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Market research report on photonics

The global market for Photonics products in 2015 accounted for EUR 447 billion. The market grew at a compound annual growth rate (CAGR) of 6.2% during the last four years (2011 – 2015). That growth rate is calculated on a euro basis. Currency effects had a strong impact on growth rates. On a US dollar basis the CAGR was only 0.3%. Expressed versus a basket of relevant currencies, such as the SDR (IMF special drawing rights), the market grew at a CAGR of 3.4%1. Exchange rate shifts also had an impact on market shares. Following the so called J-curve effect for market shares after the devaluation of a currency, the share of the European production in the world market was worth less immediately after the devaluation of the euro. Market share gains are expected to occur with a time delay when increased competitiveness translates into increased sales.

The production volume of the European Photonics industry accounted for EUR 69.2 billion in 2015, corresponding to a global market share of 15.5%2. Since 2011 the production volume of the European Photonics industry has grown from EUR 65.6 billion to EUR 69.2 billion, corresponding to a CAGR of 1.3%. These figures include the European photovoltaic industry which shrank by two third during the here assessed 2011 to 2015 period due to harsh price competition from China. Excluding photovoltaics, the 2015 European Photonics production volume accounted for EUR 66.6 billion, corresponding to a 17.0% share in the world market (EUR 391 billion). The production volume of the European Photonics industry without photovoltaics grew from EUR 57.1 billion in 2011 to EUR 66.6 billion in 2015, corresponding to a CAGR of 3.9%.

The European Photonics industry grew much stronger than industrial production in Europe in general. For the EU28 the overall industrial production nearly stagnated with a CAGR of only 0.1% from 2011 to 2015. The growth of the European Photonics production from 2011 to 2015 (CAGR of 3.9%) was less than the growth of the world market which grew at a CAGR of 6.7% on a euro basis (excluding photovoltaics). The lower growth rate can be attributed mainly to two reasons. Firstly, to the J-curve effect after the devaluation of the euro vs. a basket of relevant currencies. Secondly, China takes an increasing share of the global Photonics production, leading to market share losses for all other major producing countries. Another issue which weighed on the European market share is the less favourable overall economic trend in Europe as compared to many other regions. In spite of strong exports to outside Europe, the major part of the sales of the European Photonics industry is within Europe.

The European industry was exposed to the advance of Chinese Photonics activities in several segments of Photonics. The largest quantitative impact was in photovoltaics, where competition from China erased most of the European market share within a few years. Other areas with fierce competition and market share losses for the European Photonics industry are solid state lighting and optical communication. Also other segments such as laser materials processing are increasingly affected by market share gains of the Chinese Photonics industry.

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