The optoelectronic industry is one of Taiwan’s important technological industry development industries, and includes many daily visible technological products. For example, a smartphone with more than one hand includes LED flash lighting, solar chargers, display panels, and touch panels. Control panels, optical lenses, image sensors, surface-emitting lasers, infrared sensors, laser focus sensors, and other upstream optoelectronic related products, as well as LiDAR technology in self-driving cars, are all optoelectronic related products that are cutting-edge, key components that are indispensable in technology products.
When talking about Taiwan’s optoelectronics industry in the past, it used to have a promising market prospect. The two-trillion dual-star project, which was promoted by the government, included the semiconductor industry and the optoelectronics industry. However, the photovoltaic industry that most people recognize is still in the LCD panel industry, LED lighting industry, and PV solar photovoltaic industry. Despite the development and transformation of the industry, the market landscape has also changed due to competition, and Taiwan's optoelectronics industry is also facing key transformations.
The development of Taiwan's optoelectronic industry has taken into consideration the limitations of upstream critical materials and downstream markets and has gradually developed to provide components or modules. In the overall value chain, this is not a bad thing. Taiwan may lack the marketability to develop a single industry, but if it conforms to industry trends and develops core competitiveness, it can also play a key role in the industry.
Choose the right market and industry
In the past, Taiwan’s industrial learning mainly followed the United States, Japan, and Germany, and they often fell into a development strategy oriented by the thinking of a big country. It is the goal of all business operators to become bigger and stronger. However, in addition to the few companies with a scale of 100 billion yuan, for many domestic medium-sized companies, "precision" may be a better choice. Take Taiwan’s optoelectronics industry as an example. In the past, the development was based on the economic scale. At that time, there were five major panel manufacturers in the panel industry (AU Optronics Corporation, Chimei Innolux Corporation, Quanta Display Inc., Chunghwa Picture Tubes, Ltd., HannStar Display Corporation). After consolidation and competition with the market, only AUO and Innolux companies face competition from South Korea and China. The fierce competition is self-evident.
Commodity should not be Taiwan's battlefield
Also, take display technology as an example. Competition in TV panel production is bloody. Whether TFT/LCD or LED is the core technology, domestic manufacturers do not have sufficient competitiveness in the market to pursue volume/price competition. Perhaps manufacturers should think about it. Cultivate a market with high barriers to entry and high added value. The Optoelectronics Technology Industry Association put forward five aspects worthy of development (ABCDE): Automotive, Biomedical, Communication, Display, and Environment.
Current status of Taiwan's optoelectronic market and related application fields
- Automotive: Compared with other consumer products, the automotive industry has a more closed and conservative supply chain and therefore has a high barrier to entry. As countries have successively released timetables for banning the sale of traditional fuel vehicles, it is obvious that the development of the automotive market towards electrification has become a foregone conclusion. Major global automakers are also optimistic about the explosive growth of the electric vehicle market in the future and have announced that they will increase the proportion of electric vehicle sales. The launch of new electric vehicles includes end application products such as electric buses, electric vehicles, electric motorcycles, electric bicycles, and golf carts. Whether it is the optoelectronic industry, machinery industry, communications industry, etc., they should grasp this new wave of the industrial revolution.
- Biomedical: With the aging trend of the population, cancer and chronic diseases is increasing, and the demand for medical equipment is expected to continue to increase. The use of automated equipment and detection systems, cloud medical monitoring and detection products, and innovative medical products combined with 3D printing technology will increase. In addition, the recent development of the medical aesthetics market has also driven the demand for implantable medical materials. The medical equipment manufacturing industry covers a wide range of applications. It can be divided into medical testing and monitoring equipment (such as electronic blood pressure monitors, clinical thermometers, ear thermometers, air testing products, constant temperature products), and optical medical equipment (such as Optical lenses, contact lenses), medical consumables (such as catheters, test strips, syringes), special medical materials (precision infusion sets, pump infusion sets, thoracic aortic stents), dental, ophthalmology and orthopedic medical equipment, human implants (artificial bones, bone balls, bone plates, nails, screws, bone cement), sanitary products, fitness equipment, etc. Driven by the export of contact lenses, blood glucose meters and test strips, electric wheelchairs, and medical high-end catheters, the output value of medical materials has continued to grow.
