By some measures, the production of optics and photonics core components is $400 billion a year market now, and the technology’s downstream value far exceeds that figure — particularly when calculating in new developments like photonic integrated circuits (PICs). But will photonics ever challenge the value of electronics? Or is it more of an analog to electronics’ early days? Or is photonics simply one of the electronics industry’s more interesting corners? Optica’s senior industry advisor, Dr. Tom Hausken, joins TECH B2B Marketing’s Dan McCarthy in this episode of Manufacturing Matters to discuss this and other big questions about photonic trends and technology.

Dan McCarthy: [00:00:07] Hello everyone. Welcome back to another episode of Manufacturing Matters podcast, where we talk about the trends and technology shaping global manufacturing. I’m Dan McCarthy of Tech B2B, and joining me today is Optica’s Tom Hausken, who is here at Photonics West 2025 with me, where we’re broadcasting on-site. Tom, welcome to the show.

Tom Hausken: [00:00:28] Thank you.

Dan McCarthy: [00:00:29] I’d like to kick off a little bit by talking a little bit about Optica and what Optica does and what your role specifically is. I think of you as an industry observer, but tell me a little bit about what it is you do.

Tom Hausken: [00:00:39] So Optica is a scientific society. We’ve been around for, let’s see, this will be 109 years this year. We do scientific publications, science and technology publications and conferences, but we also have public policy, student chapters, foundation, a lot of outreach and charity work that we do in the community. And I know I’m going to leave some things out. We have a very, very active corporate membership program. So that’s who we are. We’re 24,000 members now. And my role is, I’m a science adviser, part of the science adviser team, which means that I look at the trends, try to identify who are the rising stars, make sure that we’re on the right track, and help navigate where things are going for the society and the community as well.

Dan McCarthy: [00:01:38] So you’re a bit of a trends watcher, I’d say, or a paid spectator. I don’t say “analyst,” because it’s a tricky occupation in this field. Talk to me a little bit. Why is it, after several decades of billions of dollars of value, do industry analysts find it such a hard time nailing down photonics as an industry and the value it provides economically?

Tom Hausken: [00:01:56] Yeah and actually for 13 years I was a market analyst at Strategies Unlimited. So a lot of people know me from there. And it is hard. That’s a really good point. I think a lot of people don’t really appreciate just how difficult it is. So if you look at it from the demand side, okay, this is a long answer, but if you look at it from the demand side, we’re so fragmented. Take a laser. So a laser has colors, from the UV to the mid-infrared. Different power levels, ultrafast, CW, low noise, all these different things. Each one of those has maybe many different applications it goes to. Some compete with each other. Okay, if you’re trying to analyze the markets, you really want to be looking at the vertical markets. And by the way to understand the future, if you’re forecasting, you’d have to understand each of those vertical markets.

Dan McCarthy: [00:02:53] Right.

Tom Hausken: [00:02:53] That’s a lot to have to do. So the other way to do it is you could back up and you say, well, what about all the suppliers? You have all these suppliers out here in the show floor, maybe some that aren’t here. Look at the end users, this kind of thing. But again, you have a lot of different markets, and also those suppliers, they’re often diversified across other industries. If it’s a large corporation, they may be huge, and the optical operations may be a small piece or whatever. They may be vertically integrated or not vertically integrated. And finally, after all this, not everybody is willing to pay for that sum total. It’s a very expensive endeavor. They’re willing to pay for little pieces of that, but not necessarily the whole thing. So it’s fun work. It’s just hard to do.

Dan McCarthy: [00:03:40] Yeah. Isn’t it true with electronics to some degree that those components can be buried? I mean, they don’t diversify in their applications. Well, they kind of are diversified in their applications.

Tom Hausken: [00:03:48] Yeah. That’s an interesting question. So the electronics industry, I don’t know where it is now, but it’s many hundreds of billions of dollars. Our industry, if you think about the parts themselves, it’s a fraction of that. Now the stuff that goes into the cameras and all these different things, that’s much larger. But if you’re comparing just the electronics to just the optical components themselves, the electronics industry is very, very big. So there’s a lot of people working on that industry, a lot more than are working on the optics industry. So we like to think that our industry is pretty big. And yet at the same time, if you walk around, it’s small enough that we know each other. Electronics is a much bigger industry.

