Analysis of the Development Status and Trends of China's Optical Lens Industry in 2018

（1） Industry Overview

1. Overview of the Development of the Optical Lens Industry

Optical lenses are generally referred to as camera lenses or photography lenses, abbreviated as lenses, and their function is optical imaging. Optical lenses are essential components in optical imaging systems, directly affecting the quality of imaging and the implementation and effectiveness of algorithms.

(1) Overview of Global Optical Lens Development

Since the earliest crescent shaped camera lens was introduced in 1812, optical lenses have gone through a development history of over two hundred years. At the beginning of the 19th century, British physicist Ulaston invented the crescent lens, which was the earliest photographic lens in the world with only one concave convex lens. From then on until the 1960s, there were successively the emergence of dual lens, triple Cook lens, dual Gaussian lens, quad Tiansai lens, five Beaver sub lens, and six Sonna lens. During this period, around 1950, Dr. Frank Beck of the United States designed the world's first zoom lens for cameras. Since 1970, Pentax Japan has been the first to develop SMC multi-layer coating technology; At the same time, Carl Zeiss Jena of the German Democratic Republic launched the MC multi-layer coated lens, which was subsequently widely applied. In the 1990s, Canon developed the world's first internal focus 35mm camera lens with IS stabilization function. Subsequently, Nikon, Sigma, and TAMRON developed their own optical stabilization technologies. Today, after the digitization of cameras, lens manufacturers have designed digital lenses based on the characteristics of digital cameras, as well as designed and improved around the characteristics of photosensitive components.

After a century of development, the optical lens industry has become relatively mature. Worldwide, developed industrial countries have relatively advanced optical lens manufacturing processes, especially Germany and Japan, which have a long history and tradition in lens research and manufacturing, creating optical giants such as Leica and Carl Zeiss. Carl Zeiss lenses are still a typical representative of global lens manufacturing technology. The Japanese optical lens industry has developed rapidly since World War II, gradually gaining an advantage in the global lens industry market with higher performance to price ratios. Its main manufacturers include Canon, Nikon, Fuji, Olympus, and others.

(2) Overview of the Development of China's Optical Lens Industry

The development of China's optical lens industry is closely related to military technology. In the 1960s and 1970s, China's optical enterprises were mainly military enterprises in Yunnan, Sichuan, Fujian and other places. The domestic civilian optical lens industry started relatively late, and only after 2000 did some optical companies enter the civilian optical lens market. Before 2008, the domestic optical lens market was basically monopolized by Japanese and German brands. There were almost no independently produced lenses in the security monitoring market, mobile phone market and medical image market, and the lens products produced by Taiwan enterprises were only on a few low-end devices.

With the maturity of Japan's optical lens manufacturing industry and the increasing number of applied products, the cost of optical products has decreased, and Japan's optical technology has gradually spread to neighboring countries and regions. Including Taiwan, South Korea and Chinese Mainland, the scale of optical lens production is expanding day by day, and some enterprises with world advanced level such as Taiwan Daliguang and Asia Optics have emerged. In recent years, the optical lens industry has rapidly transferred to Chinese Mainland, and Chinese Mainland is gradually becoming the main processing and production place of optical lenses in the world. The slowdown of image pixel upgrading has left a gap for optical lens enterprises in Chinese Mainland to catch up. A number of differentiated competitors have emerged in security, vehicle and other application fields as well as other emerging application markets. At present, the Chinese security market is developing rapidly, with leading domestic security companies such as Hikvision and Dahua Corporation competing fully with world-renowned security companies such as Bosch and Luxshare. Domestic substitution is accelerating. In the field of mid to high end optical lenses such as high-resolution fixed focus, star level fixed focus, high magnification zoom, ultra high definition, optical image stabilization, and security monitoring all-in-one machine lenses, domestic enterprises represented by Sunny Optics, United Optoelectronics, and Yutong Optics have gradually broken through the technological monopolies of Japan and Germany through continuous research and development accumulation, ushering in a good opportunity for development.

2. Classification of Optical Lens Products

From the perspective of optical lens characteristics, optical lenses are mainly divided into three categories: plastic lenses, glass lenses, and glass plastic hybrid lenses. Whether it is a plastic lens assembled with plastic lenses or a glass lens assembled with glass lenses, their structures are composed of multiple lenses. Generally speaking, the more lenses there are, the higher the imaging quality of the lens. Plastic lenses and glass lenses have significant differences in material properties, processing techniques, light transmittance, and other aspects, resulting in a wide range of applications. Plastic lenses are lenses composed of optical plastic lenses, which are widely used in devices such as mobile phones and digital cameras due to their strong plasticity, ease of being made into non spherical shapes, and convenience for miniaturization. Glass lenses are assembled from glass lenses, and due to their high requirements for molding technology, coating process, precision machining, and high transmittance, they are more commonly used in high-end imaging fields such as DSLR cameras, high-end scanners, and other equipment. Glass plastic hybrid lens, composed of partially glass and partially plastic lenses, combines the characteristics of both and has high refractive index optical performance and stability. It is widely used in lens modules such as surveillance cameras, digital cameras, and car cameras.

Comparison of Characteristics of Plastic Lens, Glass Lens, and Glass Plastic Hybrid Lens

Types of lenses

Process Difficulty

Mass production capability

cost

Coefficient of thermal expansion

transmittance

Scope of application

Advantageous manufacturers

Industrial concentration

Plastic lens

low

tall

low

low

Up to 92%

Mobile phone camera, digital camera

Da Li Guang, Shun Yu Optics, Yu Jing Optoelectronics

High, with the top five manufacturers occupying 60% of the market share

Glass lens

tall

low

tall

tall

Up to 99%

DSLR cameras, high-end scanners

Canon, Nikon, Carl Zeiss, Sony

High, several international giants monopolize

Glass plastic hybrid lens

tall

low

tall

Between the first two

Between the first two

Car mounted, digital camera, security monitoring

Sunny Optics, Yutong Optics

higher

Data source: Compilation of public information

（2） Overview of the Optical Lens Industry Chain

1. Upstream and downstream of the industry

The research and manufacturing of optical lenses are in the middle of the industry chain, with upstream equipment, instruments, and raw materials required for optical lens production. Raw materials mainly include glass lenses, plastic lenses, electronic components, plastic raw materials, metal parts, etc. The downstream is the application field of optical lenses, mainly including security monitoring equipment, mobile phone camera module, car camera module, machine vision system, VR/AR equipment, etc.