- Take plastic processing and injection molding as an example. The same material can be made into water pipes or breathing tubes. The production cost is not much different, but the terminal value is tens of times different. This is the difference caused by production management and quality management. It has an absolute advantage over China.
- Communication: 2020 was the first year of Netcom's 10Gbps, wireless, optical fiber, cable TV network, and 5G network. In the next ten years, companies will gradually enter a period of digital transformation, that is, introducing AIoT (Smart Internet of Things), MEC, and advanced Netcom technologies to improve corporate efficiency and user experience. Taiwanese domestic manufacturers are mature in this part of the technology and even occupy the leading group. However, in terms of market layout, it is necessary to break away from the traditional ODM/OEM thinking, break away from the checks and balances of European, American, and Japanese system brands, and directly cooperate with telecom service providers in various regions to create higher added value. Since the start of the US-China trade war, regardless of whether the United States -China or China -American, two systems will be gradually formed globally, with a shrinking market and increasing costs. This is an opportunity for Taiwanese manufacturers. If the strategy is appropriate to occupy land companies in the European and American markets in a timely manner and to fill the vacancies of US companies in the third world market, the Sino-US trade war is an opportunity for many Taiwanese manufacturers, and facing it well will be a turning point.
The slow and steady growth of Taiwan's automotive LED output value has been affected by the maturation of Taiwan's light-emitting diode LED industry. In recent years, the decline in related industries has slowed down. Taiwan's light-emitting diode LED industry can be subdivided into four sub-categories/sub-sectors based on different attributes, namely: LED Chip, LED Package, LED Lighting, and Automotive LED.
In 2018, the annual output value of Taiwan’s automotive LED industry was NT$8.767 billion, accounting for 5.7% of the total. Compared with the annual output value of 2017 of 8.494 billion, the overall accounted for 5.1%. The annual growth rate is 3.2%. The estimated annual growth rate in 2020 was 5.3%.
Taiwan's panel output declines
The output value of Taiwan's panel industry is the highest overall. The industry is affected by maturation and global competition, making future development extremely challenging. In 2018, the annual output value of Taiwan’s panel industry was 187,702 million yuan, accounting for 62.6% of the total. Compared with the 2017 annual output value of 1,204,434 million yuan, when the overall proportion was 64.1%. The annual decline rate was 7.54%. It is estimated that the annual decline rate of the annual output value in 2020 was 2%.
Taiwan image sensor output value grows steadily
Taiwan's image sensor industry demand has become more and more diversified, and the output value of related industries has continued to grow in recent years. In 2018, the annual output value of Taiwan's image sensor industry was 17 billion 499 million yuan, accounting for 0.98% of the total, compared with the 2017 annual output value of 162.5 million yuan, the overall accounting for 0.85%, and the annual growth rate was 6.4%. The estimated annual growth rate in 2020 was 7%.
Taiwan's optical communications output value grows steadily
With the rapid development of 5G communications, Taiwan’s Optical Fiber Communication industry has increasingly strong demand, and its output value will continue to rise. In 2018, the annual output value of Taiwan’s optical communications industry was 115,549 million yuan, accounting for 6.65% of the total. Compared with the 2017 annual output value of 108.879 billion yuan, the overall proportion was 5.79%, and the annual growth rate was 6.08%. It is estimated that the annual output value in 2019 reached 118.96 billion yuan, accounting for 7.16% of the total, and the annual growth rate was 3%. By 2020, the annual output value reached 124.9 billion yuan, accounting for 7.67% of the total, and the annual growth rate was 5.0%.
