‘This is a wake-up call about the opportunity’: Dodd-Walls Centre director Fred Vanholsbeeck.
16/9/2024
Few of us appreciate that photonic and quantum technologies enable much of what we do in modern life – from the smartphone we use, to the satellite technology underpinning the weather report, to the MRI scan we have in hospital.
New Zealand has built a $1.5 billion photonics industry, which is just below the country’s fishing and aquaculture industries and up from $1.2b recorded in the first report on the industry in 2020 by non-profit organisation Australia New Zealand Optical Society (Anzos).
The industry employs nearly 5000 people in 354 companies, and has a total gross added value per employee of $919 million (a measure of labour productivity), according to the latest Photonic and Quantum Technologies in Australia and New Zealand industry report.
Photonics is science and tech related to the generation, transmission, and manipulation of light, while quantum technologies provide new capabilities in computing, simulation, communications, and sensing. The technologies often overlap.
The sector is dominated by telecommunications providers and mainly services its major export earner, agriculture, with sensing and measurement technologies.
The New Zealand sector had a compound annual growth rate(CAGR) of 2.8% from 2019 to 2023. That rate hasn’t kept pace with global competitors, as a separate report by SPIE – the international society for optics and photonics – covering 2020 to 2022 showed global revenues grew by 26% over the period, demonstrating a 7.3% CAGR over the previous 10 years.
New Zealand and Australia are underperforming globally despite some companies earning healthy profits and decades of public-sector investment into world-renowned fundamental research, the Anzos report said.
“The good news is we are generating economic value, but this is a wake-up call about the opportunity and how much better we could be doing when we compare to the rest of the world,” said Fred Vanholsbeeck, director of the Dunedin-based Te Whai Ao – Dodd-Walls Centre, which is the centre of excellence for quantum and photonic technology.
There needs to be better synergy between academia andindustry and more investment by the Government in research and innovation tobetter translate fundamental research in the industry into saleable products,the Belgian-born physicist said.
Te Whai Ao – Dodd-Walls Centre director Fred Vanholsbeeck.
Auckland scientist and entrepreneur Professor Cather Simpson, who has just been elected as the next vice-president of SPIE has amore upbeat view of the New Zealand industry’s progress over the past decade.
“It’s a journey and we’re walking along that journey. I’m a bit more optimistic about the whole thing than the report is. I read the executive summary and thought ‘ouch’. The numbers are real, though. They highlight a massive opportunity for growth.”
New Zealand has a structural disadvantage compared with some larger industrialised countries because it doesn’t have a photonics components manufacturing sector that drives a lot of the global industry growth, she said.
“We’re much more at the end of doing fundamental research and then converting that into advances in what I would call aligned or adjacent areas.”
Long-term vision
The report’s main recommendation is developing a national strategy, which governments in many other countries, including Australia, have done.
“Having really good discussions between industry key players, academics, and government – and having a strategy for a few of the technologies that we want to be good at – I think that would be a good start,” Vanholsbeeck said. “At the moment, we are moving away from a knowledge-based economy and we are losing good people.”
Simpson said a national strategy would help because New Zealand has tall pillars of excellence in this space but struggles to translate that into an economic impact.
It’s unlikely New Zealand would produce a new quantum computing company but there are many physics researchers who are doing research at a level of excellence that could be commercialised.
“We struggle with our standard models out of universities of either licensing or spinning out a company; we struggle with how to capitalise on that investment, so I think we need a strategy, we need to think about this a little differently,” Simpson said.
The report also refers to government funding cuts in science, which affect the sector.
The Government’s May 2024 Budget sliced more than half a billion dollars from the Science, Innovation, and Technology portfolio and closed a number of major programmes and infrastructure investments such as the National Science Challenges and Wellington Science City. The Budget also positioned further cuts to key science funds from 2027/28.
In the report, the out-going Prime Minister’s chief science adviser Dame Juliet Gerrard said there were challenges prioritising science funding in a small economy, with the country having a generic problem of scale and a reluctance to pick winners.
In 2020, the Dodds-Wall Centre got government funding of$36.7m over 7.5 years, a figure Vanholsbeeck said was eight times smaller than its counterpart in Singapore. A year ago, the Government further invested $12mover five years to develop a quantum technologies research programme that fosters collaboration.
Two reviews are under way into research and development funding and into the university system, with reports due out later this year and early next.
“We have a tendency in New Zealand to say: ‘Oh, yeah, that’s what we should be doing, can we do it with half the money?’ I hope for once we will have the right means and long-term vision,” Vanholsbeeck said.
Professor Cather Simpson.
Solutions
Other recommendations in the report include to:
Simpson doesn’t think it likely that more translational mission-led research facilities will be created in the current environment but favours developing infrastructure that allows more prototyping to help bridge the gap from ideas being validated in the lab to being market ready.
In all the startups she’s been involved in, they’ve had to go offshore to do the prototyping and engineering because New Zealand doesn’t have the depth and breadth needed.
“If New Zealand could think a little more collectively and a little less competitively, then we could build that sort of infrastructure here and that would unlock a lot of potential.”
The Novolabs team.
Tech transfer
The report says although fewer new companies emerged in the sector in 2023, startups offer the most opportunity because of their potential to generate innovation.
One of the report’s case studies is Novolabs, a two-year-old Massey University spin-out already making millions of dollars in sales.
Massey University professor of environmental engineering Andy Shilton said the company started in a shed at the university, building the radical new system for getting light into liquid to disinfect it.
The startup – which took out a number of awards at the Hi Tech Awards this year and is a finalist in the KiwiNet research commercialisation awards – raised $1m in February in an over-subscribed Series A funding round led by the Climate Venture Capital Fund.
The company’s Supercritical UV technology has had good traction in New Zealand, particularly in the wastewater treatment space and it has just signed its first distributorship in Australia as it expands globally. It’s doubled the number of modules manufactured in the past six months and has just exceeded 1.5 billion litres of liquid disinfected.
The technology’s applications are much broader, with demand for disinfecting other liquids produced in manufacturing, agriculture, and food and beverage.
Shilton said the big break came from making a revolutionary product rather than the incremental changes its competitors were working on.
Out of all the grants he’s had in his long career, Shilton said pre-seed money from research commercialisation network KiwiNet to help get his patented idea to a stage where it was investable was the most important. “That’s why we have a company employing eight staff. It’s bloody hard to start in the laboratory.”
The Dodds-Wall Centre has supported three spin-outs from universities to date and four more are in the pipeline.
Simpson has personally co-founded three – sperm-sorting technology company Engender Technologies, which has been sold to an overseas buyer; point of care diagnostics platform Orbis Technologies; and, more recently, skin cancer screening company Luminoma with University of Auckland colleague Dr Michel Nieuwoudt.
Three more are in the pipeline from The Photon Factory she founded at Auckland University – a company using lasers to eradicate varroamites; one doing prostrate cancer sensing; and another to do with space.
Luminoma raised $3.9m earlier this year from Bridgewest Ventures, Pacific Channel, and others and has had $1.2m in government funding.
“Luminoma is an excellent example of a photonics companythat might not have succeeded in getting out of the New Zealand universityresearch lab 10 years ago. The ground is so much more fertile here now forgrowing these companies,” Simpson said.
