Prepared Remarks
Ray Kammer
Director, National Institute of Standards and Technology
Optoelectronics Industry Development Association
Washington, D.C.
October 2, 1998
- Good morning and thanks for inviting me to speak today.
- We at NIST and the Department of Commerce admire and appreciate what the
Optoelectronics Industry Development Association is working to accomplish. I am certain that
other federal technology agencies and laboratories would agree. We are not only grateful for
OIDA's leadership but we are impressed with what has been accomplished in seven short years.
- I think we are gathering at a fortuitous time for OIDA, the optoelectronics industry, and for
NIST. The winds of change are in the air and they are blowing in the right direction. And
partnerships between and among government, industry and universities are key.
- Congressman Ehlers discussed the new draft national science policy study with you earlier
today. This study is being used to help focus Congress and policy makers on this most important
policy area where tough decisions must be made.
- I appreciate Representative Ehlers' invitation to comment about the draft study, and I
encourage you to do that, too. I would like to see the study be more explicit about the
appropriateness of the federal government's role in infrastructural technologies -- including
measurement- and standards-related research that supports both science and industry. I also
would like to see the study allow some room for the government to co-fund high-risk civilian
technology research and development undertaken to benefit the economy. The report recognizes
the growing "valley of death" between basic research and actual technology development, and
the kind of infrastructural and high-risk work of the sort that NIST does in close cooperation with
the optoelectronics industry helps to fill that gap.
- The new House science study takes note of the importance of cooperation and partnerships,
and I particularly like the report's overview statement on basic principles in partnering:
"First, participants should have common goals and complementary skills, and should
understand and accept the others' priorities. Second, the partnership must be based on a
shared interest in the research that will be performed and provide each participant with
meaningful results. Finally, participants must set explicit outcome goals and procedures
before the collaboration begins."
The report adds that "trust and communication between partners is critical to success
and must be cultivated."
- I couldn't agree more, and I hope that updates to the report go even further to recognize
partnerships which extend beyond personnel exchanges, including roadmapping and cofunded
research.
- I am going to talk about cooperation -- that's what you asked me to do, after all -- and I am
going to use NIST as an example of some of the advantages of partnering. And I firmly believe
that for nearly a century, NIST has approached cooperation in exactly the way the new science
study recommends.
NIST: The Big Picture
- NIST is dedicated to helping American industry become more competitive in the world
marketplace. Our programs are planned and carried out in cooperation with industry.
- Through our Laboratories, we provide leadership and technical support in the
development of a strong industrial infrastructure in metrology.
- Through our Advanced Technology Program, we cofund with industry R&D to
support technological innovation.
- Through our Manufacturing Extension Partnership we work with small and medium
sized companies to help them to improve their manufacturing capabilities.
- And through our Baldrige National Quality Program we recognize companies that
attain high quality and serve as a model for others. Corning Telecommunications
Products Division and Motorola are both past winners of the Baldrige Award.
The Optoelectronics Sector: Impact and Opportunities
- In our programs and planning, we recognize the importance of the optoelectronics industry
as
a key enabling technology. Optoelectronic components represent a sizeable market in
themselves
-- I am told that it ranges from $30 billion to $50 billion per year depending on what definition is
selected.
- But the real power of the optoelectronics industry is in the high technology markets that
these components make possible. That's something which I know has escaped most of the
general public and policy makers.
- They might know that modern telecommunications and the Internet would not be possible
without optical fiber, but they probably don't know that lasers are involved. Nor do they realize
that compact disc entertainment systems and CD-ROM drives on computers would not be
possible without the $2 laser that reads the data. I will have more to say about that in a few
minutes.
- We at NIST recognize that now-familiar products based on optoelectronic components are
just the beginning. The recent report from the National Research Council called "Harnessing
Light for the 21st Century" -- which you just heard about -- talks about some of the advances we
can expect.
- But we also know that, as an industry, you have some concerns. We know that U.S.
companies have only 20 to 25% of the world market in optoelectronic components. And we
know that is particularly frustrating to you, because many of the most significant technological
advances in the field have occurred here.
- There are only a few examples of high volume manufacturing of optoelectronic components
in the United States. Moreover, we realize how much optoelectronics technology itself is being
pushed and transformed, and how that affects R&D agendas.
R&D Trends: Beneath the Numbers
- My colleagues and I at NIST have been spending a fair amount of time taking a fresh look at
what is really happening when it comes to research and development across the board,
not just in optoelectronics. We have been examining what we are and are not
doing, and we have been thinking about the prospects for change. Looking beneath the simple
numbers about R&D trends is revealing.
- I want to share some fairly straightforward facts and thoughts about our overall situation, and
then I want to speak more specifically about NIST's work in optoelectronics, what we have done
for you lately, and what we plan to do -- cooperating with you -- in the future.