The upstream and downstream industrial chain of the optical industry

Data source: Compilation of public information

2. The impact of the development status of upstream industries on local industries

The production of optical lenses mainly uses raw materials such as glass lenses, plastic lenses, plastic raw materials, metal components, and electronic components. The impact of raw materials provided by upstream industries on this industry is mainly reflected in price and quality factors. For example, the price increase of electronic components and other materials will lead to an increase in the factory price of optical lenses; If the quality of optical raw materials cannot meet the industry standards, it will lead to difficulties in ensuring the quality of optical lenses or a decrease in lens shipments.

3. The impact of downstream industry development on the industry

The downstream of the optical lens industry is mainly divided into three types based on product application areas: security monitoring system manufacturers, mobile phone camera module manufacturers, and car camera module manufacturers. In the field of security video surveillance, the downstream of the lens industry mainly targets manufacturers of security video surveillance equipment. With the continuous improvement of China's urbanization level, the comprehensive promotion of large-scale projects such as "Safe City", "Smart City", and "Intelligent Transportation", as well as the emphasis on strengthening the construction of the social security prevention and control system by governments and relevant departments at all levels, have provided a favorable policy environment for the development of China's security industry. From a global perspective, with the continuous occurrence of global terrorism and sabotage activities, the instability of local situations in the world, and the increasing security risks faced by various organizations, security issues have received unprecedented attention, and the global demand for security products is gradually expanding. In recent years, driven by the strong demand in the security market, manufacturers of security monitoring equipment have maintained rapid development. Mobile camera modules have entered fierce differentiation competition in recent years. With the widespread popularity of smartphones, camera function has become a key competitive factor for major mobile phone manufacturers. Mobile phone lens module manufacturers are also actively developing towards high-end fields such as dual camera lenses, wide-angle, ultra-thin, large aperture, and optical image stabilization, which also puts higher quality and process requirements on midstream optical lens manufacturers.

In the field of consumer electronics such as automotive electronics, the downstream of the lens industry mainly targets manufacturers of automotive camera modules. With the continuous improvement of road traffic safety and automobile safety requirements in countries such as Europe and America, as well as the rise of ADAS and future autonomous driving markets, car camera module manufacturers have ushered in a good opportunity for development, and have also put forward higher quality and shipment requirements for car lenses.

In summary, with the rapid rise of the terminal application product market, the development of downstream industries has put forward higher requirements for the design level and precision production and processing capabilities of optical lenses. At the same time, the increasing market demand also provides valuable opportunities for the sustainable and healthy development of the optical lens industry.

4. Overview of the application fields of optical lenses

Optical lenses have a wide range of applications, which can be divided into two categories: consumer market applications and industrial applications.

(1) Consumer market applications

Application of optical lenses in the consumer market

Application Areas

App description

Professional camera lens

Professional camera lenses have always been the earliest and most important application field of optical lenses, representing the development process of optical lenses. A camera lens refers to an optical device on a camera that receives optical objects and adjusts them to achieve optical imaging. Professional camera lenses are mainly divided into zoom lenses, fixed focus lenses, and wide-angle lenses

Mobile camera module lens

In September 2000, Sharp released the Sharp J-SH04 smartphone with a built-in 110000 pixel CCD camera, becoming the first smartphone to be equipped with a camera. Since then, optical lenses for mobile phones, especially in the era of smartphones, have been rapidly developing. Today, mainstream mobile phone lenses have evolved to millions of pixels and are equipped with dual cameras

Security monitoring lens

Video surveillance is an important component of security and prevention systems, widely used in many public places for its intuitiveness, accuracy, timeliness, and rich information content. In recent years, with the development of computer technology, network technology, multimedia technology, image processing, transmission technology, and projection splicing display technology, powerful technical guarantees and support have been provided for the implementation of video intelligent network monitoring in modern cities. Camera monitoring is the core part of video surveillance systems, requiring support from various types of optical lenses, especially high-definition lenses

Car camera

With the development of automotive technology, people demand the ability to present video and audio functions in real time during car driving, providing more convenience for positioning. Therefore, in car cameras have emerged. In the current trend of autonomous driving, in car cameras have a wider range of applications and market space.

VR/AR device lens

Virtual Reality (VR) refers to a modern high-tech method that uses computer technology as the core to generate a virtual environment. Users interact naturally with objects in the virtual world through special input/output devices, and obtain the same feeling as the real world through visual, auditory, and tactile senses. Augmented Reality (AR) is a technology that calculates the position and angle of images in real time and adds corresponding images. The goal of this technology is to overlay the virtual world on the real world on the screen and interact with it. Whether it is VR or AR devices, optical lenses are needed to assist in the interaction with the environment, especially AR devices. In order to achieve the combination of real and virtual scenes, a larger number of cameras are needed to cooperate. The sentence is:

Data source: Compilation of public information

(2) Industrial applications

Optical lenses have also been widely used in machine vision inspection, with specific applications mainly reflected in the following four aspects: mechanical parts measurement, plastic parts measurement, glass and pharmaceutical container measurement, electronic component measurement, etc.

Application of optical lenses in machine vision

Application Areas

Details

Measurement of mechanical parts

Measurement of precision mechanical components, most of which are automotive parts

Measurement of plastic parts

Some rubber parts are prone to deformation and change their original shape when taken, so non-contact optical measuring instruments must be used for measurement

Measurement of glass and medicinal containers

Small glass bottles, capsules, small medicine bottles, etc. are used to avoid breakage due to contact during the measurement process

Electronic component measurement

Resistors, transistors, and IC circuits require the use of miniature lenses to detect their size and the position of their connection points

Other special applications

Particle measurement, high-precision color printing, semiconductor mask measurement, filter control, blood analysis, and cell count calculation, etc

Data source: Compilation of public information

   （

3） Industry market situation

Nowadays, optical lenses are not only used in cameras, but their application breadth and depth have fundamentally improved and changed. Firstly, optical lenses have a wide range of applications in the industrial field, mainly reflected in the measurement of mechanical parts and plastic parts in machine vision. Compared to the industrial sector, optical lenses have a wider range of applications in the consumer market, including professional camera lenses, mobile camera module lenses, security monitoring lenses, car lenses, and many other fields.

