Thank you very much Gary. Good morning everyone and welcome to the annual Laser Focus World market seminar. In addition to the series that Gary referenced, this is actually about the tenth or so market seminar that we've done if you include more specialized seminars that we do in the medical and industrial areas. We've done a number of seminars on the medical laser market as a whole as well as on specific clinical specialties and every two years we take a very in—depth look at the industrial laser market in conjunction with the biennial machine tool show in Chicago and Dave Belforte may have more to say about that. However, this meeting here at OE-LASE has become the annual gathering at which we inspect the laser industry's score card overall for the year, as well as the outlook for the future. I'm just going to propose one ground rule. In the unlikely event that I don't consume all the tixae allotted to me, and we do indeed have the very xauch needed time for questions as Gary indicated, I simply ask that rather than directing all of your questions to me you direct them to your favorite competitor. Last year at this time, you may recall, we were meeting under rather extraordinary conditions. It was about the time of the outhreak of the Persian Gulf War. And therefore, at that time, one of the hottest laser applications was a xailitary one centering on laser-based target designators. So as we met at year-end and for a brief period of time thereafter, this was perhaps the only time in the world that the most lasers being consumed in any market was centered in Baghdad. As we'll see, the market has shifted since then. In the ensuing year, and certainly at the present time, much more general international political and economic developments again have had a most dramatic ixapact on the laser industry and its associated markets. In fact in the past year the theme was quite the opposite of war. Instead we witnessed a deepening as well as spreading global recession along with associated cutbacks in spending by a host of governments. We also saw the dissolution of the former Soviet Union and the associated end of the cold war. I think these are worth citing because these developments have certainly had a very dynamic and strong impact on a number of laser markets and in a very direct sense the scientific and military laser markets. But I think more generally pretty niuch across the board most of the other laser markets that we will be discussing today have in iiiany ways been SPIE Vol. 1719 The Laser Marketplace 1992 / 1 LASER MARKET OVERVIEW Dr. Morris R. Levitt Senior Vice President, PennWell Publishing Company Thank you very much Gary. Good morning everyone and welcome to the annual Laser Focus World market seminar. In addition to the series that Gary referenced, this is actually about the tenth or so market seminar that we've done if you include more specialized seminars that we do in the medical and industrial areas. We've done a number of seminars on the medical laser market as a whole as well as on specific clinical specialties and every two years we take a very in—depth look at the industrial laser market in conjunction with the biennial machine tool show in Chicago and Dave Belforte may have more to say about that. However, this meeting here at 0E-LASE has become the annual gathering at which we inspect the laser industry's score card overall for the year, as well as the outlook for the future. I'm just going to propose one ground rule. In the unlikely event that I don't consume all the time allotted to me, and we do indeed have the very much needed time for questions as Gary indicated, I simply ask that rather than directing all of your questions to me you direct them to your favorite competitor. Last year at this time, you may recall, we were meeting under rather extraordinary conditions. It was about the time of the outhreak of the Persian Gulf War. And therefore, at that time, one of the hottest laser applications was a military one centering on laser-based target designators. So as we met at year-end and for a brief period of time thereafter, this was perhaps the only time in the world that the most lasers being consumed in any market was centered in Baghdad. As we'll see, the market has shifted since then. In the ensuing year, and certainly at the present time, much more general international political and economic developments again have had a most dramatic impact on the laser industry and its associated markets. In fact in the past year the theme was quite the opposite of war. Instead we witnessed a deepening as well as spreading global recession along with associated cutbacks in spending by a host of governments. We also saw the dissolution of the former Soviet Union and the associated end of the cold war. I think these are worth citing because these developments have certainly had a very dynamic and strong impact on a number of laser markets and in a very direct sense the scientific and military laser markets. But I think more generally pretty much across the board most of the other laser markets that we will be discussing today have in many ways been profoundly iiupacted by these developments in the world political econom.

The main focus of market studies, including ours, tends to be numbers. I get calls every year from people who want to know, "What is the number?" "How many ion lasers are sold?" There is a number, but most numbers are not very useful. People tend to want too much information to the point they can't see the forest and the trees is actually true. Sometimes you have so many numbers you can't see an individual application. At the end of the year you look at your sales and say sales were OK, but they could have been better. I worked for one company that was all concerned about major economic models — how could we globally tell how our business was doing? That never made much sense to me because I always sold lasers one at a time. I couldn't understand how a global economic model was really going to be very useful to me to get the next order. Part of what we've done over the last two years is t step back front the numbers one level and say here are the numbers, but here's also some insight. Some things that you've heard, some things that maybe you haven't heard. In the technical talks here this week, I've been surprised at some of the progress that's been made with high power red laser diodes. We hope some insight will provide a helpful supplement to the general statistical overview. This afternoon we are going to look specifically at industrial and medical markets in an effort to highlight specific application areas.

Many people in the semiconductor industry are upset because they claim we are not truly reporting their sales numbers. We have an ongoing problem of defining industrial lasers, so I though I would give you a definition so we are all on the same track. The second thing I want to explain is how we go about collecting the data.

I am very optimistic about the business potential of medical lasers in general. On the other hand, it's very easy to point out and criticize some severe failures that there have been. So I think that we will be able to do better in the future in terms of predicting where the lowest risk business opportunities are and where we should invest our time, energy, and money for business development. And I think that if I can read my audience correctly, business development is probably important here. Some of you may have a good, strong business in the medical area but I think you would all welcome new opportunities. That is really the focus of our talk today: new opportunities.

When I went back and started to track the industry for the last year, we see a tremendous amount of acquisitions and mergers. Tremendous amount of startups which by the way has a very good side to the recession, which I'll speak to. And reorganization which is also maybe a euphemism for restructuring, downsizing. As Gary mentioned, these trends were well underway before the recession, but certainly in 1991 we saw the acceleration of this, primarily from government defense cutbacks, which again have been accelerated by the end of the Cold War. We also have the restructuring which has been going on for several years because of the heightened global competition. And the third thing, of course, it's all come together with all recession.

Looking at an overall summary of the optoelectronics industry in Japan, it is clear that optoelectronic equipment is by far the dominant revenue generator. I think there is a lesson in that. It does not mean there is no component business, it just means that there is a lot more money in the equipment business. Today I am going to talk not only about components but also about some equipment opportunities.

I will be talking about mostly Japanese R&D, particularly the R&D status for diode pump lasers and miniature lasers.

Today I want to introduce the subject of laser materials in China. I will discuss the general background of lasers and laser materials in China. Second, I want to show you some recent rapid development of lasers and laser materials in China. Third, I want to give you an overview of key R&D centers and manufacturers of lasers and laser materials. Fourth, I want to analyze some important export trends from China. Finally, I want to say something about the active international cooperation in the field of lasers and laser materials.