Dan McCarthy: [00:04:28] That’s true. That’s true. And you know, to your point earlier, you were talking about lasers. There’s also optics. There’s also the sensors. There’s all these other niche little parts of photonics too.

Tom Hausken: [00:04:38] By the way, I’d like to throw something in here. A lot of times people, when they start talking about integrated photonics or PICs or whatever you want to call them, they’ll make an analogy to electronics. And there’s a whole conversation, but they’ll say, “Well, this is like electronics so many years ago.”

Dan McCarthy: [00:04:56] It’s come up a couple times.

Tom Hausken: [00:04:56] To which to which I would say, well, electronics is a very big business. There’s memory or DRAM memory, for example. There’s processors, there’s ASICs, there’s all these different things, and there’s analog devices. And among that there’s all these little specialty sort of niches. And I would say we’re much more like those specialty niches, like we’re one kind of niche in that whole. And that would be just the integrated. But we also have big lasers, giant things. So, yeah, we’re very diverse. And that diversity is really good because when something’s not doing well, something else is on the rise. So it’s a very active, healthy industry.

Dan McCarthy: [00:05:39] Right, I agree. With these caveats in mind, can you talk a little bit more on the laser systems you talked about, particularly in manufacturing. So we’re talking about industrial lasers. A lot of those are starting to compete a little bit more on price, as you have, like Chinese 50 kilowatt and below lasers are starting to really compete on price more. So people are competing. The value add seems to be higher-power lasers, but even that is starting to get, I won’t say commodified, but where’s the value coming from? What’s driving value in industrial lasers today? It’s not the laser itself. Is it the systems around it? Automation?

Tom Hausken: [00:06:17] So first of all, full disclosure, I don’t follow a particular part of the industry the way I used to. But the way that industries often work is you start off with performance, right? And just to make a laser or to make a laser at this wavelength or at that power is a big deal. That’s an accomplishment. And of course, you’re always trying to drive the cost down. But just to have that, maybe that’s worth a premium. And then as time goes on, you try to make it lower noise. You add some bells and whistles to it, and then over time maybe you can make it smaller. Of course, you’re always driving the cost down, but you make it smaller. Maybe it’s a little bit more user friendly, a little more stable. Yeah, you can drop it on the floor or whatever. Let’s see what else. It’s got some standard interfaces to it. Industry-standard interfaces of some kind. And then I’m thinking now of, like, home stereo systems. I could use a cellphone, I suppose, or TVs, but stereo systems they used to compete on performance at some point, and then at some point it’s like they start competing on the color, right? And fortunately, we’re not there yet. But that’s what happens to a certain sector. Now again, there’s so many pieces to our industry that there’s some pieces that are still very much at that bleeding edge of the performance. And I mean, you can think of all kinds of examples. And then there’s pieces that are very commoditized. So that’s the natural evolution of things. And companies have to always be moving on. You can’t rest on your laurels. You have to always be looking for the next thing.

Dan McCarthy: [00:08:04] Right. And there are still innovations going on in lasers, not on the industrial side so much. But you have much smaller pulses or whether they’re integrated or other.

Tom Hausken: [00:08:15] And by the way, some examples, we could think of examples all day. But if you think about communications, you might say, well, by now maybe you would have matured. Well, no, no, we’re 400 gigabits per second. 800. You know, we’re talking about 1.6 terabits. So that’s how far we’ve come. But that happens to be a special area. We’re very blessed.

Dan McCarthy: [00:08:43] So another classic part of photonics is of course the optics, which are part of everything and part of lasers, part of images or imaging technology, sort of everywhere. And obviously a lot of that is dependent on centuries-old technology, the spherical optics. But there’s new innovations happening there that seem to have come out of meta-optics, where you have flat optics and you manipulate light with a flat surface. Can you talk about a little bit what you’ve seen here on that?

Tom Hausken: [00:09:09] Well, I spent some time over at the AR/VR/MR show.

Dan McCarthy: [00:09:14] A big application there for this.

