Boulder County hub of photonics

BOULDER — According to the University of Colorado Business Advancement Center, the Colorado photonics industry is positioned to grow at a rate of more than five new organizations per year, with Boulder County as the hub of the state industry.

There are 52 photonics firms in Boulder, 12 in Longmont and 12 in other Boulder County locations, representing 56 percent of Colorado’s photonics industry, the Aapplication of light to engineering problems,@ says R. Brian Hooker, associate research professor at the University of Colorado at Boulder Optoelectronic Computing Systems Center. Products are used in communications, computer/office, entertainment, medical and military applications, with new developments everyday.

“Photonics is a fast-moving technology,@ Hooker says. AWhat is a breakthrough today will be commonplace tomorrow and obsolete the day after tomorrow.”

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While this region may be the center of the state’s photonics business, Asia is often where the customers are. To stay competitive, some companies are partnering with manufacturers and distributors in Japan, Korea and China.

In 1998, Displaytech Inc. teamed up with Samsung Electronics Co. Ltd. in Korea. Founded in 1985, Longmont-based Displaytech manufactures LightCaster TM microdisplay panels. International sales account for 40 to 50 percent of all Displaytech’s sales. The 100-employee firm declined to disclose 1998 revenues.

“Samsung saw the broad potential to use microdisplay products in its digital display applications such as televisions, desktop monitors and camcorders,” says Anthony Artigliere, senior director of sales at Displaytech.

Samsung products using LightCaster displays are scheduled for a 1999-2000 release. Smaller than a fingernail, LightCaster displays are created by layering ferro-electric liquid crystal material on an integrated circuit chip that is covered with glass having a conductive coating. An image is produced when light is reflected off the chip.

A distribution agreement with Nissho Electronics in August 1998 increased the firm’s exposure in Japan, one of the largest producers of products using microdisplays.

“Nissho has established relationships with key players in the Japanese electronics market such as Sony. We are starting out at a much deeper level in the beginning,” Artigliere says.

According to the Colorado International Trade Office, Colorado companies shipped $138.9 million of products under Standard Industrial Classification 36, which includes electronic components and microdisplays, to Japan in 1997.

To meet the growing microdisplay demand, Displaytech needed a production partner. In March it signed an agreement with Nagano, Japan-based Miyota Co. Ltd., a producer of precision-processed electronic components.

Asked why Displaytech chose Miyota, Artigliere says, “Miyota has the technical expertise that allows it to handle small parts manufacturing — in automation, for example.”

The initial cost of setting up the Japanese production line was $8.3 million, according to a March article in the Asian Wall Street Journal.

Miyota engineers have been working with Displaytech to learn the firm’s processes and technology. The first phase of production began in Japan this past summer. Full production is scheduled within 12 months.

Longmont-based Applied Films Corp. strengthened its international presence through an alliance with Nippon Sheet Glass Co. Ltd.

In February 1997, Applied Films choose Nippon to sell its coated glass to manufacturers of liquid crystal display products in Japan. This relationship led to a joint venture in Suzhou, China last June where Nippon operates a plant with a coating line. Applied Films brought its thin-film technology to the venture.

Each firm invested $3.2 million in the enterprise.

“We had a large export business, but little experience in establishing ourselves overseas. Through our alliance with Nippon, we gained people with coating experience that understood the market and a partner that we really trusted, which is critical,” says Thomas Edman, president and chief executive officer at Applied Films.

Founded in 1976, Applied Films supplies thin film-coated glass to the flat-panel display industry. FPDs are found in cellular telephones, calculators, video games and laptop computers. International sales account for 80 percent of total sales. Revenues for the fiscal year ending July 3 were $31.5 million. The firm employees 150 in Longmont and 120 in China.

Nippon also produces raw glass in Suzhou. “Glass is a critical raw material, with the cost representing 40 percent of the sales price of the product. With a week of lead time needed to turn around orders in China, we can respond to the customer and minimize working capital commitment,” Edman says.

According to Edman, the new company, Suzhou NSG-AFC Thin Film Electronics Co. Ltd., contributed $433,000 to Applied Films after its first quarter of operation from April to June.

Still, the technical nature of some photonics products can make international partnerships difficult.

Boulder-based Research Electro-Optics Inc. produces gas laser tubes and customer- designed optical components. International sales account for about 5 percent of its total business.

“It has not been part of our business plan to date to build a relationship with a Japanese trading company to sell our optical components,@ says N.E. Rick Strandlund, president of Research Electro-Optics. AThere are infrastructure issues when making custom components. You need to not only speak the same language, but relay to the home office information that is understandable and meaningful.”

Founded in 1994, the firm has 90 employees. According to Strandlund, 1999 revenues are expected to be around $10 million.

Local connections can be a way to go global as well.

Last November, Displaytech and Hewlett-Packard Co. formed an alliance to design, manufacture, market and distribute microdisplay components. In May, its first product, a QVGA display, used in viewfinders for digital cameras, camcorders and portable communications devices, was introduced.

HP will distribute the product in Europe and the United States. Nissho will handle Japan.

The Colorado Photonics Industry Association, universities such as the Colorado School of Mines and the University of Colorado at Boulder, federal labs and institutes like the Colorado Advanced Photonics Technology Center in Aurora, provide photonics firms with a regional infrastructure.