Europe’s photonics sector is at a crossroads. It continues to lead globally in high-performance optics, precision engineering, and industrial photonics — but faces stiff competition from China in mass markets and from the U.S. in venture-driven innovation. Meanwhile, rising geopolitical tensions and shifting trade policies are redrawing the map for supply chains, research collaboration, and public investment. Courtesy of iStock/asbe. Photonics21, the European technology platform representing more than 4300 members, plays a central role in shaping the European Union (EU)’s photonics agenda. Its current president, Lutz Aschke, is a physicist and industry leader who has spent decades at the interface of science, startups, and strategy. Photonics Spectra contributing editor Andreas Thoss spoke with Aschke about Europe’s strengths, gaps, and the future role of photonics in global competition. Thoss: Photonics is one of the decisive technologies of the 21st century. Where does Europe still hold a competitive edge, and where is it falling behind? Aschke: Europe remains a powerhouse in photonics, especially in high-tech, deep-tech segments dominated by small- to medium-size enterprises (SMEs). We still lead in areas such as medical technology, manufacturing, sensing, security, and telecom. However, we have seen China take over in mass markets such as consumer imaging — cellphone cameras, for instance — largely due to its aggressive scaling strategies. Europe excels at what we call “high mix, low volume.” This describes complex, specialized products that require close customer interaction and highly skilled labor. This is deeply rooted in our working culture. Thoss: Europe’s SME landscape is unique, especially with so many “hidden champions.” Why do they thrive here? Aschke: It’s about excellence over scale: Many of these companies were founded by entrepreneurs who still run them, valuing technical leadership over fast growth. This leads to sustainable innovation. Plus, the tight integration with research institutions and a long-standing culture of engineering excellence have created fertile ground for these companies to lead globally in their niches. Thoss: That brings us to research. How do you describe Europe’s photonics research ecosystem? Aschke: We have an incredibly strong ecosystem, from fundamental research at places such as the Max Planck Institutes to application-focused research and technology organizations (RTOs) like the Fraunhofer Institutes or ICFO in Spain. Our public-private partnerships, especially under Photonics21, foster constant dialogue between industry and science. This collaboration is key to translating breakthroughs into commercial products. And the EU’s funding frameworks have supported this alignment for years. Thoss: Is this system prepared for future growth? Aschke: Definitely. We have identified enough topics of focus for the upcoming decades, and we are actively in discussion with the European Commission. The challenge lies in translating these topics into scalable businesses. We’ve made progress — venture capital is more accessible than it was 15 years ago. And we have many startups now that are able to raise risk capital for the next growth period with two- to three-digit million euro amounts. That’s good to see, but it is still more difficult compared to [how it is] in the U.S., for example. At the 2025 meeting of Photonics21 in Brussels, Henna Virkkunen, European Commissioner for Innovation, identified photonics as “not only a field of scientific inquiry but a strategic asset for the European Union.” Virkkunen called for the technology to remain central to Europe’s industrial and research priorities in the next funding cycle. Courtesy of Photonics21/Iris Haidau (Babylonia). Thoss: You’ve called for a bold strategic initiative. What would that look like at the European level? Aschke: Photonics is one of the key enabling technologies that is difficult to digest on a political level. Now, we are looking at the Grand Challenges and the big topics where photonics can contribute. There are health and manufacturing, and defense, of course, but telecom, data communication, medicine, agriculture, and food production are also interesting fields. We are currently working on a position paper that outlines our ideas for photonics in the new 10th European Framework Programme for Research and Innovation (FP10) and that includes some concrete calls to action as well as proposals for Grand Challenge programs. We provided the position paper and the Grand Challenge programs to the European Commission in the summer. Thoss: One strategic pillar, certainly, is the European Chips Act. What role does photonics play there? Aschke: A crucial one. First, integrated photonics is now explicitly included in the Chips Act — this is a big step forward. We see pilot lines, for example, a €380 million pilot plant for photonic chips in the Netherlands, as well as the PIXEurope pilot line dedicated to advanced PICs. Led by ICFO in Spain, this initiative unites 20 partners from 11 countries to enhance Europe’s leadership in photonics. Second, photonics enables semiconductor manufacturing itself, from lithography to advanced metrology. That makes us an indispensable part of the semiconductor value chain. Thoss: Two years ago, CEOs from eight leading European integrated photonics companies joined to propose a €4.25 billion plan for PICs. Has there been any progress? Aschke: Yes, some of the elements made it into the Chips Act, but we haven’t yet seen that level of investment. The good news is that the European Commission is engaged, and discussions about the next funding cycle, FP10, are ongoing. Europe has a unique chance here. PICs don’t follow the same economies of scale as silicon. They are more diverse in terms of materials and use cases. That fits Europe’s strength in complex, small-batch production. Lutz Aschke has served as president of Photonics21 since 2022. The association is based on the European Technology Platform Photonics21, which has more than 4300 members from industry, science and research, academia, and policy. Courtesy of Markus Steur. Thoss: The European Commission is often seen as slow-moving. Is the role of photonics in AI, green energy, or quantum technologies recognized in Brussels? Aschke: In parts, yes. Directorate-General Connect, for example, is very aware. But the challenge remains: Photonics is not a self-explanatory label. It’s not one product or one industry. It