Heavy weight! The Industrial Policy of China's Laser Industry's Great Rise

The "the Four Great Inventions" of ancient China, such as the compass, papermaking, gunpowder and printing, have made indelible contributions to the world's scientific and technological progress. The "New Four Great Inventions" of the 20th century have completely rewritten the historical track of the world's scientific and technological development. They are "atomic energy, semiconductors, computers, lasers", and lasers are the protagonists we are going to talk about today.

The development of the laser industry is mainly due to the extremely wide range of application fields of lasers. The development of the laser industry in China is almost synchronous with that of developed countries in the world, and the development paths are different. In the early stage of technological blockade, the Chinese laser industry struggled to survive. With the evolution of globalization, the Chinese laser industry ushered in a golden period of development around the 21st century.

After more than 10 years of rapid development, China's production capacity of small and medium power lasers has greatly increased, but the production process of high-power lasers is monopolized by foreign countries, and China's laser industry is still in the middle and low-end links of the global laser industry value chain.

1.Under the impact of the epidemic, the performance of listed companies in the laser industry has fallen short of expectations

The year 2020 is an extraordinary year. The COVID-19 is raging around the world, and Sino US trade frictions are escalating. The global industrial chain is structurally unbalanced in supply and demand, with shrinking demand and insufficient supply. The laser industry is no exception, especially the high-power laser market, which is heavily dependent on imports, has been greatly impacted.

With the comprehensive control of the epidemic in China in the later stage, the laser industry has recovered to some extent. However, judging from the revenue performance of laser concept listed companies in China's laser industry, many companies still suffered significant impacts in 2020.

We have compiled the operational data of nearly 30 laser listed companies, and the financial performance of listed companies varies. 28 companies have achieved performance growth, among which 11 companies such as Gaode Infrared and Jept have achieved performance growth of over 10%; 11 companies experienced a decline in performance, accounting for approximately 38%. Four companies, namely Qingniao Huaguang, Diweixun, Xinguang Optoelectronics, and Daheng Technology, experienced a decline of over 30% in performance, with Qingniao Huaguang experiencing the most significant decline at 57%. Leading semiconductor laser company Ruike Laser, as well as three other companies including Wanji Technology and Jinghua Laser, have underperformed expectations with growth rates below 2%.

                                                                                                                                                                                       Figure 1 Performance of Laser Industry Listed Companies in the Third Quarter of 2019-2020

                                                                                                                                            

                                                                                                                                                                           Source: Compilation of Public Information (OFweek Industry Research Center)

2. Policy benefits continue, and the regional layout of the laser industry is promising in the future

One of the pillar industries of China's future is intelligent manufacturing, and one of the cores of intelligent manufacturing is optoelectronic technology. Laser is also one of the cores of optoelectronic technology. Therefore, it can be seen that the laser industry plays an irreplaceable role in strengthening China's intelligent manufacturing industry and achieving the transformation from a manufacturing power to an "intelligent manufacturing powerhouse".

The development of Chinese industries is relatively susceptible to the influence of policy environment, and the government has always paid high attention to the development of the laser industry.

In 2009, the Ministry of Science and Technology released the "National Torch Plan Priority Development Technology Fields", which first proposed to prioritize the development of new laser processing equipment. In 2015, additive manufacturing technology was included in the "Made in China 2025" plan. In 2016, "accelerating the development of high-power fiber lasers with independent intellectual property rights" was included in the "Thirteenth Five Year Plan for National Science and Technology Innovation". In 2020, "promoting breakthroughs in key core technologies of laser manufacturing" was included in the "Strengthening Basic Research from 0 to 1" work plan. The policy support for the laser industry continues to increase, and high hopes are placed on breaking through the "bottleneck" technology bottleneck of the laser industry.

                                                                                                                                                                                             Figure 2: Policy Roadmap for National Support of Laser Industry Development

 

                                                                                                                                                                           (Source: OFweek Industry Research Center for Public Information Compilation)

Local governments actively implement national policies for the development of the laser industry, and have introduced laser industry policies in conjunction with regional development realities.

Guangdong Province has taken the lead in releasing the provincial-level plan for cultivating and developing the laser industry, the "Action Plan for Cultivating Strategic Emerging Industry Clusters of Laser and Additive Manufacturing in Guangdong Province (2021-2025)", and proposed four major development goals for the laser and additive manufacturing industry in the future: "maintaining leading industrial scale, significantly improving industrial innovation capability, continuously optimizing industrial layout, and improving industrial ecology". At the same time, six key tasks have been proposed to promote coordinated development, including the layout of precision laser manufacturing in Guangzhou, laser devices in Shenzhen, and Zhuhai.

Shenzhen, Jiangmen and other cities have successively introduced support policies for the laser industry, providing unprecedented financial and spatial support for the development of the laser industry.

The Implementation Plan for Accelerating the Development of Laser Industry in Chengdu, Sichuan Province has set the goal of achieving a laser industry scale of 12 billion yuan and driving the scale of laser related industries to exceed 100 billion yuan in the next 3-5 years.

                                                                                                                                                                                          Figure 3: Relevant Policies of Provinces and Cities Supporting the Development of Laser Industry

                                                                                                                                                                              (Source: OFweek Industry Research Center for Public Information Compilation)

The national environment for the development of the laser industry is continuously improving. During the 2020 Two Sessions, Xi Jinping proposed that "facing the future, we should take meeting domestic demand as the starting point and foothold of development, accelerate the construction of a complete domestic demand system" and "gradually form a new development pattern with domestic circulation as the mainstay and domestic and international circulations mutually promoting each other, cultivating new advantages for China's participation in international cooperation and competition under the new situation". In such a pattern, the market supply and demand environment of China's laser industry will be more stable.

At the same time, the continuous introduction of policies related to the laser industry by the central and local governments has guided China's laser industry towards higher end development. The path of rapid and high-quality development of the laser industry has emerged, and the development prospects of the laser industry are worth looking forward to!