Twenty years in the making, the photonic big bang is near

Over the past two decades, on more than one occasion the time seemed right for integrated-photonics technology to move beyond niche applications. Now finally, everything is lined up for that to happen, says Lionix International CEO Arne Leinse. It will require one more bold investment push, however.

What will Lionix International look like in ten years? Doubled in size to 100 employees or so, says Arne Leinse, CEO of the Enschede-based integrated-photonics pioneer celebrating its 20th anniversary this year. That might not sound very ambitious, especially coming from a man who three years ago predicted that the Dutch integrated-photonics industry will be generating billions of euros in revenue by 2025. Shouldn’t Lionix be getting a tasty piece of that huge pie?

Yes and no, Leinse explains. “Lionix is a mixture of an engineering house and a foundry – a vertically integrated foundry, as we like to call it. We develop customized solutions for our customers, going from design all the way up to fully assembled modules. We have facilities to manufacture and assemble chips in low and medium volumes, but we don’t do high volume ourselves. We do however supply the modules in high volumes to our customers by partnering with high-volume foundries. There’s room for Lionix to grow, but it’s companies that take photonics solutions to the market that have the potential for massive growth.”

Having co-founded two of such companies – Phix, a photonic-packaging foundry, and Surfix, which develops a photonics-based biodiagnostic platform – Lionix still stands to benefit handsomely from the ‘photonic big bang’ Leinse predicts willhappen. He has to admit, though, that this is taking longer to happen than he anticipated. “The market definitely hasn’t been developing as fast as I would have liked.”

The opportunity is still there, Leinse says, if the Dutch photonics ecosystem is enabled to seize it. “If we don’t accelerate now, China and the US will overtake us within five years. We need to set up high-volume manufacturing facilities. We started Phix for the assembly part, but we still need a foundry for the chips. If we get that on the road, this will inspire confidence with OEMs and system integrators to start using integrated-photonics technology on a large scale. It will require major investments, but if we manage to drum those up, 1+ billion euros in revenues really isn’t such an outlandish number.”

Majority share

Over the past two decades, Lionix has experienced first-hand how hard it has been for integrated photonics to gain a foothold outside niche markets. Almost immediately after being founded, it saw its target market crumble. Lion Photonics, as the company was originally called, was started in January 2001 to develop photonic integrated chips (PICs) for communication systems. Weeks later, the telecom bubble burst.

“Integrated photonics was really hot back then. Startups popped up all over the world, it was easy to find investors. Most of them didn’t make it because venture capitalists didn’t have the patience. Lion Photonics is still around because our founders Hans van den Vlekkert and René Heideman invested their own money. And it has always been their intention to build a lasting addition to the Dutch high-tech industry. I wholeheartedly share that ambition,” says Leinse, who joined Lionix in 2005 and succeeded Van den Vlekkert as CEO last year. Heideman is still CTO.

Clearly, though, the original plan to capitalize on the telecom hype with integrated photonics wasn’t going to work out. Within a year, Lion Photonics acquired MEMS and microfluidics activities to become Lionix. Next to integrated photonics, these technologies have remained an important pillar for the company to this day. “We operated as a kind of blend of an engineering house and a foundry. We develop demonstrators for customers, with the goal to manufacture the final product in volume.” Lionix’s manufacturing operations are at the Mesa+ Nanolab, a shared production facility set up by the University of Twente.

Near the end of the decade, however, Lionix spotted two opportunities for the application of integrated photonics on which it didn’t want to pass up. It still had no desire to market its own products, though. Instead, it started two subsidiaries: Satrax, focused on wireless broadband communication, and Xio Photonics, focused on life science applications. Both companies developed modules based on Lionix’s photonic chips. “We expected that these companies would become major customers within a few years.”

It wasn’t to be. The financial crisis didn’t exactly help, but, in hindsight, the time for the breakthrough of integrated photonics simply hadn’t arrived yet, says Leinse. “In the end, it’s a matter of whether companies are willing to embrace a disruptive technology. Or even a single company, to set things in motion. That didn’t happen, unfortunately.”

In 2016, instigated by a new-found Korean investor, Lionix absorbed Satrax and Xio Photonics to become Lionix International. “It wasn’t a big transition. Obviously, we had been working very closely with our subsidiaries. In addition, Lionix has always operated as a one-stop shop, meaning we assume responsibility for the outcome of outsourced services that we don’t provide ourselves. By absorbing Satrax and Xio Photonics, we took that model one step further and became a vertically integrated company that handles everything from design to volume production.” In 2018, another Korean company, Magic Micro, acquired a majority share in Lionix International. Through Magic Micro, Lionix has access to volume production of PICs.

Sunk in

Today, integrated photonics is still waiting for its big breakthrough. However, Leinse is seeing some very strong omens. Customers are calling Enschede about the technology that Satrax was trying to sell before: a technology push has turned into a market pull. The rise of augmented and virtual-reality technology presents unique opportunities for photonic chips. And the technology of subsidiary Surfix is ready to take off, according to Leinse: Lionix and several other investors recently injected Surfix with 8.5 million euros to industrialize and clinically validate its point-of-care diagnostic platform.

“We’ve been pushing the boulder uphill for a long time and I believe we’re about to reach the summit. As a company, we’re doing what we can to seize this opportunity, but, ultimately, a national effort is required to make the most of it.” This is exactly why Photondelta was founded, a public-private partnership to boost the emerging Dutch integrated-photonics industry by fostering cooperation, facilitating knowledge sharing, attracting investors as well as co-investing in key projects and companies, among which Surfix and Phix.

That has worked out very well, says Leinse. “The Americans and Chinese think our ecosystem is a little odd, but companies working together is clearly essential for success. Even if there’s a little friction now and then, because of competing interests, it’s always going to be better to grow the pie that we all eat. By lining up the entire value chain and strengthening it with strategic investments, Photondelta has been making that happen.”

“Photondelta has also done a great job getting integrated photonics on political agendas,” Leinse continues. “I get asked sometimes why we allowed ourselves to be acquired by a Korean company, instead of a Dutch one. The answer is very simple: five years ago, it was impossible to find a Dutch investor. Now, the Ministry of Economic Affairs and Climate is investing public money to make sure that the Smart Photonics foundry in Eindhoven remains in Dutch hands. Clearly, the importance of integrated-photonics technology has sunk in. It’s considered a key enabling technology.”

Still, Leinse warns, it’s going to take another bold leap to really make the most of the potential. “Lately, we’ve seen a renewed interest in the manufacturing industry across Europe. Well, let’s build a fully automated, high-volume photonics foundry in the Netherlands then! That will drive applications forward. In fact, the applications aren’t much of a concern right now. It’s finding the investors for those 100+ million euros we need.” Looks like the Photondelta ecosystem is about to face its greatest challenge yet.