At present, from the perspective of global optical lens applications, mobile phones, video surveillance, and car cameras are the three largest terminal markets, which can greatly affect the overall trend of the optical lens module industry. The combined revenue of global optical lens modules in the fields of mobile phones, video surveillance, and car lenses will continue to grow. In 2017, the combined market revenue was about 5.731 billion US dollars, and it is expected to reach about 7.367 billion US dollars in 2021. Among them, the revenue of global mobile phone cameras will reach 5.326 billion US dollars, the revenue of global surveillance lenses will reach 982 million US dollars, and the revenue of global car lenses will reach 1.059 billion US dollars. In addition, the global machine vision market, as a downstream application field with great development potential, has grown rapidly in recent years. With the increasing maturity of modern industrial automation technology, more and more enterprises are considering how to use machine vision to help production lines achieve recognition, detection and other functions, in order to improve efficiency and reduce costs. According to relevant reports, the global market size of the machine vision industry is expected to reach 12.5 billion US dollars by 2020 and exceed 19.2 billion US dollars by 2025.

Global optical lens market size (merging mobile phone, surveillance, and car camera fields)

Data source: Compilation of public information

Based on the application areas of industry products, the following specific analyses will be conducted for four segmented markets: security monitoring, vehicle cameras, machine vision, and VR/AR.

(1) The current situation and trend of the security video surveillance market

① The global security video surveillance market is growing rapidly

The security video surveillance market in developed countries in Europe and America has maintained rapid growth in recent years, and has now entered the stage of upgrading and replacing products with "high-definition, networked, and intelligent" features. At the same time, the demand for security video surveillance in emerging economies such as China, India, and Brazil is rapidly expanding. For emerging economies such as Asia, the Middle East, and Central and South America that are accelerating their transformation, economic growth and social transformation are parallel. Factors such as the expansion of the upper middle class population and increased social mobility have led to a continuous increase in the complexity of social security prevention. It is expected that investment in maintaining public safety will show a rapid growth trend in the future, and the security video surveillance market in emerging economies will maintain high-speed growth. Overall, in the future, with the continuous attention of governments around the world to security issues, advances in IT communication, biometric recognition and other related technologies, as well as the accelerating globalization trend of the security monitoring market, the upgrading and replacement needs from Europe and America, as well as the new demand from emerging markets, will promote the steady growth of the security video surveillance market.

In the past five years, the global video surveillance market has grown rapidly, with a compound annual growth rate of about 18%. In 2016, the market size reached 301 billion yuan. The demand for the future global video surveillance market will expand with the continuous penetration of high-definition and intelligent products, and it is expected that the global video surveillance market size will reach 460 billion yuan in 2021.

② China has become the most core market for global security video surveillance

In recent years, the size of China's video surveillance market has continued to expand, rapidly growing from 29 billion yuan in 2011 to 96.2 billion yuan in 2016, with a compound annual growth rate of 27.1%. At present, China's security video surveillance system is gradually upgrading and ushering in the intelligent "2.0" era. In the era of security "1.0", homogenization is evident, and market concentration tends to favor large and medium-sized professional equipment suppliers with scale advantages in price wars. The intelligent "2.0" era will be a new era for video surveillance. The price competition will be transformed into technical competition, the core competitiveness of the industry will be transferred, the technical threshold will be improved, and the industrial concentration will be increased. Related products will rely on Internet big data, combined with face recognition, iris recognition and other biometric technologies, to meet users' requirements for different security levels in different scenarios. Artificial intelligence will also be applied in the industry.

Market size of China's video surveillance industry

Data source: Compilation of public information

In the future, according to the industrial development goals of the "13th Five Year Plan" for the security industry, by 2020, the total revenue of security enterprises will reach about 800 billion yuan, with an annual growth rate of about 10%. The overall market demand for the security industry will steadily increase. As an important component of security products, the video surveillance market will also be positively affected. In addition, the downstream applications of video surveillance mainly include safe cities, intelligent transportation, and intelligent buildings, all of which are in a period of rapid development. With policy support, the video surveillance market will expand vigorously in the future.

③ The market for security video surveillance lenses is steadily growing, with Chinese manufacturers dominating

Driven by the continuous expansion of the global security video surveillance market, the security video surveillance lens market has developed rapidly in recent years and will continue to grow in the future. In 2017, the global shipment of surveillance lenses reached 186 million pieces, and it is expected to increase to 246 million pieces in 2021. The global sales revenue of surveillance camera lenses is expected to increase from $653 million in 2017 to $982 million in 2021, with a compound annual growth rate of approximately 8.50%. At present, the global market favors high-quality and reasonably priced products, such as fixed focus lenses, which still dominate the market, but high pixel lenses will become the future development trend.

Global market size of surveillance lenses

Data source: Compilation of public information

Surveillance camera lenses are one of the few monopolistic markets, with Chinese suppliers dominating the market. In 2017, the top three suppliers of surveillance camera lenses accounted for 66.1% of the global market share of surveillance camera lens shipments, namely Yutong Optics (38.1%), Sunny Optics (16.1%), and Fuguang Shares (11.8%); The top five accounted for 79.0%, while the top ten accounted for 93.9%. In the future, leading suppliers will seize more market share and competition will become increasingly fierce.

