About China Optoelectronics Industry

1. Survey
1.1Development Retrospection

Over the past twenty years, China's reform and opening-up have promoted China's laser and optoelectronic
science to face the application market, the world and the future. Much progress has been made. In many
national strategic scientific plans, laser and optoelectronic technologies are attached much importance.
Among the seven big plans of “863” there are laser technology and optoelectronic technology (including laser
technology used in information field). In 1995, Inertial Confinement Fusion was added to the list.
Optoelectronic technology item on national defense is also been set up as a cross-departmental project. In
the national “Six-Five” and “Seven-Five” plan, laser and optoelectronic technologies are listed as important
items. Besides, the State Fund for Natural Sciences sponsored a number of researches in laser and
optoelectronic technologies from 1986 to 1998. By painstaking effort during “Eight-Five” and “Nine-
Five”plan, much has been achieved in laser and optoelectronic:

(1) China has set up six industrial bases for optoelectronic achievements conversion (Beijing, Wuhan,
Shanghai, Shijiazhuang, Shenzhen and Changchun).

(2) Since 2000, optoelectronic technology industry development zones are set up in many places. There are
13 optoelectronic industrial base. Optoelectronic industry in Shanghai, Wuhan, Shenzhen, Guangzhou,
Changchun and Beijing reach certain scales.

(3) 11 state key optoelectronic laboratories and 5 key laboratories affiliated to the State Educational Bureau
have been set up. 5 National Engineering Research Centers in laser and optoelectronic are built, including CD,
laser processing, optical fiber communication and optoelectronic components. 4 NERTCs are set up, including
solid-state lasers, optics instruments, specialty display and Flat Panel Display engineering technologies.

(4) China has built numbers of industrial enterprises in optoelectronic , including China North Industries
Group Corporation, China South Industries Group Corporation, China Electronic Technologies Company,
China Aerospace Science and Technology Corporation, etc. These group corporations all have several
enterprises engaged in laser optoelectronic technology industry, such as the 11,13,23,44,45 research
institutes of CETC; Others includes enterprises engaged in laser technology industry such as Wuhan Research
Institute of Posts & Telecommunications, Yangtze Optical Fiber and Cable Company, Shenzhen Photon
Technology Co., Ltd., Shenzhen Tianma Microelectronics Co., Ltd., Shenzhen Kaifa Technology Co., Ltd,
Huawei Technologies Co., Ltd., WXZTE, Hi-Tech Optoelectronics Co., Ltd., Daheng Information Technology,
Changchun Caijing, Changchun New Industries Optoelectronics Tech. Co., Ltd., Institute of Semiconductors of
CAS, Shanghai Institute of Optics & Fine Mechanics of CAS, Shanghai Institute of Technical Physics of CAS,
Kunming Institute of Physics, Xi'an Optics Application Institute, No. 41 Research Institute of CETC, Anhui
Institute of Optics & Fine Mechanics of CAS, Xi'an Institute of Optics & Precision Mechanics of CAS, Peking
University, Tsinghua University, Nankai University, Shanghai Jiao Tong University, Jilin University, Tianjin
University, Southeast University and South China Normal University, etc. These units have formed groups of
talents cultivating, products research, production and sales in optoelectronics. And some joint ventures are
set up.

(5) In the past more than ten years, China's optoelectronic products market has developed dramatically, its
average annual growing rate keeps double-digit. This is the outcome of reform and opening-up policies and
effort to take full advantage of the investment environment and consumer market.

At the beginning of 21st century, China started its Tenth Five-year plan (2001-2005). After China's entry into
WTO and successful bid for the 2008 Olympic Games, China's large optoelectronic product market, sound
industrial basis and more than ten industrial development zone in optoelectronic set up since 2000 have
further attracting overseas tycoons to strive for China's market share. China's optoelectronic industry is
confronting unprecedented opportunities and challenges.

1.2 National Goal and Specially Supported Items

National Reform and Development Commission have started to carry out items in optoelectronic. They are
supposed to be complete in three years. The industrialization goal of the optoelectronic items is:

(1) According to national technological advantages and resource characteristic in optoelectronic, China
government will give special support to some optoelectronic products of high technological level and with
significant potential market prospect.

(2) Building up optoelectronic industrial system with China’s own intellectual property right during the Tenth-
Five. Strive for meeting the domestic demand of all industries as well as march in the international market.
(3) With the drive of technological innovations and item constructions, China government will provide
sustaining support and incentive policy for the growing of optoelectronic industrial bases.