Taiwan's laser application output value grows steadily
Since Taiwan is not the world's main production base for the Laser Application industry, its output value is not high. In 2018, the annual output value of Taiwan's laser application industry was 23.313 billion yuan, accounting for 1.34% of the total. Compared with the 2017 output value of 21.96 billion yuan, the overall proportion was 1.17%, and the annual growth rate was 6.16%. The estimated annual growth rate in 2020 was 8%.
Taiwan's precision optics output value will grow steadily after a slight decline
The global demand for precision optics is becoming more diversified, and Taiwan is the main production base. Therefore, the output value of Taiwan Precision Lens has also grown accordingly. In 2018, the annual output value of Taiwan's precision optics industry was 83.86 billion yuan, accounting for 4.83% of the total. Compared with the 2017 output value of 849 billion 67 million yuan, the overall proportion was 4.52%, and the annual decline rate was 1.3%. The estimated annual growth rate in 2020 was 8%.
The output value of biomedical optoelectronics grows steadily
In 2018, the output value of Taiwan Biomedical Optoelectronics was 59.3 billion, compared with 55.2 billion in 2017, an annual growth of 7.3%. The Bio Photonic industry includes three parts: photoelectric sensing, medical imaging, and photoelectric therapy. The output value in 2018 was 22.4 billion yuan, 12.7 billion yuan, and 24.2 billion yuan, respectively. The annual growth of optical therapy is the largest. The products include contact lenses and corneal plastics. The production value of contact lenses is growing rapidly. The demand for wearing contact lenses has shifted from the long-wear type in the past to the monthly or daily disposable type. The demand has greatly increased, thus driving the growth of the output value of contact lenses. The output value of contact lenses in treatment accounted for more than 90%, and the revenue growth of contact lenses in 2018 was as much as 17%. Next is photoelectric sensing. Its products include infrared thermometers, blood glucose meters, biochips, etc., and the output value dropped slightly by 2%. The main reason was that Taiwan's blood pressure machine manufacturer was acquired by foreign investors in March 2018. After the public issuance, the output value of Paleo's blood pressure machine has a pivotal position in Taiwan, so there was a slight decline in output value. The acquisition will have a significant impact on the revenue of photoelectric sensing in 2019; finally, medical imaging, which is divided into items maintained steady growth, with products including endoscopes, medical displays, X-ray images, ultrasound images, etc., which grew by 5% compared to 2017. Taiwan Biomedical Optoelectronics grew 0.46% in 2019 Q1 compared to the same period last year. Although photoelectric sensing declined by 14%, contact lenses in optical therapy grew by 12.3% compared to 2018 Q1. Overall, 2019 Q1 still saw slight growth. It is estimated that the output value of biomedical optoelectronics in 2019 will be 60.8 billion, and the overall revenue will grow slightly by 3%. The revenue of photoelectric sensing will decline by 6%. Contact lenses will continue to have outstanding performance, which is estimated to increase revenue by 14%.
Observing the changes in Taiwan's optoelectronic industry as a whole and its sub-industry in 2018, it is showing a decline compared to 2017. It is estimated that the optoelectronic industry will continue to decline slowly in the next two years. In 2018, the output value of Taiwan's light-emitting diode LED industry showed a decline. In the future, with the expansion of application fields and the promotion of Mini/Micro LED, it is expected to stop the decline. If there is no further demand stimulus or technological growth in the output value of Taiwan's solar PV industry, it will be difficult to see the growth trend in the short term. In 2018, the output value of Taiwan's panel industry also showed a decline. The main reason was that the production capacity of China's panel makers continued to open, resulting in over supply, and falling prices. Others, such as the output value of Taiwan's image sensor industry and Taiwan's optical communications industry, showed growth in 2018, and are expected to increase further in the future.
Another thing to look forward to is the Precision Lens industry in Taiwan. With the development of camera applications and digital surveillance markets in the future, market demand is expected to grow further. Thanks to the needs of an aging society, the output value of Taiwan's biomedical optoelectronic industry is expected to maintain the same trend in the future.