Global market share of surveillance camera lens manufacturers (2017) (by shipment volume)

Data source: Compilation of public information

(2) The current situation and trend of the car camera market

① The global ADAS system and connected car market is growing rapidly

At present, in car cameras are at the dual forefront of the autonomous driving and connected car markets. On the one hand, in car cameras are the main visual sensors of ADAS systems. With the advent of the era of autonomous driving, ADAS systems, as the "bridge" of autonomous driving, have also ushered in a period of rapid growth. The scale of ADAS worldwide maintains an annual growth rate of over 30%. In China, the ADAS market size will begin to grow rapidly, with a compound annual growth rate of up to 58% from 2015 to 2020, and the size will increase to 75.783 billion yuan in 2020. On the other hand, in the future, in car cameras will be an important entry point for information processing in the Internet of Vehicles. Although the size of China's connected car market was only 7.7 billion yuan in 2016, it will begin to grow rapidly in the next decade and reach 216.2 billion yuan by 2025.

② The global car camera lens market continues to expand, with high entry barriers

The car camera market is divided into two categories: imaging cameras and induction cameras. At present, image-based cameras dominate the market, but demand for sensor lenses, including hybrid lenses, is also growing. The United States, Europe, and Japan are leading markets for automotive lenses, and there is significant growth potential for demand in the Chinese market in the future. In terms of market competition, the car camera market and its lenses are among the few monopolistic markets. In 2017, the top three suppliers in the induction lens market had a shipment volume exceeding 60% of the market share, and even the top five suppliers accounted for 75.1%. The technical difficulty is high and the market threshold is relatively high. In 2017, the top three suppliers of imaging lenses accounted for 42.1% of the market share, while the top five suppliers accounted for 57.5% of the total market share. Due to the lower technical difficulty compared to induction lenses, there is fierce competition among suppliers.

Car mounted camera, as the main component of car mounted cameras, refers to optical lenses installed on cars to achieve various functions, mainly including interior view lens, rear view lens, front view lens, side view lens, surround view lens, etc. In 2016, the shipment of car mounted lenses was 88.807 million pieces, an increase of 19.8% compared to the previous year; It is expected that the market will continue to expand, with a market size of 143.192 million units by 2021. The global revenue from car camera lenses will continue to rise, and it is expected that the revenue scale in 2021 will increase by about 85% to 1.059 billion US dollars on the basis of 395 million US dollars in 2017.

Global shipment volume of in car lenses

Data source: Compilation of public information

Global market size of in car lenses

Data source: Compilation of public information

（2） Overview of the Optical Lens Industry Chain

1. Upstream and downstream of the industry

The research and manufacturing of optical lenses are in the middle of the industry chain, with upstream equipment, instruments, and raw materials required for optical lens production. Raw materials mainly include glass lenses, plastic lenses, electronic components, plastic raw materials, metal parts, etc. The downstream is the application field of optical lenses, mainly including security monitoring equipment, mobile phone camera module, car camera module, machine vision system, VR/AR equipment, etc.

The upstream and downstream industrial chain of the optical industry

Data source: Compilation of public information

2. The impact of the development status of upstream industries on local industries

The production of optical lenses mainly uses raw materials such as glass lenses, plastic lenses, plastic raw materials, metal components, and electronic components. The impact of raw materials provided by upstream industries on this industry is mainly reflected in price and quality factors. For example, the price increase of electronic components and other materials will lead to an increase in the factory price of optical lenses; If the quality of optical raw materials cannot meet the industry standards, it will lead to difficulties in ensuring the quality of optical lenses or a decrease in lens shipments.

3. The impact of downstream industry development on the industry

The downstream of the optical lens industry is mainly divided into three types based on product application areas: security monitoring system manufacturers, mobile phone camera module manufacturers, and car camera module manufacturers. In the field of security video surveillance, the downstream of the lens industry mainly targets manufacturers of security video surveillance equipment. With the continuous improvement of China's urbanization level, the comprehensive promotion of large-scale projects such as "Safe City", "Smart City", and "Intelligent Transportation", as well as the emphasis on strengthening the construction of the social security prevention and control system by governments and relevant departments at all levels, have provided a favorable policy environment for the development of China's security industry. From a global perspective, with the continuous occurrence of global terrorism and sabotage activities, the instability of local situations in the world, and the increasing security risks faced by various organizations, security issues have received unprecedented attention, and the global demand for security products is gradually expanding. In recent years, driven by the strong demand in the security market, manufacturers of security monitoring equipment have maintained rapid development. Mobile camera modules have entered fierce differentiation competition in recent years. With the widespread popularity of smartphones, camera function has become a key competitive factor for major mobile phone manufacturers. Mobile phone lens module manufacturers are also actively developing towards high-end fields such as dual camera lenses, wide-angle, ultra-thin, large aperture, and optical image stabilization, which also puts higher quality and process requirements on midstream optical lens manufacturers.

In the field of consumer electronics such as automotive electronics, the downstream of the lens industry mainly targets manufacturers of automotive camera modules. With the continuous improvement of road traffic safety and automobile safety requirements in countries such as Europe and America, as well as the rise of ADAS and future autonomous driving markets, car camera module manufacturers have ushered in a good opportunity for development, and have also put forward higher quality and shipment requirements for car lenses.

In summary, with the rapid rise of the terminal application product market, the development of downstream industries has put forward higher requirements for the design level and precision production and processing capabilities of optical lenses. At the same time, the increasing market demand also provides valuable opportunities for the sustainable and healthy development of the optical lens industry.

4. Overview of the application fields of optical lenses

Optical lenses have a wide range of applications, which can be divided into two categories: consumer market applications and industrial applications.

(1) Consumer market applications

Application of optical lenses in the consumer market

Application Areas

App description

Professional camera lens

Professional camera lenses have always been the earliest and most important application field of optical lenses, representing the development process of optical lenses. A camera lens refers to an optical device on a camera that receives optical objects and adjusts them to achieve optical imaging. Professional camera lenses are mainly divided into zoom lenses, fixed focus lenses, and wide-angle lenses

Mobile camera module lens

In September 2000, Sharp released the Sharp J-SH04 smartphone with a built-in 110000 pixel CCD camera, becoming the first smartphone to be equipped with a camera. Since then, optical lenses for mobile phones, especially in the era of smartphones, have been rapidly developing. Today, mainstream mobile phone lenses have evolved to millions of pixels and are equipped with dual cameras

Security monitoring lens

Video surveillance is an important component of security and prevention systems, widely used in many public places for its intuitiveness, accuracy, timeliness, and rich information content. In recent years, with the development of computer technology, network technology, multimedia technology, image processing, transmission technology, and projection splicing display technology, powerful technical guarantees and support have been provided for the implementation of video intelligent network monitoring in modern cities. Camera monitoring is the core part of video surveillance systems, requiring support from various types of optical lenses, especially high-definition lenses

Car camera

With the development of automotive technology, people demand the ability to present video and audio functions in real time during car driving, providing more convenience for positioning. Therefore, in car cameras have emerged. In the current trend of autonomous driving, in car cameras have a wider range of applications and market space.