Tom Hausken: [00:09:16] Yeah. Moscone West, and that’s a very active area, very exciting,  where they’re talking a lot about meta-optics and getting the light into the display. You could also use mini LEDs, micro LEDs. So I think there’s a lot of activity over there. So again, that’s a consumer product. And yet there’s a lot of innovation going on. They have to make it smaller, lighter, cheaper. And nobody knows exactly how it’s going to play out. And there’s a lot of money behind it. So it’s very exciting.

Dan McCarthy: [00:09:47] Yeah. It’s a lot simpler to make a meta-optic. I don’t want to downplay it, but it’s easier to make a meta-optic than integrated circuits where you’re doing a lot of heterogeneous integration of different materials, which is related to my next question. But go ahead.

Tom Hausken: [00:09:59] Well, nothing’s ever easy for whoever has to do it. They’re talking about using nanoimprint, and I was impressed with how many times they can do an imprint before they have to clean it, but that they can do this. And I’m used to working in a lab where this stuff is sticking to it. You have to clean it off and all that stuff. And, no, they really got that down. But imagine all the technology that went into it to get it at that point.

Dan McCarthy: [00:10:26] It’s important to scale that.

Tom Hausken: [00:10:27] Yeah. And I’m sure they still have some more generations to go to improve it.

Dan McCarthy: [00:10:31] Yeah, so let’s talk about integration. It’s interesting because it’s almost an adjacent trend to photonics because you have all the classic components. You have lasers and sensors and optics, but you’re integrating on a wafer. So it’s sort of a manufacturing story. And we’re talking silicon photonics as well as its other platforms. Have you seen any interesting trends there that have stood out this year?

Tom Hausken: [00:10:57] And by the way, a third platform would be fiber, pulling stuff, long, long piece of fiber, right? So that’s sort of the three things, the free space optics on a wafer and then a fiber. And you can come up with some more your own, I suppose. But those are how I see it. Well, they’re talking about new materials, particularly lithium niobate, but there’s some other exotic materials that they’re talking about using for things like quantum computing and so forth. So that’s exciting just because anytime you get away from the conventional materials now, it’s a whole new ballgame. You have to develop a supply chain. You have to understand the properties, the costs, and all that.

Dan McCarthy: [00:11:43] Okay. Do you see the advances? Where do you see the challenges in photonic integrated circuits? Is it largely manufacturing issues or a supply chain issue? A little of both?

Tom Hausken: [00:11:53] So there’s a large fixed cost, first of all.

Dan McCarthy: [00:12:02] Capital equipment.

Tom Hausken: [00:12:02] Yeah. So that means you have to have some volume to justify it. Well let’s back up a little bit. What are the benefits? So the benefits are you reduce the parts count. You can make it small. That may not be enough. You know, I was talking to some quantum people years ago, and I said, yeah, you could do all this fancy stuff, you could put it into . . . They said, “Yeah, that’s expensive.” They can do it now, right? So maybe there is something that you cannot do any other way because you’re on this chip. And maybe quantum computing would be that thing. Not just quantum anything, but quantum computing. Okay. So there’s certain advantages that you believe in. Now you have these high fixed costs. So you have to have some volume, but you also have to have some value in it. It’s doing something special or it’s significantly smaller or you’re really reducing that parts count. Maybe there’s a huge number of parts in there that now you’ve reduced it down to this one chip.

Tom Hausken: [00:13:01] How many places are there in the market where you say, okay, you have a significant volume and there’s a lot of value in this. You know, that’s not an easy thing. Think about Nvidia. You know, it’s kind of an unfair comparison. But there you have quite a significant volume of something that’s really really valuable. So that’s why it’s a multi-trillion-dollar company. And again, it’s a little unfair, because that’s just so extreme. But that’s kind of one of the challenges I see to it. The other thing is, you also have these variable costs. That’s on the front end. On the back end, you have to package this thing, and it’s not so easy to package photonics. It’s like packaging electronics and yet more, because you’ve got optics, and everything has to be perfect. It’s very fragile. And I don’t mean fragile from the point of view of  shake, rattle, and roll, but just fragile in the sense that you’re working with even more specifications.