- First, too many pundits are paying too much attention to the gross numbers about R&D in
the
United States. It's true that total R&D is moving up again as the economy has regained its
strength. But if you look at the details, at the content and conduct of R&D, the
picture takes on a decidedly dimmer image. No one could reasonably argue that the
amount of technology isn't important. It is. But too often we overlook:
- the types of technology, which are either home grown or acquired, along
with
- the productivity, or efficiency, of the R&D that produces new technologies.
- An increasing number of products in the marketplace are actually systems, raising the
complexity of R&D and reducing individual companies' ability to conduct all of the needed
R&D.
- More and more, those systems that meet final demand are information-based, with
optoelectronics subsystems playing a role that is front and center to the action.
- More and more product innovations require multidisciplinary R&D, which
significantly increases the scope of the R&D capabilities required. And they require
development times well beyond those acceptable to most companies.
- The result? More technologies are requiring greater risk and longer R&D cycle times. And
that is in direct conflict with the pressures of the marketplace, where investors and managers
insist on lower risk and shorter cycle times. The National Association of Manufacturers reports
that 83 percent of all manufacturing firms require a payback of under three years -- under three
years!
- More and more radical and breakthrough product innovation is needed for long-term
profitability and employment growth. One survey found that 45 percent of respondents allocate
more of their R&D to product line extensions than to new product development.
- So we see a drastic reduction in the larger, more fundamental R&D operations, the Bell
Labs, the GE corporate labs, that could be rationalized and afforded. These labs have changed,
and others like them have disappeared. With their departure we have undercut a critical part of
our science and technology base that supports our long-term needs. This trend becomes ever
more critical as the larger firms, the OEMs, now increasingly rely on their suppliers to conduct
the necessary R&D.
- We also see that the multidisciplinary nature of R&D and new technologies poses a real
challenge to our university research community. Individual universities with broad-based, multi-
disciplinary capabilities in optoelectronics are few and far between.
- So at a time when centralized corporate-managed long-term R&D is being cut and policy
makers are looking more and more to universities to assume the role of basic R&D performer,
they just aren't as well equipped as they need to be to deal with the interdisciplinary challenges.
It may be that one of the few places left for true multidisciplinary work are the government-
funded laboratories, and they are under plenty of budget and mission-related pressures.
- These trends carry significant policy implications. They require a more integrated
innovation
delivery system, and that means government-industry-university cooperation.
- I want to make one more point about the changing nature of R&D that has special
importance to the optoelectronics sector. It is our high-tech service industries that have really
made major changes. They have grown at a much faster rate than the economy as a whole and
they have made huge investments in information technologies. They exhibit a trade surplus and
are a growing proportion of our overall trade. And they have increased R&D spending
significantly, even though they began with a very small base.
- The rapid growth of service-sector R&D spending and its different character from
manufacturing R&D are creating major new requirements for technical infrastructure support,
something that you -- and we -- care about a lot.
- Here's a number that shocked me: the rate of return on investment in IT capital by the
service sector is almost 200 percent, compared with just 11 percent for non-IT capital. That tells
us that we are woefully under-investing in the IT area, despite our $200 billion-plus annual
expenditures on IT equipment in recent years.
- Each of these changes in R&D, its complexity, its interdisciplinary nature, the drop off in
corporate centralized R&D operations, the dramatic growth in service sector R&D and the
reliance on information technologies is shaping the way we at NIST are looking at our own
mission and customer demands. And that takes me back to the optoelectronics sector, your
needs, and the way we are trying to meet those needs.
NIST and the Optoelectronics Industry: Accomplishments
- We at NIST have been pleased to be able to work with your association and your industry in
addressing your concerns from the standpoint of technology development, measurements, quality
and standards. We have a long history of support for the optoelectronics industry. Cooperation
has been the key.
- Since the 1960s we have been developing measurement technology for lasers. We calibrate
laser power meters and detectors for many of your member companies, allowing you to comply
with laser safety regulations and International Organization for Standardization (ISO) quality
requirements.
- Since the 1970s we have been developing measurement technology for optical fiber
communications and assisting with the development of measurement standards. Our artifact
standards -- Standard Reference Materials -- are used to control dimensions in the manufacture of
optical fibers and to calibrate much of the instrumentation used in the field. We provide
wavelength standards to assist in the development of the most advanced wavelength division
multiplexed (WDM) communication systems, chromatic and polarization dispersion standards
that relate to the capacity of a fiber, and dimensional standards that relate to the connection of
fibers. Soon we will have Standard Reference Materials for integrated optic components, optical
data storage, and semiconductor lasers and LEDs, among others.