VR/AR device lens

Virtual Reality (VR) refers to a modern high-tech method that uses computer technology as the core to generate a virtual environment. Users interact naturally with objects in the virtual world through special input/output devices, and obtain the same feeling as the real world through visual, auditory, and tactile senses. Augmented Reality (AR) is a technology that calculates the position and angle of images in real time and adds corresponding images. The goal of this technology is to overlay the virtual world on the real world on the screen and interact with it. Whether it is VR or AR devices, optical lenses are needed to assist in the interaction with the environment, especially AR devices. In order to achieve the combination of real and virtual scenes, a larger number of cameras are needed to cooperate. The sentence is:

Data source: Compilation of public information

(2) Industrial applications

Optical lenses have also been widely used in machine vision inspection, with specific applications mainly reflected in the following four aspects: mechanical parts measurement, plastic parts measurement, glass and pharmaceutical container measurement, electronic component measurement, etc.

Application of optical lenses in machine vision

Application Areas

Details

Measurement of mechanical parts

Measurement of precision mechanical components, most of which are automotive parts

Measurement of plastic parts

Some rubber parts are prone to deformation and change their original shape when taken, so non-contact optical measuring instruments must be used for measurement

Measurement of glass and medicinal containers

Small glass bottles, capsules, small medicine bottles, etc. are used to avoid breakage due to contact during the measurement process

Electronic component measurement

Resistors, transistors, and IC circuits require the use of miniature lenses to detect their size and the position of their connection points

Other special applications

Particle measurement, high-precision color printing, semiconductor mask measurement, filter control, blood analysis, and cell count calculation, etc

Data source: Compilation of public information

（3） Industry market situation

Nowadays, optical lenses are not only used in cameras, but their application breadth and depth have fundamentally improved and changed. Firstly, optical lenses have a wide range of applications in the industrial field, mainly reflected in the measurement of mechanical parts and plastic parts in machine vision. Compared to the industrial sector, optical lenses have a wider range of applications in the consumer market, including professional camera lenses, mobile camera module lenses, security monitoring lenses, car lenses, and many other fields.

At present, from the perspective of global optical lens applications, mobile phones, video surveillance, and car cameras are the three largest terminal markets, which can greatly affect the overall trend of the optical lens module industry. The combined revenue of global optical lens modules in the fields of mobile phones, video surveillance, and car lenses will continue to grow. In 2017, the combined market revenue was about 5.731 billion US dollars, and it is expected to reach about 7.367 billion US dollars in 2021. Among them, the revenue of global mobile phone cameras will reach 5.326 billion US dollars, the revenue of global surveillance lenses will reach 982 million US dollars, and the revenue of global car lenses will reach 1.059 billion US dollars. In addition, the global machine vision market, as a downstream application field with great development potential, has grown rapidly in recent years. With the increasing maturity of modern industrial automation technology, more and more enterprises are considering how to use machine vision to help production lines achieve recognition, detection and other functions, in order to improve efficiency and reduce costs. According to relevant reports, the global market size of the machine vision industry is expected to reach 12.5 billion US dollars by 2020 and exceed 19.2 billion US dollars by 2025.

Global optical lens market size (merging mobile phone, surveillance, and car camera fields)

Data source: Compilation of public information

Based on the application areas of industry products, the following specific analyses will be conducted for four segmented markets: security monitoring, vehicle cameras, machine vision, and VR/AR.

(1) The current situation and trend of the security video surveillance market

① The global security video surveillance market is growing rapidly

The security video surveillance market in developed countries in Europe and America has maintained rapid growth in recent years, and has now entered the stage of upgrading and replacing products with "high-definition, networked, and intelligent" features. At the same time, the demand for security video surveillance in emerging economies such as China, India, and Brazil is rapidly expanding. For emerging economies such as Asia, the Middle East, and Central and South America that are accelerating their transformation, economic growth and social transformation are parallel. Factors such as the expansion of the upper middle class population and increased social mobility have led to a continuous increase in the complexity of social security prevention. It is expected that investment in maintaining public safety will show a rapid growth trend in the future, and the security video surveillance market in emerging economies will maintain high-speed growth. Overall, in the future, with the continuous attention of governments around the world to security issues, advances in IT communication, biometric recognition and other related technologies, as well as the accelerating globalization trend of the security monitoring market, the upgrading and replacement needs from Europe and America, as well as the new demand from emerging markets, will promote the steady growth of the security video surveillance market.

In the past five years, the global video surveillance market has grown rapidly, with a compound annual growth rate of about 18%. In 2016, the market size reached 301 billion yuan. The demand for the future global video surveillance market will expand with the continuous penetration of high-definition and intelligent products, and it is expected that the global video surveillance market size will reach 460 billion yuan in 2021.

② China has become the most core market for global security video surveillance

In recent years, the size of China's video surveillance market has continued to expand, rapidly growing from 29 billion yuan in 2011 to 96.2 billion yuan in 2016, with a compound annual growth rate of 27.1%. At present, China's security video surveillance system is gradually upgrading and ushering in the intelligent "2.0" era. In the era of security "1.0", homogenization is evident, and market concentration tends to favor large and medium-sized professional equipment suppliers with scale advantages in price wars. The intelligent "2.0" era will be a new era for video surveillance. The price competition will be transformed into technical competition, the core competitiveness of the industry will be transferred, the technical threshold will be improved, and the industrial concentration will be increased. Related products will rely on Internet big data, combined with face recognition, iris recognition and other biometric technologies, to meet users' requirements for different security levels in different scenarios. Artificial intelligence will also be applied in the industry.

