CHAPTER 7

OPTOELECTRONICS IN JAPAN: SOME ECONOMIC CONSIDERATIONS

Gary R. Saxonhouse

SIZE OF THE MARKET

The Optoelectronics Industry Development Association has estimated (OIDA 1994) that in 1993 markets identified for optoelectronics-enabled equipment totaled approximately $70 billion (Fig. 7.l). While OIDA provides no estimates of national market shares, Japan's Hikari sangyo gijutsu shinkokai (Optoelectronics Industry and Technology Development Association, or OITDA) reports 1993 Japanese production of optoelectronics equipment and components at almost $35 billion (Fig. 7.2). OITDA's definition of optoelectronics-enabled equipment is considerably narrower than OIDA's definition, requiring considerably more optoelectronics value-added for inclusion in production statistics.(Endnote 1) Also, OIDA's estimate is for the value of equipment sold including distribution costs, while OITDA's value of production estimates do not include such costs. Therefore, it is likely that Japanese-based firms together have a global share of the optoelectronics market substantially in excess of 50%.

This very large Japanese market share is the product of explosive growth over the past dozen years, during which time the Japanese optoelectronics industry grew at an average annual rate of 23.7% (Fig.7.2). Such a rapid rate of growth is unlikely to continue in the future; indeed, in the years since 1989, growth has slowed to an average annual rate of 11.6% (Table 7.1). While slower than in the past, this rate of growth is still faster than the U.S. industry's average annual rate of growth of 9.9% over the same period.(Endnote 2) Looking to the future, OIDA (1994) foresees a $400 billion global market in optoelectronics-enabled equipment by 2013 (Figs. 7.3 - 7.6). This implies a 9.5% average annual growth rate in the market for optoelectronics products. This rate differs little from what the industry has experienced over the past few years. Sustained over a twenty-year period, however, it does imply that the industry will be larger by a factor of six. Given the slow rate of growth of gross domestic product expected for both Japan and the United States over the next two decades, if the forecast growth rate of the optoelectronics market is correct, optoelectronics will be a far more important part of both countries' economies than it is today.(Endnote 3)


Fig. 7.1. Global market for optoelectronics-enabled equipment (OIDA 1994).


Fig. 7.2. Production in the Japanese optoelectronics industry, 1983-1993 (OITDA 1994).

Table 7.1
Value of Shipments, Japanese Optoelectronics Industry, 1987-1993
(million Yen)


Indented, non-bold items are not included separately in subtotals; they are subtotaled in the bold line above. Note that individual line totals may not add up to the subtotals and grand totals given here, as some minor categories have been omitted.
Source: OITDA 1994.


Fig. 7.3. Display-enabled equipment markets (OIDA 1994).


Fig. 7.4. Optical communications market size (OIDA 1994).


Fig. 7.5. Optical storage market size (OIDA 1994).


Fig. 7.6. Market for hardcopy equipment (OIDA 1994).


Published: February 1996; WTEC Hyper-Librarian