The specially supported items from 2002 to 2003 include:

1).Optical communication components:

A. active components, including 10Gb/s optical transceiver modules, optical amplifier (wide spectrum, high
gain, low noise EDFA, PFDA, Raman Fiber Amplifier, 1.55μm wavelength semiconductor optical amplifier
SOA), 10Gb/s 1.3-1.55μm wavelength tunable distributed feedback (DFB) lasers, Si-based and InGaNAs-based
Tunable Narrowband Detector, 1.3μm wavelength VCSELs (Vertical Cavity Surface Emitting Lasers).
B. Optical passive components, including optical connectors, optical couplers, Dielectric Coating Interference
Filter, Multiplexer/Demultiplexer, Fiber Bragg Grating, Array Waveguide Grating, waveguide switch array, etc.

C. Optical switch components, including tunable wavelength converter, wavelength selector, route selector
(module), etc.
D. Integrated optical components.

2.) Optical storage components, including blue/green light 480nm wavelength GaN semiconductor lasers and
650nm wavelength red light semiconductor lasers, high-intensity, highly efficient, high-speed mother disk
write and new type record medium technologies, etc.

3.) High power lasers, including DPSSL and large-scale integrated parts. Optical active components, optical
passive components, optical switch components, integrated optical components, optical storage
components, high-power lasers.

2. Laser products market

According to incomplete statistical data, so far China has around 400 units engaged in laser technology
research and laser application products development (Audio-visual laser products providers) and there are
about 200 among them have stable production and sales. The employment personnel is nearly 20,000.

According to the Statistics of 2001 Laser Products Sales Nationwide by LB COEMA (Laser Branch of China
Optics and Optoelectronics Manufacturers Association) on 200 enterprises in laser industry (118 laser
products manufactures and 82 holographic products manufactures) by the end of 2002 June: the national
laser products sales of 2001 is 3.24 billion RMB (hereinto, laser products account for 2.839 billion yuan and
holographic products account for 401 million), having a 65.6 % increase than 2000's 1，911 million yuan , the
net increase is 1,253 million yuan.

In the year 2001, China's laser products export was affected by the global economic depression, the export
amount dropped from 40,455 thousand USD of 2000 to 24,690.3 thousand USD, declined by 39 %. The major
export products are optical communication components, laser processing devices, laser medical devices and
all kinds of lasers.

It is predicted that in 2002 the national laser products sales (including holographic products) can reach 3.71
billion. The laser processing devices market will still increase; the laser medical instruments sales will increase
a little than 2001; the holographic security products sales will have a slight increase; the holographic
packaging material sales will have a bigger increase; optical communication components sales will keep
almost the same with 2001, due to the influence of overseas market. In 2001, the global laser products
market had a slump, from 8.8 billion USD to 5.6 billion USD, declined by 36 %. However, though the China
mainland laser products market is not in a large scale, the market demand for technological innovation is
large and the market scale of these years has not been much affected.

3. Optoelectronic material and market

3.1 Semiconductor optoelectronic material

China's optoelectronic material research has entered an application and industrialization phase. According to
the statistics provided by China Electronics Materials Industry Association, the annual productivity of GaAs
single crystal is about 600kg. For example, GRINM Semiconductor Materials Co.,Ltd. And No. 46 Research
Institute of CETC have been able to produce in batches GaAs used in optoelectronic components and are
developing Φ50mm GaAs single crystal and Φ75mm GaAs single crystal. Φ50mm InP single crystal used in
LED and LD has been applied. The annual output is around 60kg. The annual output of GaP chip material used
in red and green LED is about 90kg. The domestic LED market demand relies mainly on import. China's single
crystal Si output of 2000 is about 400 tons, mainly the Φ100mm and Φ150mmsingle crystal Si, used mainly in
IC and solar cell. Among those 250-300 tons of Si is used for solar cell, producing electric power of about
4.5MW. Wide Forbidden Band Semiconductor materials used to blue LD and blue/green LED and GaN, Sic are
still under the research.

3.2 Laser crystal material

In recent years, China has developed Nd:YAG and Nd:YVO4 laser crystal. The technical indexes have reached
the international advanced level. The export amount takes up about one third of the international market.
The Nd:YAG North China Optoelectronic Technology Research Institute has reached Φ60±5mm×210mm.
China Broad Crystal Technology Co., Ltd. has the annual production ability of Laser Rod of 3000. China has
become a big production export country of YVO4 crystal. Fujian Institute of Research on the Structure of
Matter of CAS researched Φ42mm×42mm YVO4 single crystal and processed into Φ20mm×20mm
polarization crystal components. Bright Crystals Technology Co., Ltd. has set up product line of annual
productivity of 200kg YVO4 single crystal.