Market size of China's video surveillance industry

Data source: Compilation of public information

In the future, according to the industrial development goals of the "13th Five Year Plan" for the security industry, by 2020, the total revenue of security enterprises will reach about 800 billion yuan, with an annual growth rate of about 10%. The overall market demand for the security industry will steadily increase. As an important component of security products, the video surveillance market will also be positively affected. In addition, the downstream applications of video surveillance mainly include safe cities, intelligent transportation, and intelligent buildings, all of which are in a period of rapid development. With policy support, the video surveillance market will expand vigorously in the future.

③ The market for security video surveillance lenses is steadily growing, with Chinese manufacturers dominating

Driven by the continuous expansion of the global security video surveillance market, the security video surveillance lens market has developed rapidly in recent years and will continue to grow in the future. In 2017, the global shipment of surveillance lenses reached 186 million pieces, and it is expected to increase to 246 million pieces in 2021. The global sales revenue of surveillance camera lenses is expected to increase from $653 million in 2017 to $982 million in 2021, with a compound annual growth rate of approximately 8.50%. At present, the global market favors high-quality and reasonably priced products, such as fixed focus lenses, which still dominate the market, but high pixel lenses will become the future development trend.

Global market size of surveillance lenses

Data source: Compilation of public information

Surveillance camera lenses are one of the few monopolistic markets, with Chinese suppliers dominating the market. In 2017, the top three suppliers of surveillance camera lenses accounted for 66.1% of the global market share of surveillance camera lens shipments, namely Yutong Optics (38.1%), Sunny Optics (16.1%), and Fuguang Shares (11.8%); The top five accounted for 79.0%, while the top ten accounted for 93.9%. In the future, leading suppliers will seize more market share and competition will become increasingly fierce.

Global market share of surveillance camera lens manufacturers (2017) (by shipment volume)

Data source: Compilation of public information

(2) The current situation and trend of the car camera market

① The global ADAS system and connected car market is growing rapidly

At present, in car cameras are at the dual forefront of the autonomous driving and connected car markets. On the one hand, in car cameras are the main visual sensors of ADAS systems. With the advent of the era of autonomous driving, ADAS systems, as the "bridge" of autonomous driving, have also ushered in a period of rapid growth. The scale of ADAS worldwide maintains an annual growth rate of over 30%. In China, the ADAS market size will begin to grow rapidly, with a compound annual growth rate of up to 58% from 2015 to 2020, and the size will increase to 75.783 billion yuan in 2020. On the other hand, in the future, in car cameras will be an important entry point for information processing in the Internet of Vehicles. Although the size of China's connected car market was only 7.7 billion yuan in 2016, it will begin to grow rapidly in the next decade and reach 216.2 billion yuan by 2025.

② The global car camera lens market continues to expand, with high entry barriers

The car camera market is divided into two categories: imaging cameras and induction cameras. At present, image-based cameras dominate the market, but demand for sensor lenses, including hybrid lenses, is also growing. The United States, Europe, and Japan are leading markets for automotive lenses, and there is significant growth potential for demand in the Chinese market in the future. In terms of market competition, the car camera market and its lenses are among the few monopolistic markets. In 2017, the top three suppliers in the induction lens market had a shipment volume exceeding 60% of the market share, and even the top five suppliers accounted for 75.1%. The technical difficulty is high and the market threshold is relatively high. In 2017, the top three suppliers of imaging lenses accounted for 42.1% of the market share, while the top five suppliers accounted for 57.5% of the total market share. Due to the lower technical difficulty compared to induction lenses, there is fierce competition among suppliers.

Car mounted camera, as the main component of car mounted cameras, refers to optical lenses installed on cars to achieve various functions, mainly including interior view lens, rear view lens, front view lens, side view lens, surround view lens, etc. In 2016, the shipment of car mounted lenses was 88.807 million pieces, an increase of 19.8% compared to the previous year; It is expected that the market will continue to expand, with a market size of 143.192 million units by 2021. The global revenue from car camera lenses will continue to rise, and it is expected that the revenue scale in 2021 will increase by about 85% to 1.059 billion US dollars on the basis of 395 million US dollars in 2017.

Global shipment volume of in car lenses

Data source: Compilation of public information

Global market size of in car lenses

Data source: Compilation of public information

③ The Chinese car lens market is developing rapidly and has great potential for future growth

In recent years, China's car lens industry has been in an expansion period with rapid development. In 2011, China's car lens production capacity was 4 million pieces, which increased to 8.6 million pieces in 2013 and expanded to 18.8 million pieces in 2015. In the future, the Chinese car lens market will also be vigorously promoted by the outbreak of ADAS and connected car markets, and will continue to expand with huge growth potential.

Expected market size of ADAS in China

Data source: Compilation of public information

Forecast of China's Connected Car Market Size in 2025

Data source: Compilation of public information

(3) The Current Status and Trends of the Machine Vision Market

① Machine vision has a wide range of applications and its penetration rate will gradually increase, with optical lenses being an important component

Machine vision simulates human visual functions through computers, allowing machines to obtain relevant visual information and understand it, that is, using machines to replace human eyes for measurement and judgment. Machine vision systems are mainly divided into three parts - acquiring, processing and analyzing, and outputting/displaying images. The specific operation is to convert the captured target into an image signal through an image capture device, transmit it to a dedicated image processing system, obtain the morphological information of the captured target, and convert it into a digital signal; The image system performs feature recognition on these signals to control the actions of on-site equipment.

Machine vision is a rapidly developing branch of artificial intelligence that uses machines to replace human eyes for measurement and judgment. Machine vision is known as the "eye" of intelligent manufacturing and is the key to improving production efficiency and intelligent automation level in the manufacturing industry. Machine vision mainly refers to computer image recognition, which uses algorithm software to recognize digital images. The software and hardware components of machine vision generally include light sources, optical lenses, image acquisition cards, image processing units, and visual processing software. Among them, optical lenses are important components in machine vision systems, playing a crucial role in imaging quality. The main indicators that affect imaging quality are resolution, contrast, depth of field, and aberration. At present, there are many types of lenses on the market with significant differences in quality, and lenses with low imaging quality may lead to system development failure.