- As the needs of your industry have grown and our work expanded, we established a division
-- the Optoelectronics Division -- explicitly to provide measurement technology, standards, and
traceability for the industry. This division works with other divisions of NIST that perform
work of direct importance to the optoelectronics industry. We are committed to supporting the
optoelectronics industry to the extent that our resources permit.
- From the earliest days of your Association, you have invited us to participate in your
activities, to learn about your needs and share insights. We have watched with admiration as you
have studied the problems and opportunities through many topical workshops. And gradually
you have drawn our attention to just a few, very high priority, areas for investment: compound
semiconductor manufacturing; packaging, modeling and simulation; and metrology.
- Last year, your leaders came to NIST to encourage us to address the first three of these needs
through a focused ATP competition. The story was compelling, and affirmed vigorously by
many individual companies and local industry groups. We decided to go forward with the
competition, which we called Photonics Manufacturing, and there was a tremendous response
from the industry. We had 98 pre-proposals and 60 full proposals. Out of those, 16 were
selected as semifinalists.
- I know that Phil Perconti from the ATP office had planned to be up here next to describe our
final selections, but the timing turned out to be just a bit too tight, so I offer apologies on behalf
of Phil and ATP.
- But we do plan to announce the results next week. I can tip you off by telling you that 10
proposals have been selected for funding. That is a very healthy result; the photonics
manufacturing competition ties one other ATP competition for the most awards this year. This
sector clearly was able to demonstrate the promise of high-risk research and the need for ATP
co-
funding.
- This year, your leaders returned to NIST to tell me about the industry's needs for even
greater investment in metrology and standards. Again the story was compelling. Industry
executives have spoken clearly about the successful industry-NIST partnership in developing
measurement technology and standards for optical fiber.
- They believe it played an important role in helping them establish the international
competitive position they enjoy today. And they believe we now have a good model for
working on other tasks the optoelectronics industry has identified as high priority.
- International standards is another area that we should discuss. It concerns me and I know it
concerns you.
- In my relatively short term as director of NIST, I have made one of the agency's goals to
become a more forceful player in the arena of international standards development. I see the
problem as three-fold.
- First, other countries -- notably in Europe -- have been quick to recognize the
importance of standards and realize they can create a competitive advantage in world
markets by strongly influencing the content of international standards. We need to shore
up our representation -- and influence -- in international standards-writing bodies, such as
ISO and the International Electrotechnical Commission (IEC).
- Secondly, our domestic standards-development system is fragmented and, in some
cases, ineffective. We need to work more effectively to resolve our differences with one
another to achieve a unified U.S. approach in the setting of international standards. That
might need to include federal support for ANSI on broad-based standards efforts and
international representation.
- Third, we need to consider combining those first two strategies and joining with other
countries to help re-engineer ISO and IEC so that they better accommodate U.S.
technology and standards.
- The optoelectronics industry has had its successes and failures in the standards-setting arena.
Your leadership has told me about the fragmentation in the standardization activities within the
industry. I understand there are at least 20 organizations that are developing standards
independently and, sometimes, duplicatively. And yet there are other areas where
standardization lags.
- The success in standardization for optical fiber that I mentioned earlier happened under the
umbrella of one of your sister associations, the Telecommunications Industry Association. To
the extent that you can work more closely with other associations in the field, and with standards
groups, your voice is strengthened and the fragmentation diminished.
NIST and the Optoelectronics Sector: Cooperation and An Action Agenda
- "Working together" is the message I would like you to take away today. NIST is prepared
to
accept your challenges and to work even closer and more effectively with the optoelectronics
industry. I see three ways to strengthen our partnership:
- We will strengthen our metrology research programs in optoelectronics to better
serve you;
- We will improve our presence as your advocate in the international standards arena;
and
- We will work with you through the Advanced Technology Program to provide
support for high-risk technologies.
- Let me be more specific.
[Labs]
- First, our labs. We are planning to expand our research in optoelectronic metrology by
making it more of a NIST-wide effort. Throughout NIST, there are many scientists who are
familiar with optoelectronics and who use optoelectronic technologies in other fields--chemistry
and materials science, for example. We believe these people can help address the problems you
face.
- We intend to follow a model we have used successfully in support of the semiconductor
industry.
- We have an office dedicated to finding the resources necessary to meet the high
priority needs of the semiconductor industry, as identified in the Semiconductor Industry
Association (SIA) Roadmap, and then managing a NIST-wide program in response. It's
called the Office of Microelectronics Programs. It is working well and we are getting
excellent feedback from the industry.