3.3 Nonlinear optical crystal

China is the first that has researched superior quality nonlinear optical material such as BBO and LBO used in
laser source's frequency conversion in optical zone. China has productivity of 10 tons of LN used to laser
frequency double, optical parametric oscillator (OPO), acoustic-optic and electro-optic components.

3.4 Display components, material and the market

a. LCD:

China's display field is developing well. China's LCD output takes up 25 % of the world. PDP R&D has made
much progress and has researched 21-inch PDP screen.

In 2001, China liquid crystal sales was 5,352 million yuan, 108 million yuan less than the last year (2 % less).
The liquid crystal display sales dropped the most, as much as 22%. The LCD sales in 2001 was 3,541 million
yuan, accounting for 66.16 %. The related materials were 774 million, accounting for 14.46 %. The
manufacture devices were 50 million, accounting for 0.94 %. The others were 987 million, accounting for
18.44 %.

China has around 60 LCD manufacturers. A survey on 30 major LCD enterprises in the industry in 2001
revealed that the total investment is 610 million USD, 17017 employment personnel among which the
management technology staff accounts for about 22 %. The sales of the 30 enterprises were 3,541 million,
997 million less than the last year, the decline percentage was 22 %. The liquid crystal output was 1,500
thousand square meter ; the sales was 2,003 million yuan. Modules output was 27 million; the sales was
1,238 million yuan. In 2001, the investment was speeded up. Japan, Korea, Taiwan speeded up transferring
STN－LCD,TFT-LCD product line. There were 14 already built or being built ones. Most of them were STN-LCD
product lines. There were also TN and color STN product lines.

So far, China's liquid crystal material productivity has exceeded 40 tons. The domestic enterprises are mainly
the following four: Beijing Tsing Hua YaWang Liquid Crystal Materials Co. LTD., Xi'an Modern Chemistry
Institute, Shijiazhuang Slichem Liquid Crystal Material Co., Ltd. and Yantai Valiant Fine Chemical. The sales
amounts 145 million yuan.

Currently, China has been able to produce TN liquid crystal materials meeting special requirements such as
wide temperature and low threshold. STN liquid crystal material has been in batch production. The liquid
crystal material for TFT is still under research.

Polarizer has entered stable mass production period. There are two enterprises: Guangdong Fortune Science
and Technology Company and Shenzhen Textile-Lucky Optoelectronic Material Co., Ltd. The 2001 volume was
750,000 square meter and the sales exceeded 60 million yuan.

ITO glass develops the fastest among the three materials of liquid crystal. There are over ten manufacturers;
the biggest one is Shenzhen Laibao Vacuum Technology Co., Ltd. The 2001 output of ITO glass was 3760,000
square meter and the sales amounted 600 million yuan. The STN glass now can meet most of the domestic
demand.

Moreover, the self-providing ability of mask, back light, packaging glue, photo resists and other LCD related
material has been much improved. According to incomplete statistic data, there are seven enterprises in this
aspect, realizing production value of 169 million.

b. LED：

China LED industry has been developing steadily these years. There are around 300 LED research,
development and production units. Most of them produce common LED (referring to LED with GaP, GaAlAs
chip). The 1999 annual production of LED was 750 million; the sales was 27 billion yuan. In 2000, the output
reached 8.4 billion and the sales was around 31 billion yuan. In 2001, the output was 12 billion and the sales
was about 4 billion.

At the present, there is only one domestic manufacturer being able to mass produce common LED chip. The
annual output is about 2 billion ones. Added to the chips produced by wholly foreign-owned enterprises, the
2001 chip production exceeded 15 billion ones. There are about tens of LED screen manufacturers. China is
becoming one of the global production and providing bases of traditional LED.

China produced red, green, orange and yellow LEDs account for 12 % of the world. The blue LED has been
developed successfully. Progress has been made in other displays such as VFD, OLED and FED.

3.5Infrared products market

In recent years, China infrared products market has developed steadily. With the improvement of level of
industrial automatic-control, promotion of thermal failure and leakage diagnosis, setup of security system,
products such as Infrared Thermometer, Infrared Camera and infrared TV have been in a stable demand.
According to the Infrared Brach of COEMA-China Optics and Optoelectronics Manufacturers Association, the
2001 national main infrared products sales was about 850 million RMB, almost the same level with that of
2000. The 2002 national main infrared products sales was about 960 million yuan, having a 9% increase than
2001. The 2003 sales is predicted to exceed 1000 million yuan. Hereinto, the sales of Infrared Thermometer,
Infrared Camera, infrared TV, thermoelectric detector and photoelectric detector will have bigger increases.
Sales of heating coatings, heating components, devices and systems, including all kinds of infrared medical
instruments will probably be almost the same with 2002.