Machine vision applications penetrate various industries, including industry, agriculture, medicine, military, aerospace, meteorology, astronomy, public security, transportation, safety, scientific research, and more. In terms of scale, in the downstream of domestic machine vision applications, the market share of electronic manufacturing, automotive, pharmaceutical, and packaging machinery is close to 70%. The electronic manufacturing industry has the largest overall scale, while the penetration rate of machine vision in the automotive industry has increased to 30%. In the future, with the explosion of demand in the consumer electronics field, the improvement of quality inspection requirements in the automotive and food industries, and the acceleration of automation upgrading and transformation in the pharmaceutical and printing industries, the penetration rate of machine vision will continue to rise, and the development space is huge.

② Global machine vision technology is gradually maturing, and national policies are promoting sustained expansion of the industry

In the 1960s, the concept of machine vision was officially proposed globally, and researchers began to delve into three-dimensional structures; In the 1970s, machine vision made initial progress, and a complete theory of vision was first proposed. At the same time, some simple applications of visual motion systems and clear images provided by image sensors emerged; In the 1980s and 1990s, machine vision entered a period of vigorous development, and the rapid development of processors and image processing technology laid the foundation for the high-speed development of machine vision. During this period, China's machine vision industry began to truly take off. After the 21st century, machine vision technology gradually matured, and machine vision products have been widely applied in downstream industries, especially in the field of industrial control.

With the rapid expansion of the market and the rapid maturity of technology, the robotics industry has ushered in unprecedented opportunities for development, which will greatly benefit the development of the machine vision industry. The production mode that was originally led by humans is gradually shifting towards a production mode dominated by industrial robots. Major industrialized countries have proposed policies for the robotics industry, such as Germany's "Industry 4.0", Japan's new robotics strategy, the United States' Advanced Manufacturing Partnership Program, China's "13th Five Year Plan" and "Made in China 2025", which have all been incorporated into the development of the robotics industry as important components. These policies will promote the sustained growth of the industrial robotics market and drive the development of the machine vision market.

With the expansion of the global machine vision market in recent years, the optical lens market, as an important component of machine vision, has steadily developed. In 2017, the global market size of machine vision lenses applied in the industrial and automation fields was $1.4 billion, and it is expected to grow to $2.8 billion by 2023, with a compound growth rate of 12%.

③ Chinese machine vision is in a period of rapid growth, with great potential for future growth

Chinese machine vision is in a period of rapid growth. Domestic machine vision started with the introduction of technology in the 1980s, and the semiconductor and electronics industries were one of the earlier application industries. Before 2006, the application of machine vision products in China was mainly concentrated in foreign-funded manufacturing enterprises with a small scale. The domestic machine vision market began to launch in 2006. Although China's machine vision industry started relatively late, it has become the third largest application market after the United States and Japan, thanks to the widespread and rapid development of downstream industry applications.

From the perspective of market size, the Chinese machine vision industry is currently at a turning point in the development of industrial robots, with great potential for future growth. With the deepening of automation and intelligence in various industries, the machine vision market will continue to grow in the next five years, and is expected to reach around 20 billion in 2018 (including system integration). The application of high-precision manufacturing and its corresponding automated production lines in China is growing year by year, and machine vision is rapidly replacing conventional artificial vision. From the perspective of industry companies, there are over 100 international machine vision brands in China, more than 102 domestic machine vision enterprises, over 200 machine vision product agents, and over 50 professional machine vision system integrators, covering all machine vision industry chain products from light sources, optical lenses, image capture cards, and smart cameras.

(4) Current Status and Trends of Optical Lens Market in VR/AR Field

Virtual Reality (VR) technology refers to the combination of cutting-edge technologies from multiple fields (computer graphics technology, human-computer interaction technology, sensor technology, human-computer interface technology, artificial intelligence technology, etc.), with the help of professional equipment, allowing users to enter a virtual space, perceive and operate in real time, and thus obtain an immersive and realistic experience. Simply put, virtual reality technology is the use of computers to create a world that is indistinguishable from reality. Its most important feature is immersion. When one is immersed in it, receiving multiple virtual signals of vision, sound, touch, and even smell makes it difficult to distinguish between reality and illusion, creating a sense of immersion and greatly enhancing human perceptual experience. VR devices tend to take the entertainment route, and the increasing proportion of entertainment consumption is a huge market blue ocean.

Augmented Reality (AR) technology is mostly developed based on virtual reality technology, and the two highly overlap in the fields of 3D model construction of virtual information and sensor interaction. However, AR technology has put forward "advanced requirements" in spatial perception and "virtual real fusion" display technology. AR devices have the potential to become auxiliary tools for improving productivity and will be adopted first by enterprise level users.

① The VR/AR industry has broad application prospects, and optical lenses are conventional components

At present, the conventional VR/AR equipment set consists of four components: head mounted display device (HMD), host system, tracking system, and controller. Head mounted display devices (HMDs), commonly known as virtual reality glasses, are hardware devices that are placed in front of users to display AR or VR effects. HMD hardware typically consists of the following components: display screen, processor, sensors, camera, wireless connectivity, storage/battery, and lenses. Among them, the camera is one of the necessary hardware components of head mounted display devices, and some VR/AR HMD devices use the front camera for taking photos, position tracking, and environment mapping. When necessary, users are also allowed to "see through" the HMD device; Some ARHMDs use internal cameras to perceive the environment and surrounding targets. Therefore, optical lenses are conventional components of VR/AR. VR/AR has a wide range of applications in the consumer market. VR can be widely applied in consumer markets such as gaming, film and television, education, real estate, tourism, automotive, e-commerce, advertising, healthcare, and social networking. AR is mainly used in the consumer market for real-life application games (such as Pokemon GO), three-dimensional marketing in shopping malls, tourism, etc. In the future, it can also be extended to social and other fields.

