In today's world, where almost everyone owns a smartphone, capturing life's moments has never been easier. The advancement of optical lens technology has brought us many conveniences, but have you ever considered that Taiwan might be a key player behind these innovations? With the rapid development of AI-driven technologies, Taiwan's optical industry has become an essential part of global technological advancements, spanning high-end LiDAR, AR/VR applications, image recognition, and optical computing.

Development of the Optical Industry

Early to Mid Stages: 1950s – 1970s

In its early stages, Taiwan's optical industry primarily focused on producing low-value-added products such as eyeglasses, magnifying glasses, and telescopes. Benefiting from government tax incentives and labor-intensive advantage, Taiwan gradually established its optical industry.

With increasing involvement from foreign companies such as Philips and Texas Instruments, local Taiwanese manufacturers began investing in R&D. The product scope expanded from simple optical lenses to more complex optical modules used in applications such as SLR camera lenses, zoom lenses, and microscopes.

Transition Period: 1970s – 1980s

Under government policies aimed at upgrading the industrial economy, more foreign firms, including Canon Optical and Germany’s Bosch, set up operations in Taiwan’s export processing zones. At the same time, domestic companies such as LARGAN Precision (3008) and Kinko Optical (6209) began to emerge. During this transition period, Taiwan’s optical industry advanced further, expanding into manufacturing optical production equipment and raw materials.

Thanks to Taiwan's lower production costs and the establishment of export processing zones, Japanese companies gradually shifted their orders to Taiwan, accelerating the industry's growth.

Mature Stage: 1990s and Beyond

Taiwan's optical industry has successfully combined its advanced manufacturing expertise with its strong local electronics industry, enabling it to expand into diverse applications such as televisions, computer screens, fiber optic communications, solar silicon wafers, and laser technology. Taiwan holds a crucial position in the global optical market—for example, approximately 70% of smartphone lenses worldwide are manufactured by Taiwanese companies. Additionally, Taiwan has captured around 30% of the global market share in optical communications and biomedical optics.

Today, Taiwan’s optoelectronics industry encompasses optical materials and components (e.g., LED, solar panels, displays) as well as optical instruments and equipment (e.g., optical devices, lenses, coatings, cameras), with an annual production value exceeding NT$2 trillion.

Optical Industry Supply Chain

Upstream: Raw Materials & Components

The upstream segment supplies the essential raw materials and components for optical product manufacturing, such as optical glass, blanks, and plastic raw materials. Taiwanese companies such as Unique Opto-Electronics (3441) specialize in producing various optical glass, lenses, blanks, and prisms.

Midstream: Modules & Products

The midstream segment processes raw materials into various optical products, including lenses, filters, camera lens modules, and displays. Key players include optical mold manufacturers such as Zhong Yang (6668) and Best Precision (6859) as well as lens manufacturers such as LARGAN Precision (3008) and Genius Electronic (3406), both long-time suppliers of Apple’s smartphone lenses. Meanwhile, Asia Optical (3019) is aggressively expanding into AR/VR lenses to capture future AI-related hardware opportunities. Companies such as Kinko Optical (6209) and Zhong Yang (6668) leverage their expertise in automotive and IoT applications to explore the robotics sector.

Downstream: Assembly & Applications

The downstream segment primarily focuses on sensors and end-user applications, including smartphones, laptops, automotive systems, and drones—fields where optical technology plays a crucial role.

Future Outlook

With the rapid advancement of emerging technologies such as AI, IoT, and the Metaverse, Taiwan's optical industry has the opportunity to integrate cutting-edge technology into innovative applications. These include AR/VR devices, advanced optical sensors, and LiDAR systems for autonomous driving. Additionally, AI-driven image recognition and optical computing are developing rapidly, allowing Taiwanese companies to apply these technologies in medical imaging, smart surveillance, and robotic vision, expanding their technological impact.

AI

The integration of AI with the optical industry will enable applications in image recognition, autonomous driving, and medical diagnostics. These fields require high-precision imaging technology, presenting an opportunity for optical lens manufacturers to tap into the AI market.

For example, in advanced medical equipment, AI-powered recognition technology combined with endoscopes can assist doctors in making more accurate diagnoses, improving early detection accuracy. Autonomous driving also relies on LiDAR and high-resolution optical lenses to analyze road conditions with precision.

IoT

The proliferation of IoT devices will drive demand for optical sensors, benefiting Taiwan's optical industry. From in-car applications and autonomous driving to smart doorbells, industrial environmental monitoring, and robotic vision, optical lenses serve as a key input source for AI-driven systems.

However, the optical industry also faces fierce competition, particularly from China and South Korea. Maintaining technological leadership, enhancing R&D capabilities, and expanding into global markets will be crucial challenges for Taiwan’s optical industry in the future.