is everywhere, impacting the economy and society. So, we have to constantly communicate and educate. Fortunately, we’ve built strong channels with the Commission. But yes, we have to repeat the message as personnel rotate. Thoss: Let’s talk bottlenecks. Photonics21 member companies are growing fast, but what’s holding them back? Skills? Capital? Regulation? Aschke: All of the above. Skills is a big one, especially for startups, which usually operate in English to attract international talent. But we still lack enough engineers and specialists across the board. On capital, as I mentioned, there has been progress. But we still need to work on cultivating support for scale-ups. Regulation is another tricky area. For instance, in AI or medtech, if rules are unclear or even changing, innovation becomes risky. In my personal experience, you have to deal with such bureaucratic aspects if you really want to push an issue forward, and then you do your business. The graph shows China’s ascent in the global photonics market and its market share compared with Europe and North America. Adapted with permission from Reference 1. Thoss: On a global level, how important are transatlantic relations for photonics? Aschke: Incredibly important. Europe and the U.S. share not only technologies but also values around scientific integrity, standardization, and open markets. We have long-standing personal and institu- tional ties. And given China’s rise in this field, closer transatlantic cooperation makes even more sense. I believe we can compete globally without confrontation — through what we call “coopetition.” We cooperate where it makes sense, and compete respectfully in the market. Meet the interviewee Lutz Aschke was elected president of Photonics21 in January 2022. He has a scientific background in plasma physics, with expertise in deep-ultraviolet optics, extreme-ultraviolet light sources, and laser fusion. He has held C-level positions in both large enterprises (Mahr, TRUMPF, SCHOTT) and SMEs (Limo). Aschke serves on the boards of midcap enterprises and startups in laser and quantum technology, as well as industry associations (lasers, micro- and nanotechnology, optics), research institutes (Fraunhofer), and advisory groups for the former German Federal Ministry of Education and Research. His primary focus today is on innovation and commercializing technology. He holds a Ph.D. in physics and additional education in finance, innovation, and quality management. Opportunity in Innovation Photonics21 — Europe’s voice for light technologies Founded in 2005, Photonics21 is the European Technology Platform for photonics — a key enabling technology spanning applications from health care and AI to quantum and clean energy. Today, it has more than 4300 individual members from across Europe. Together with the European Commission and within the framework of the Public-Private Partnership, Photonics21 shapes the EU innovation agenda through close dialogue between industry, research, and policy. Embedded within Horizon Europe, the Photonics Partnership coordinates 10 pilot lines and service hubs to support SMEs and startups, offering “test-before-invest” infrastructure for early-stage photonics innovation. Photonics21 fosters democratic engagement across seven expert working groups that feed directly into EU R&D strategy, ensuring that Europe’s photonics sector remains globally competitive and socially impactful. The European Chips Act: Europe’s response to semiconductor vulnerability The European Chips Act, adopted in 2023, is the EU’s strategic initiative to boost its share of global semiconductor production and reduce dependence on foreign supply chains. It aims to double Europe’s global market share in semiconductors from 10% to 20% by 2030. The Act mobilizes more than €43 billion in public and private investment to support R&D, pilot lines, skills development, and advanced manufacturing capacity. It consists of three pillars: • Pillar I: Supports research, design, and innovation across Europe’s semiconductor ecosystem. • Pillar II: Focuses on securing supply chains and building large-scale production facilities — so-called first-of-a-kind fabs. • Pillar III: Establishes a crisis response toolbox for monitoring supply risks and intervening during shortages. For photonics, the Chips Act is highly relevant, particularly in Pillars II and III, which address the supply security and resilience of critical technologies such as PICs and micro-optics, both of which are essential to next-gen computing and communications. Photonics-based semiconductor manufacturing technologies, such as lithography and optical metrology, are critical enablers of the chip industry. One of the key players in this space is the firm ASML, Europe’s largest supplier for the semiconductor industry. As is true of the U.S. CHIPS and Science Act, which allocates $52 billion to revitalize America’s semiconductor industry, the European initiative reflects growing geopolitical concern over technological sovereignty and supply chain resilience. Europe’s photonics industry at a glance: A driver of innovation, growth, and resilience1 • Market volume: Annual European photonics revenues reached €124.6 billion in 2022. • Growth rate: The European photonics market grew at a 6.5% compound annual growth rate between 2019 and 2022, while the EU gross domestic product (GDP) grew at ~2% annually. • Speed versus GDP: Between 2015 and 2019, photonics grew 3× faster than the EU’s GDP (7% versus 2.3%). • Global position: Europe holds ~15% to 16% global market share, ranking second behind China. • Company structure: Approximately 5000 companies, 55% of which are SMEs with fewer than 20 employees. • Jobs: European photonics accounted for around 430,000 direct jobs in 2022; approximately 35,000 jobs have been added since 2019. • R&D intensity: The industry invests 10% to 11% of revenue into R&D, up to 15% of which is among SMEs. Per the Photonics21 Market Research Study 2024, Europe holds ~38% of the Industry 4.0 market, ~38% of the optical instrumentation market, and ~24% of the defense/security market. The continent leads in each category. Reference 1. Photonics21 and Tematys (May 2024). Insights into the dynamic photonics market (2019-2022): European prowess, emerging trends, and the path towards global photonics advancements. Market Research Study Photonics 2024, www.photonics21.org/download/ppp-services/photonics-downloads/market_research_study_photonics_2024.pdf.