At present, market consulting firms generally believe that the combination of VR/AR and the pan entertainment industry is the breakthrough and important source of revenue for the industry, and consumer upgrading will promote the development of the pan entertainment industry, thereby driving the growth of the VR/AR market. Now, with the post-80s and post-90s becoming the backbone of society and the most important consumer group, this group pursues personalization and novelty, and their pursuit of material and spiritual consumption will further promote the transformation of consumption structure. They have witnessed the tremendous changes brought to social life by game consoles, movies and TV dramas, computers, and mobile phones during their growth. They have a strong ability to accept new things and technologies, and also have high consumption and pursuit in spiritual fields such as culture and entertainment. Games and movies are important components of young people's lives, and the natural combination of VR/AR technology with games and movies will greatly enhance users. In addition, due to the stronger tool attributes of augmented reality (AR), it is also widely used in the enterprise market. AR can assist in remote expert guidance in enterprise markets such as military, security, industrial maintenance, and other fields. In the medical field, wearing AR smart glasses can be used for first person live streaming of surgeries or auxiliary teaching. In the field of education, AR can be used to transform two-dimensional images into three dimensions and overlay some information on them, which can effectively solve the problem of knowledge transmission.

② The global VR/AR market will maintain a rapid growth trend

The revenue of the global augmented reality and virtual reality market was around 5.2 billion US dollars in 2016, and it is expected that the global augmented reality and virtual reality market revenue will reach 162 billion US dollars in 2020, with a compound annual growth rate of 181.30% from 2015 to 2020. The market size of augmented reality (AR) will be twice that of virtual reality (VR) in the next four years. The total global shipment of AR and VR devices in 2016 was 10.1 million units, and it is expected that the total shipment of AR and VR devices will exceed 99.4 million units in 2021. Although virtual reality (VR) devices currently dominate the market in terms of revenue, it is expected that augmented reality (AR) will experience rapid development in the future. The total revenue of AR devices in 2016 was 209 million US dollars, and it is expected to exceed 48.7 billion US dollars in 2021. The total revenue of VR devices in 2016 was 2.1 billion US dollars, and it is expected to grow to 18.6 billion US dollars in 2021. The current revenue of AR devices is significantly different from four years later, mainly due to the fact that AR devices are on average $1000 more expensive than VR devices, resulting in a smaller initial consumer base for AR.

③ The VR/AR market in China has already started and its future development is promising

At present, the virtual reality and augmented reality industry in China is still in its infancy and has not yet formed a clear leader. The number of enterprises participating in related fields has significantly increased, mainly focusing on hardware research and development and application support. At the same time, the development of emerging technology industries such as VR and AR has been included in the 13th Five Year Plan, which is of great significance. It will vigorously promote the development of the entire industry chain covering upstream and downstream, which is conducive to the popularization of VR and AR technology, as well as the integration and development with various industries. It is expected to form a new trend of "VR+" and "AR+". For the domestic market, the market size of virtual reality in China is expected to reach 5.66 billion yuan in 2016, and is projected to exceed 55.63 billion yuan in 2020; The size of China's augmented reality market will continue to rise, with a market size of approximately 3.39 billion people in 2016 and expected to increase to 118.77 billion yuan in 2020.

Scale and Forecast of China's Augmented Reality Market

Data source: Compilation of public information

（4） Industry technology level and development trend

1. Industry technology level and development trend

Optical lenses are highly precise products used in the security lens, car lens, and consumer electronics lens industries, and their quality level is an important reference for various terminal imaging systems. The design and manufacturing of optical lenses is a complex system engineering that integrates a series of technologies such as optics, mechanics, electronics, and software. At the same time, due to the different application scenarios of different terminals, there are also different requirements for imaging quality and application environment. Therefore, higher technical requirements have been put forward for lens manufacturers in lens design, production technology, and precision machining. At present, high-end products in the optical lens industry, such as camera lenses, are mainly concentrated in developed countries such as Japan and Germany where optical lenses started early.

In the process of development, the technological development of the security monitoring lens industry presents the following characteristics:

(1) Interdisciplinary advanced manufacturing technology is continuously integrated into lens processing technology

With the improvement of imaging quality of security monitoring lenses and the development of large-scale production, advanced manufacturing technologies in the semiconductor processing field and other fields continue to be integrated into lens processing technology, causing significant changes in the processing technology, processes, equipment, and other aspects of modern precision optical components compared to traditional optical processing technology. At present, CNC machining technology, computer-aided design (CAD), precision cutting technology, etc. have begun to be applied to the production process of security monitoring lens processing. This not only greatly improves production efficiency and quality assurance capabilities, but also changes the situation where optical processing technology relies on individual operating skills and experience, providing reliable guarantees for the large-scale production of security monitoring lens processing.

(2) Optical thin film technology has become a key technology

Due to the development of modern security terminal lenses towards functional integration and high precision, the spectral characteristics of lenses can only be achieved through optical thin films. The polarization splitting, anti reflection, and accurate spectral wavelength positioning (usually at the nanometer level) of precision optical thin films are characteristics that cannot be replaced by any other technology at present. Therefore, optical thin film technology is a key technology for the processing of security terminal lenses.

(3) The development trend of large caliber and miniaturization

In order to increase the light flux of the lens, it is necessary to increase the aperture of the lens, which has better performance in terms of image brightness in dim environments and night modes compared to small aperture lenses. Miniaturization refers to a compact lens structure that can be used for different product installations and reduce product volume. Compared to foreign million pixel surveillance lenses, the application of non spherical technology is mature. Often, the same lens has sufficient focal length, large aperture, small structure, and high clarity. Major domestic lens manufacturers have gradually applied their new products of million pixel surveillance lenses, competing with foreign manufacturers.

(4) The increasing demand for high-definition, networked, and intelligent technology

With the gradual expansion of the application scope and scenarios of security monitoring video technology, as well as the increasing requirements for high-definition, networked, and intelligent security monitoring, the technical level of security monitoring lens products in areas such as high magnification zoom, optical stabilization, large aperture, fog transmission, infrared night vision, ultra wide angle, virtual focus processing, and high reliability is constantly improving.