- Now, we are planning to organize an Office of Optoelectronics Programs. It will need
industry guidance, analogous to the SIA Roadmap. In that regard, I was delighted to learn you
have already developed a detailed statement of priority needs. I gather that you heard a report on
that yesterday. NIST staff were pleased to participate in the workshop that led to that report and
look forward to continuing the dialog.
- I have asked Gordon Day, who is the Chief of the Optoelectronics Division in our Boulder
Laboratories, to plan and develop the Office. Many of you already know him, since he has
participated in many of your activities from the earliest days of the Association. He was on your
agenda here yesterday.
- Gordon has formed a NIST-wide advisory board to guide the Office and he is working on
funding issues. More importantly, he has already found ways to get new research started on a
couple of your highest priority needs. But there is much work to be done to make the Office a
reality. I know I can speak for him in thanking you for past support and asking for your
continued cooperation.
[Standards]
- A second area of expanded cooperation on our action agenda involves standards. We are
prepared to try to strengthen our presence as your advocate in the international standards arena. I
was particularly interested to read the comments about standards in the NRC report I mentioned
earlier.
- It said: "Government agencies and the optics community should recognize the
importance of optics standards, especially their significance in international trade. The
U.S. government should participate actively in the setting of such standards. NIST
should be given the funding necessary to take the lead in this area."
- In fact, we just held a "summit" on the international standards issue in Washington, D.C. last
week. Our goal at NIST is to work with the private sector to develop a reasonable plan for an
effective national standards strategy, the sort of strategy I mentioned earlier. I think we got off to
a good start at the summit. There was strong agreement on the need for a strategy and even some
commitment to get to work on the tough -- and too often, provincial -- details.
- NIST pledged to work together with standards developers, conformity assessment
bodies, industry leaders, and government representatives to solve the competing issues of
revenue recovery, intellectual property, and good U.S. technical input to international
standards. And we tentatively decided to hold a follow up summit with ANSI on
conformity assessment issues.
[ATP]
- Our third action agenda item involves higher-risk research. Our Advanced Technology
Program will continue to monitor the needs of the optoelectronics industry, and respond as it can.
As you know, the ATP program has been controversial with some members of Congress virtually
since its inception. We have never been funded to the extent the Clinton Administration would
like and, consequently, the program has not grown as rapidly as we wished or hoped for.
- This year there has been some movement on the Hill to eliminate the focused program areas.
If this were to happen, your industry could be directly impacted. Funds awarded in the current
focused competition are safe and will be distributed over the next several fiscal years. But there
would be no opportunity for future focused competitions. Every award would be made in one or
more general competitions each year.
- The good news is that both the Senate and the House have voted to fund the ATP -- and that
hasn't always been the case. We have often had to rely on the White House's insistence for ATP
funding.
- With our fiscal year 1999 funding still up in the air, it is anyone's guess how we will
come out.
Communicating, Communicating, Communicating
- I began by citing the new congressional National Science Policy study, and that's the way I
will end. Along with an emphasis on partnering, the report also placed high priority on improved
communications between scientists and engineers and the public. The report declares that the
gap between scientists and journalists is wide and possibly getting wider, and it suggests some
ways to close that gap. But the report also calls for scientists and engineers to deal more directly
with the public, speaking about their work.
- NIST's goal of aiding U.S. industry in becoming more competitive in the international
marketing arena can be more achieved more readily if you help to educate policy makers, the
news media, and the public about the importance of research and development, especially in
optoelectronics-related areas.
- I encourage you as members of OIDA and as representatives of your companies and
businesses to make your views known, including to Congress. Comment on the new
congressional science study. Share the vision for your industry -- a vision that includes an
expanding share of world markets and increasing productivity and job growth at home.
- Arpad Bergh and OIDA should be congratulated for spending as much time educating policy
makers as you do. I can tell you that it does make a difference when the private sector speaks.
- And don't overlook the media. I realize optoelectronics won't often make the front page, but
the media can help tell your story. I've noted the attention that optoelectronics is beginning to
receive in the popular press -- for example, an article in Newsweek a few months ago calling the
next millennium the "Age of Light."
- Look to the national business publications such as the Wall Street Journal,
Business Week, and Fortune; get to know the reporters who cover your
industry or who cover high technology developments. Don't be reticent about sharing
with them your accomplishments as a company or as an industry. Become familiar with
the business editors of your hometown newspapers -- and don't overlook television,
including the cable business channels like CNBC and the Financial News Network.
- The world is changing at a rapid pace. New alliances and strategic partnerships are needed
to keep ahead of the curve. Change must be seen as an opportunity and not as a problem.
- OIDA is a young organization but it has achieved an early record of success in pulling an
often disparate industry together to face change and carve a vision for the future. Government in
general--and NIST in particular--would like to work with you and be part of your vision for the
future. We will both benefit.
- Thank you.