Dan McCarthy: [00:13:58] Alignment, for example, and the coupling and optical signals, not just contact.

Tom Hausken: [00:14:04] Yeah. All these things that you’re trying to do. Okay. So it’s not so cheap. And maybe you think you can reduce that cost. That’s good. But it’s not so cheap. And that scales with each unit that’s going out the door. You know you have to package each one at a time. So the front end, you can make a whole bunch of chips on a wafer. Okay, that’s one thing. But each one is getting packaged one at a time. And if you can’t reduce that enough, then that’s a problem. Then you say, okay, we got that solved. We’re going to fix this. What a lot of people talk about is, well, there could be this application. Ah, there’s the consumer application or something really big. But to just jump to a high volume, maybe you have a high-volume, high-value application. But to just jump to that is probably not possible. It’s not realistic. You have to go in these little steps.

Dan McCarthy: [00:15:01] You have scale.

Tom Hausken: [00:15:02] You have to scale. Yeah. And so what would those little steps be? It could be lidar. It could be quantum computing.

Dan McCarthy: [00:15:09] Data center, chips.

Tom Hausken: [00:15:11] Yeah I feel like, well that’s real. So maybe we’re good with that. But now you need another one and some other ones to start it, and you say, well, but then how do electronics do it? Electronics had this beautiful system where as they shrunk the feature sizes, it got smaller. It got lower power. They could cram more onto a wafer.

Dan McCarthy: [00:15:35] That’s right.

Tom Hausken: [00:15:36] Then they found new applications, like you have it in your cellphone now. And then those new applications, then they could take the growth from that, invest, shrink it some more. And you had this feedback loop. You can’t quite do that with integrated photonics. So there’s this beautiful feedback loop with electronics. Moore’s law. You know Moore’s law just kept on going. And so you have this beautiful feedback loop that kept propelling things forward. And so that’s your scaling. You’re stepping stuff. They didn’t just leap to the cellphone. In fact, you could have thought of the cellphone decades earlier. Wouldn’t matter. They couldn’t have done it. They didn’t have the battery. They didn’t have the display. But with photonics, you have to have some kind of stepping stones to scale up. And they’re not that easy to find.

Dan McCarthy: [00:16:28] Is that just a question of critical mass? It’s just not achieved that mass, like you hit that virtuous circle? Or is it that every chip — this is true of semiconductors too — is sort of an ASIC. It’s an application-specific IC, so you must be able to leverage production techniques you used previously at a smaller scale at some point.

Tom Hausken: [00:16:54] That’s the billions-dollar question, right? People have talked about if there would be a foundry, and everybody would use that foundry, and you could standardize off of that, and then they could get volume. Wouldn’t that be great? But then the first thing everybody says is, well, that’s nice, but can it be my foundry? Because I have a spec. I have something very special. And that’s exactly what you get with silicon analog electronics. You get these little sort of niche-y things where people say, “Yeah, I have this beautiful high-power process, and we have our foundry,” and that’s good. It works. But yeah, so I won’t claim to have the answer, but it’s a patient path. But if you’re an investor, you may not be so patient.

Dan McCarthy: [00:17:36] Especially when I turn around in five years or so. Just to kind of change gears a little bit, and maybe it’s too early to ask this question, but I think it’s on some people’s minds. Well, supply chains are obviously very important, not only to PICs but also to the photonics industry in general. It’s obviously been a global industry for decades. So the potential impact on photonic supply chains and collaboration, what’s the outlook for that if the U.S. enacts tariffs? Is there any anticipation that’s going to affect Photonics West next year? And remember, you’re on camera.

Tom Hausken: [00:18:21] It is the question, I think, this week.

Dan McCarthy: [00:18:26] So it’s the right question to ask?

