of lasers for optical storage applications (780 nm for CD and 650 nm for DVD) in 2002 were $1.42 billion, an increase in revenue of 82% on unit growth of 38%, compared with the 2001 figures. More modest growth is expected in 2003, with revenues forecast to reach $1.56 billion from 487 million unit shipments, although Steele suggests that this figure may have more to do with suppliers conservative estimates than with market realities.
Sales of DVD players for movies, DVD-based games units and also PCs with DVD drives snowballed in 2002, helped by falling prices and the increasing number of movies, games and software titles available in DVD format. Sales of 650 nm DVD lasers grew to 148 million units in 2002, bringing in revenue of $448 million. Nearly a third of these were monolithically integrated dual-wavelength (650 and 780 nm) lasers that were introduced in 2001 to enable DVD players to also read CDs. Prior to 2001, this need was met by two co-packaged discrete lasers.
The lack of a clear winner amongst the different standards for recordable DVDs has failed to dent enthusiasm for rewritable DVD drives. These use higher-power (30 mW) 650 nm lasers, of which 7.5 million were sold in 2002. Increasing numbers of PCs are being shipped with CD-RW drives for backing up data, storing digital images from cameras and writing music files. This pushed sales of 40 mW 780 nm lasers to 89 million units valued at $615 million in 2002.
Other applications
There is a large spread in the price per unit across the applications outside of telecom and data storage. High-power diode lasers used to pump DPSSLs make up the next most valuable category, and are also showing healthy growth. Unit sales of DPSSLs grew by 38% in 2002, helping the unit sales of pump lasers rise to 123,000. Total revenue increased by 19% to $119 million. Much of the growth came from an increase in US military spending, which will help pump laser revenues to grow to $135 million in 2003.
At the other end of the unit price range is the category of lasers for entertainment and display applications, which mostly comprises laser pointers. This is a relatively mature application, and most of the lasers are manufactured in Taiwan before being packaged in China. Although unit sales are expected to be flat in 2003 at 43 million, the unit price will decline. Total revenue will drop from $25.3 million in 2002 to $22.9 million in 2003, due to low-cost packaging methods for this relatively undemanding application.
Lasers for medical equipment sit between DPSSLs and laser pointers in the price per unit range. After suffering a two-year decline in sales, the forecast for 2003 is somewhat better. Unit shipments will reach 270,000 units valued at $53 million, still below the 364,000 units and $82 million in 2000.
Other application sectors, which include pump lasers for diode-pumped solid-state lasers (DPSSLs), barcode scanners, laser pointers, and medical and printing applications, accounted for 14% of the market with revenues of $348 million in 2002. This was a decline of 8% compared with the 2001 figure, although the market for pump lasers in DPSSLs showed healthy growth.
With modest growth expected to return to the fiber-optic components market this year (Compound Semiconductor January/February 2003 p24), and the continued acceptance of DVD technologies, the overall laser diode market is predicted to grow by 17% in 2003 to $2.81 billion.
Telecommunications
The telecom laser market fell by 61% from $1.72 billion in 2001 to $665 million in 2002. In 2002, telecom lasers accounted for 28% of the total diode laser market, while in 2000, that figure was 83%. Transmission lasers fared slightly better than pump lasers for optical amplifiers in 2002. Revenue from transmission sources fell by 50% to $600 million, while pump source revenue fell by 87.5% to $65 million.
The differences in performance arise because optical amplifiers are deployed in long-haul systems, an area in which there was very little build activity in 2002. Transmission sources have benefited from demand in the more active short-haul area, and also from modifications to increase the capacity of existing links by adding channels.
The forecast for telecom lasers in 2003 is for 33% growth to $885 million, still below 1996 levels. Revenue from transmission sources will grow by 30% to $780 million, with pump laser revenue growing by 62% to $105 million.
A related area that is included in the "other" category is lasers for short-reach optical communications such as local-area networks (LANs). The market for LANs and storage-area networks (SANs) has not suffered as badly from the over-investment and high inventory levels that the telecom market is now paying for. However, capital spending among the corporations that use SANs and LANs has been put on hold due to falling corporate profits. The impact on the laser diode market has been a reduction in sales of transceivers that use 850 nm VCSELs and 1310 nm edge-emitting lasers. Revenues from such lasers fell by 35% to $79 million in 2002, and continued economic uncertainty means that the market is expected to remain flat in 2003.
Optical storage
Just as the CD-based optical storage market saturated and began to decline, along came DVD to lift volumes again. Total sales of lasers for optical storage applications (780 nm for CD and 650 nm for DVD) in 2002 were $1.42 billion, an increase in revenue of 82% on unit growth of 38%, compared with the 2001 figures. More modest growth is expected in 2003, with revenues forecast to reach $1.56 billion from 487 million unit shipments, although Steele suggests that this figure may have more to do with suppliers conservative estimates than with market realities.
Sales of DVD players for movies, DVD-based games units and also PCs with DVD drives snowballed in 2002, helped by falling prices and the increasing number of movies, games and software titles available in DVD format. Sales of 650 nm DVD lasers grew to 148 million units in 2002, bringing in revenue of $448 million. Nearly a third of these were monolithically integrated dual-wavelength (650 and 780 nm) lasers that were introduced in 2001 to enable DVD players to also read CDs. Prior to 2001, this need was met by two co-packaged discrete lasers.
The lack of a clear winner amongst the different standards for recordable DVDs has failed to dent enthusiasm for rewritable DVD drives. These use higher-power (30 mW) 650 nm lasers, of which 7.5 million were sold in 2002. Increasing numbers of PCs are being shipped with CD-RW drives for backing up data, storing digital images from cameras and writing music files. This pushed sales of 40 mW 780 nm lasers to 89 million units valued at $615 million in 2002.
Other applications
There is a large spread in the price per unit across the applications outside of telecom and data storage. High-power diode lasers used to pump DPSSLs make up the next most valuable category, and are also showing healthy growth. Unit sales of DPSSLs grew by 38% in 2002, helping the unit sales of pump lasers rise to 123,000. Total revenue increased by 19% to $119 million. Much of the growth came from an increase in US military spending, which will help pump laser revenues to grow to $135 million in 2003.
At the other end of the unit price range is the category of lasers for entertainment and display applications, which mostly comprises laser pointers. This is a relatively mature application, and most of the lasers are manufactured in Taiwan before being packaged in China. Although unit sales are expected to be flat in 2003 at 43 million, the unit price will decline. Total revenue will drop from $25.3 million in 2002 to $22.9 million in 2003, due to low-cost packaging methods for this relatively undemanding application.
Lasers for medical equipment sit between DPSSLs and laser pointers in the price per unit range. After suffering a two-year decline in sales, the forecast for 2003 is somewhat better. Unit shipments will reach 270,000 units valued at $53 million, still below the 364,000 units and $82 million in 2000.