Infrared technology in China is still in the process of industrialization. There are about 30 infrared institutes
reached certain scales. Most of them are scientific research institutes. With the deepening of China's reform,
many new enterprises have been set up. Some of the infrared products have has certain priorities. The
market occupation rate is over 50 %. For example, in the field of infrared material, the sales of
Monocrystalline germanium produced by Beijing Guojing Infrared Optical Technology Co., Ltd. was 22 million
yuan in 2001. In the infrared detector field, Shanghai Nisaila Sensors Co., Ltd. that engaged in thermoelectric
detectors materials and components achieved sales of 207 million yuan, 90% of its products are for export. In
the field of Infrared thermometer, Sino-American joint-venture Raytek Optoelectronic Technology Company
had 38 million yuan in China in 2001. In the field of infrared medical instrument, Zhoulin Bio-spectrum
Technology Inc. had an annual sales of Zhoulin 40 million yuan in 2001. Shanxi Huaxing Infrared Instruments
mass produces pbs, waveguide InSb infrared detector products. Its annual productivity is 100,000 ones. They
have been applied to infrared temperature measurement, tracing, alarming, etc. Line infrared detectors and
Pt:Si focal plane array have been for use in a certain amount.

The SARS break much stimulates the market demand for human-body temperature infrared thermometers.
Many units develop in a short time the infrared camera and thermometer for human temperature
measurement. At the same time, SARS thermometer from other parts of the world have entered China. So
far, China has tens of thousand thermometers for human-body temperature measurement.

Fever is one of the typical symptoms of SARS. Due to its non-contact and quick measurement, infrared
thermometers are widely used for SARS inspection. The market demand is roaring dramatically. The supply
was once far from the market need. According to the reports, Beijing Civil Aviation, Railway and other
transportation departments have invested totally 10,136,900 yuan for infrared thermometers, thermometers
and protective clothing, etc. 156 infrared thermometers have been installed in all big ports.

Infrared thermometers fall into two kinds: contact ones, for forehead temperature and ear temperature;
non-contact ones, including point temperature measurement and image measurement. Infrared
thermometers have characteristics of radiation-free, high-resolution, stable operation, etc. It can monitor the
human-body temperature beyond two meters. It especially fits for airdromes, stations and supermarkets, etc.
There are three kinds of products in use: (1) portable thermometer (industrial type, 1℃ Accuracy); (2) wall
hung/in-out door multipoint thermometer (0.1℃ Accuracy); (3) desk thermometer (0.1℃ Accuracy).

For example, the No. 11 Research Institute of CETC has developed two types of infrared thermograph for
quick human-body temperature recognition: (1) HR-2 cool infrared thermograph, 0.03℃ temperature
accuracy, scan speed ≤3 seconds. (2) FJR－1A non-cool infrared thermograph: quickly measure human-body
temperature and the temperature accuracy is 0.1℃. It is specially suitable for public places for large area
monitoring. Since April 20, it has been used to public places such as Beijing Capital International Airport,
transportation ports, supermarkets, hospitals, etc. Recently, this Institute has also researched HR－2C/2D
infrared human-body alarmer; the temperature accuracy is ±0.2℃; the response time is 0.1 second; the best
effecting distance is 0.2m－0.3m.

In the battlefield of anti-SARS, there are other units researching infrared thermograph, infrared
thermometer: Shanghai Institute of Technical Physics of CAS, Kunming Institute of Physics Kunming North
Infrared Technology Co., Ltd., Beijing Raytek Infrared Technology Company, Wuhan Guide Optical Electronic
Company, Tsinghua Unisplendour Group, Research Institute of Tsinghua University in Shenzhen, Institute of
Automation of CAS, Beijing Security Technology Research Development Center, Guangzhou SAT, Arcon
Science Technology Ltd. Wuhan Huazhong Numerical Control System,Inc., Associated Technology Chong-Qing
Corp, Wuhan Huazyang Optic-eletric System Ltd., Nanjing University of Science and Technology, Shijiazhuang
College of Ordnance Engineering, Wuhan Yonsee Technology. Other overseas manufacturers are: Raytek and
Exergen of American, CANTRONIC (Canada), Opgal Optronic (Israel)，SAAT (Israel), Spring Singapore
Corporation, EPC; Resources & Environment Network sells all kinds of industrial infrared thermometers and
SARS temperature sensors for Raytek (America), NINOLTA (Japan), AZ (Taiwan), TESTO (German).