Tom Hausken: [00:18:28] Right. I mean, people are talking about AI and DeepSeek. You know, this thing came out of China. But that is absolutely pertinent. That should be the question. And yet the problem is, nobody knows the answer. But yeah, but I’ll give you some, I guess, kind of my take on it. I think the closest analogy is what happened in the pandemic. Everybody remembers what happened with toilet paper. Like, all of a sudden, “Oh, there’s no toilet paper.” And you say, well, it shouldn’t be that hard. And yet, suddenly you have a shock to the system. So for a couple years, I was tracking this, trying to understand the supply chain problems in our industry. And it would vary from things like — by the way, the Russian invasion of Ukraine disrupted supply chains there as well. And so companies are scrambling, trying to find alternate sources. Prices going up. Workers not available either at your own workplace or maybe in your suppliers. Some suppliers, some companies reported they don’t even know exactly what’s going on because all they know is the lead times are increasing. Is it because the factories shut down? All they know is prices are going up. Why are they going up? You never really know. It could be way deep in the multi-layers. And when I talk to a company, I say, “Well, what is it exactly that’s short?” And one company says, “Oh, it’s the microprocessors.” They can’t get enough of them in Taiwan. They switched their sales. “The auto industry is more important than we are.” So they’re out there. They just can’t get them. Then somebody else would say, well, they couldn’t get the styrofoam popcorn to pack and ship their stuff. You say, “Well, that’s not important.” But three months later, it’s something else, right? And you talk to a different company, and it’s something else. So it was impossible to really pin down. There’s no one thing that’s affected it.

Dan McCarthy: [00:20:34] Are there other trends we haven’t covered here? Because I know that we’ve been doing some recording down here. I’ve been down on the floor as much as I’d like to. You talked about quantum. Quantum seemed to be sort of still in that kind of a research market last year. Is it sort of shifting a little bit more into concrete products now outside of research? I mean, in other words, if I was selling lasers for quantum stuff, it’d be largely a research application, whether it’s prototyping or developing a computer. It doesn’t seem like people are buying quantum sensors, with the exception, I think, quantum clocks have a bit of a market, but some of the other applications are. . .

Tom Hausken: [00:21:14] Yeah, quantum clocks have been around for quite some time. But some of the companies on the floor would be better qualified to answer that question. So there’s markets that we’re in that are good markets, but they’re not necessarily big blockbuster markets. And I think that’s a good thing, by the way. We thrive on that. Again, we’re fragmented. There’s all these different things going on. It’s great. If they were to become blockbuster markets, some of these companies might not be the ones to be able to carry that forward. Maybe they don’t want to do that kind of scale or maybe they just can’t. And so quantum to me is a little bit in that space that even if it were to take off, what would be big would be the impact of these, let’s say quantum computers. Still pretty speculative, but if it were to take off, the impact could be big on all kinds of things that it could do. There’s kind of a misconception in the mainstream media that it’s faster. It’s not necessarily that it can do things that a classical computer just wouldn’t do, because it wouldn’t make sense. It just takes too long. So the impact could be really big for the companies that build it and sell the services. That could be good. And there’s a number of public companies in that space.

Dan McCarthy: [00:22:39] Okay.

Tom Hausken: [00:22:40] As far as the actual optics for it, it’s not necessarily that much. Now there again, there are companies on the show floor that sell into that, and they’re probably pretty pleased with that business. They know it much, much better than I do. And I was just talking to some people about space optics. It’s kind of a similar thing. So space optics you might say could be a lot of different things, remote sensing and all this. But I’m just thinking about satellite-to-satellite communications, maybe satellite to ground and ground to satellite. And it’s the same sort of thing where you have NASA and ESA. And then you have SpaceX getting a lot of coverage. Now they put up a lot of satellites, but they have a completely different business model. But not very many companies can actually compete in that. It’s a very special place. It has to be highly qualified. The customers have to trust you. It’s not exactly a commodity market.

Dan McCarthy: [00:23:37] That’s exactly right.

Tom Hausken: [00:23:38] So for those companies, it’s really good, probably great growth.  But it’s a little piece of it. But that’s our industry, with lots of little pieces. And again, one’s going down, one’s going up. Now the AR/VR is a different story.

Dan McCarthy: [00:23:56] How so?

