German lens maker goes from strength to strength

30 Jul 2002

Last year was Carl Zeiss's best ever - an impressive achievement for a company that is more than 150 years old and in the midst of a global downturn. Oliver Graydon reports that an expertise in imaging is creating a wealth of opportunities for the German firm.

From Opto & Laser Europe July/August 2002

In the camera and microscopy industries, Carl Zeiss is a brand with an unrivalled reputation and history. Founded in November 1864 in the small German town of Jena, the company began by manufacturing high-precision microscopes and lenses and has grown over the years into a global giant in the field of optics.

Today, Zeiss has corporate headquarters in the German town of Oberkochen, and employs more than 14,000 people at 17 manufacturing locations in countries as diverse as Germany, the US, Hungary, Switzerland, Mexico and Belarus.

Almost brought to its knees by the politics of the Second World War and the reunification of Germany, the company rallied and has since gone from strength to strength. Zeiss is now divided into six business groups: consumer optics; medical systems; microscopy; industrial metrology; optical systems for microelectronics; and optoelectronic systems. In the 2000/1 financial year it reported sales of €2.06 bn - the best performance in the history of the company. And it looks as though this success is set to continue in 2002.

Lucrative marketsAlthough it is best-known for its high-quality consumer optics and microscopes, almost half (46%) of Zeiss's revenues come from its sales of systems to the medical and semiconductor industries. which each bring in a 23% share of revenues. Consumer optics accounted for just 18% of the company's annual revenue in the year 2000/1.

In fact, the semiconductor business has become so important to Zeiss that last October it created Carl Zeiss Semiconductor Manufacturing Technologies, a subsidiary dedicated to the field. The Oberkochen-based branch has just opened a large new factory for producing the specialized optical lenses used in the fabrication of semiconductor chips. The factory, which cost 125 m to build, is the biggest construction project in Zeiss's history. When complete at the end of 2002, it will occupy 45,000 m².

"Lithography optics has been our fastest-growing sector in the past 5 years," commented Franz-Ferdinand von Falkenhausen, president of Carl Zeiss Jena. "Last year our semiconductor technology business achieved sales of €464 m."

It is easy to understand why the semiconductor business is lucrative for Zeiss. Every chip plant relies on precise ultraviolet lithography to "print" the tiny electronic circuit onto the surface of a semiconductor wafer. Zeiss is a top supplier of the expensive projection optics required for this process.

Even so, given that the semiconductor industry has been experiencing an economic slump, it seems strange that 2001 was such a successful year for Zeiss. Falkenhausen is quick to explain the reasons why.

"Firstly, we are not 100% dependent on our lithography business - our other areas are performing well," he said. "From last March [2001] onwards there was a drop in our semiconductor business, but our financial year runs from October to October. So by March, 50% of our revenue was already on the books.

"As a technology leader we are 5-6 months ahead of the competition, and that has helped us avoid being hit too hard by the downturn. We are now seeing signs that the business is coming back."

The other star financial performer at Zeiss is its medical business, which is in the process of teaming up with Asclepion-Meditec, a leading provider of laser systems for refractive eye surgery. Carl Zeiss Meditec, the company resulting from the merger of Asclepion with Zeiss's ophthalmic division, will start operations this month.

The new company will offer a complete range of ophthalmic equipment, from products for diagnosis and operations to follow-up treatment. It will employ around 900 staff and expects sales of roughly 233 m.

"The merger makes a lot of sense from a strategic point of view," said Falkenhausen. "Zeiss is a leading supplier of diagnosis equipment for ophthalmology but was lacking expertise in lasers. We will now become the leader in the ophthalmology market."

Planetarium pioneerAnother field - albeit a small and esoteric one - in which Zeiss is a world leader is the development of optical systems for planetariums. The firm constructed the world's first planetarium projector in 1923 for the Deutsches museum in Munich. The Model I planetarium was heralded as a masterpiece of mechanical and optical engineering. Its central sphere housed 31 separate projectors and was capable of displaying 4500 fixed "stars".

Since then Zeiss has sold almost 600 planetarium projectors - including 71 in the last decade - to centres and institutions around the world. State-of-the-art models, such as a recent installation at the New Hayden Planetarium in New York, can retail for as much as $2.5 m. The New Hayden design features 150 projectors and is capable of generating 9100 stars, each calibrated to match the colour and brightness of a real star seen by the naked eye on a clear night.

As for the future, display technologies may turn out to be the next big growth area for Zeiss. The firm's new projection displays group is hoping to exploit a young but potentially lucrative market. The group was set up in 1999 to develop the optical engine for next-generation digital projectors used to display computer and television images. It has grown to include 88 members of staff, and expects to generate €31 m this year.

It is Zeiss's ability to turn its expertise in imaging to such a broad range of activities that is central to its success. The firm's new corporate slogan, "We make it visible", is perhaps a fitting one.