IPG enters merchant diode business

31 Jan 2008

The entrance of the fibre laser powerhouse into the diode business presents a challenge to other merchant suppliers.

“It adds another competitor, and a very challenging one.”

IPG Photonics has made its fibre-coupled laser diodes available on a merchant basis to OEM customers, in a move said by the company to be a natural expansion of its product line. The decision follows IPG's recent expansion of production capacity, with three new multi-wafer molecular beam epitaxy reactors coming on stream last year.

"This is the ideal time to introduce the advantages of IPG's cost-effective diode lasers into the market," said Valentin Gapontsev, IPG's chief executive officer.

The fibre-coupled diodes, which are the crucial elements of IPG's fibre lasers, deliver power levels of up to 20 W at a range of 9xx nm wavelengths. "Keep in mind that what IPG really does is fabricate and assemble diodes," commented Tom Hausken of Strategies Unlimited to optics.org. "I don't want to downplay its skill at fabricating and assembling the fibre, but the diodes are essential."

Hausken described the move as somewhat surprising for IPG, but not unusual for the industry. "Coherent, Spectra-Physics and JDS Uniphase are well known for their merchant diodes, as well as the diode-pumped solid-state lasers that use them," said Hausken. "What's unusual is that IPG is the largest supplier of this type of diode in the world, so it is not just another supplier."

The move could potentially make a sizeable addition to the company's cash flow, while the manufacture of the extra diodes should not add substantially to IPG's fixed costs.

"From that perspective it's a no-brainer," said Hausken. "The risk is that an expansion like this to a lower layer in the supply chain could distract them from their core business of fabricating and assembling diodes."

IPG is already the largest manufacturer and consumer of this type of diode so the move won't affect the overall size of the market, but the company's volume advantages mean that the merchant business has just become more competitive.

"There are other high-power diode businesses that IPG's product doesn't address, so the move doesn't necessarily mean the end for anybody," commented Hausken. "It will change the opportunities for the other merchant suppliers though. It adds another competitor and a very challenging one at that."