Tom Hausken: [00:23:57] Well, if that takes off — again, it’s speculative — but that could be huge, right? Because you talk about consumer market. So when in 2022 I think it was, 2021–2022, when Facebook changed its name to Meta, and they had a big announcement and they said, “It’s the metaverse.” Their idea was that these things were going to be the next smartphone, and the smartphone took the place of the personal computer before that. So we still have personal computers, but we do so much with our phones now. And maybe that whole vision is morphing a little bit now. But still the idea is that, okay, there’s still more to come from this vision. And imagine that the stakes on that are pretty big. Some of the other things, you see a lot of self-driving cars. Waymo has a lot of self-driving cars out here in the streets. Pretty impressive. So that was something that was really big several years ago. The lidar for self-driving cars.

Dan McCarthy: [00:25:10] Yeah, that’s a good point.

Tom Hausken: [00:25:11] Yeah. And the trouble with that is you have to have that technology before you . . . I mean, they were building the self-driving cars already, but we have to be backed up earlier in that. And then you sit and wait and wait and wait and wait. So things are happening. They’re completely driverless right now. They don’t even have anybody in there watching it. It’s completely driverless. But there’s that, fusion energy, a lot of money going into that.

Dan McCarthy: [00:25:42] Yeah. That seems farther down the road than even photonics, end markets.

Tom Hausken: [00:25:48] Um.

Dan McCarthy: [00:25:49] But that’s your point.

Tom Hausken: [00:25:50] It depends who you believe.

Dan McCarthy: [00:25:52] And then you might suddenly hit that critical mass.

Tom Hausken: [00:25:55] You know, I always try to hesitate, because there’s somebody that’s on the leading end that is saying five years or less, they’ll have a reactor, a commercial reactor, and you always have to try to figure out exactly what they’re defining. A lot of people say, yeah, maybe more like 10, 15 years, but still.

Dan McCarthy: [00:26:15] The people who are putting on the short end of that prediction, is that more from the diode laser guys? You need a lot of power to do fusion. And people have so far relied on massive building-sized lasers. But if you just get enough diode lasers, theoretically, it’s like you put enough diode lasers together, you can do anything.

Tom Hausken: [00:26:38] Well, they are talking about smaller reactors, right? In the tens to hundreds of megawatts instead of gigawatts. But yeah, it’s highly speculative, but imagine if it works. So the energy business, even if you’re getting just a little sliver of that, the energy business is just so big. And it’s geopolitical. It’s all of those things. So I don’t want to oversell it. It’s not the talk of the show, but it’s another one of those things that’s out there that’s just starting to rise up. And it’s not government money at this point. There’s private money going in. A lot of private money.

Dan McCarthy: [00:27:21] But that itself is a little bit of a change.

Tom Hausken: [00:27:22] There’s something like 50 startups in it.

Dan McCarthy: [00:27:24] Wow.

Tom Hausken: [00:27:25] Yeah.

Dan McCarthy: [00:27:26] Wow. Like five years ago, it was all mostly government. Lawrence Livermore Lab.

Tom Hausken: [00:27:31] Yeah. About five, maybe 10 years ago, it started picking up. And I mean, there’s maybe two or three or four companies that are getting the bulk of the money so far. But, yeah, there’s money from high-net-worth individuals like Bill Gates and Jeff Bezos, from sovereign wealth funds like out of Saudi Arabia, Norway, that are hedging against oil. Countries that don’t have oil that are betting on it because they have to import it. If you’re a small country, that’s very expensive. The venture capital firms that have long viewpoints. Lots of different sources.

Dan McCarthy: [00:28:18] To come back to the show, it’s always something new, something interesting. Even if it’s incremental.

Tom Hausken: [00:28:24] It’s a great industry.

Dan McCarthy: [00:28:26] Yeah, I agree. Well, Tom, I really appreciate your time and sharing some insights with us here on the Manufacturing Matters podcast.

Tom Hausken: [00:28:33] You’re welcome. And thanks for having me on.

Dan McCarthy: [00:28:35] Thank you. And for all of you listening, if you have any questions for Tom, feel free to send them to us and we will forward them on. And he can get back to you at his leisure.

Tom Hausken: [00:28:43] I love questions.

[00:28:43] You heard him say it. If you would like to watch this or other episodes, you can find us on any of your favorite podcast platforms or go to our website at www.manufacturing-matters.com. And thanks again for joining us here.