08 Feb 2008
Fibre lasers have gained market share in applications where they have a distinct advantage over established laser technology. But Tom Hausken of Strategies Unlimited argues that the new and difficult challenge facing fibre-laser developers is how to move into areas where the cost or performance advantage is not so obvious.
It is interesting to see how discussions regarding fibre lasers have changed in just a couple of years. Not so long ago, discussions were full of sweeping generalizations but today they are more focused on specifics. There is acceptance that while fibre lasers are well suited for many tasks, they will never be the choice for applications such as laser drilling or photolithography. Today's debate has narrowed to the areas in between that are still cloudy, such as metal sheet cutting and applications that require visible, ultraviolet or ultrafast lasers.
Indicative of the increasing acceptance, several prominent laser manufacturers (namely Rofin-Sinar, Trumpf, Newport and GSI) announced fibre-laser products in 2007. Even if some of this is due to a bandwagon effect – showing a product without really believing in it – at least some of it is genuine. But now that the fibre-laser market reached nearly $250 m (€170 m) in 2007, what lies ahead?
History of the fibre-laser market
It is difficult to win market share with a new technology in the highly fragmented laser business. A small company may succeed in a particular subsegment, but wider gains can only be won a subsegment at a time. An industry champion or early adopter may help the market to accept a new technology, but those champions are few. Also, an early adopter in one sector, such as the automotive industry, does not have influence over users in other sectors, such as the semiconductor industry.
Nonetheless, the fibre laser has gained significant share in metal marking, some precision material processing applications and remote welding where its beam quality and flexibility can be exploited. The fibre laser is also a cost-effective substitute for lamp-pumped and diode-pumped solid-state laser designs in these applications. The leading supplier, IPG Photonics, is credited even by its competitors for its success at making a name for fibre lasers in these markets. To date, IPG has sold relatively standard products to anyone who is willing to take them and make system products out of them.
The next stage for fibre lasers will be more difficult. They will have to substitute for solid-state lasers in applications where the cost or performance advantage is not so clear and exotic features, such as visible or ultraviolet emission or special pulse characteristics, are required. IPG is now even taking on CO2 lasers for sheet metal cutting. It is certain that fibre lasers will eventually win substantial business in many of these applications, but the big questions are which ones and how long will it take?
Figure 1 shows our forecast for the total available market (TAM) for fibre lasers. This estimate excludes applications not suited for fibre lasers, such as photolithography, but it errs on the side of inclusion as we do not know how the market will evolve. We expect the overall market to continue to grow, due to general economic growth and expansion into new laser applications.
Figure 2 shows the market share of lasers by type for the TAM for fibre lasers. This is not the breakdown for all industrial lasers. As we learn more about the applications where fibre lasers are the preferred solution, the TAM should become more exclusive, but the total share of fibre lasers within the TAM should increase.
The laser cutting business is especially important for fibre lasers. Here, they can certainly seize some sales for use in 3D cutting systems, but the sales of such systems are relatively few. Nearly all of the high-power laser cutting business is for sheet metal cutting, which is dominated by CO2 lasers. To meet expectations for growth, fibre-laser makers must win share from the CO2 lasers used for sheet metal cutting.
We estimate sales of over 4300 CO2 resonators for high-power laser cutting in 2007, with a value of about $520 m. This includes all high-power applications, but not the many lasers used for lower power engraving and precision cutting. At an average price of about $60/W, this corresponds to an average power of about 2 kW.
Over half of these resonators are manufactured by system vendors, leaving less than half of the market available to independent CO2 resonator suppliers like Fanuc, Panasonic and Rofin-Sinar. These suppliers have strong relationships with their customers, restricting the opportunity even more. Moreover, the CO2 laser makers are likely to have enough margin available to lower their prices further to remain competitive.
This compares with only a handful of fibre-laser sales for sheet metal cutting to date, with a value of just a few million dollars in 2007. We assume an average power of about 1.5 kW and an average price at that power level of about $120/W. This average price is still much higher than for CO2 lasers, but the fibre-laser advocates point out the advantages in life cycle cost over CO2 lasers. Fibre lasers may be able to do the same process at lower average power, but for now the difference in average power is simply due to the different mix of CO2 and fibre-laser system products for these high-power cutting processes.
Fibre lasers have shown that they can make high-quality cuts for thinner metal with some advantages in the overall life-cycle cost. But this remains one of the great unanswered questions today. Fibre lasers are very effective for precision or thin-sheet metal cutting, but they are not the best choice for the thickest pieces. CO2 laser makers point out that job shops are likely to prefer a tool that has been proven for both thick and thin sheets, and the best candidate for this is the CO2 laser. The initial cost of such a laser can be very low as it is a mature technology.
It would be surprising if CO2 lasers were not superior in cut quality until enough time has passed that process engineers can perfect the fibre-laser cutting process, which seems certain to improve. While much is made of the differences between fibre and CO2 lasers in consumables and eye safety, the bottom line is that it will simply take time for the industry to settle on its choices in sheet metal cutting.
We have assumed a relatively cautious 5% penetration of fibre lasers by 2011, largely because of the time it takes for this industry to adjust to new technologies. Nonetheless, that amounts to about 10x growth over 2007 and clearly the overall opportunity is very large for fibre lasers if they can penetrate further.
The other large opportunity for fibre lasers today is in the micro category. This is not a monolithic segment, rather a diverse set of low- to mid-power continuous-wave and pulsed applications. Many relate to precision cutting and welding, but also drilling, scribing and even stereolithography, plastic welding and laser soldering.
These applications form a middle ground between kilowatt and high-volume marking lasers. Solid-state lasers rule this category, mainly emitting at 1 µm but often at visible or ultraviolet wavelengths. In this category, performance often triumphs over price. The need for special performance sometimes favours fibre lasers, sometimes solid-state or excimer lasers. This exacerbates the fragmentation of the market.
In many cases, the best solution may be a laser that defies categorization. For example, in 2007 Newport introduced a laser that employs a more conventional solid-state ultraviolet seed laser followed by a doped fibre amplifier. We call this a fibre laser because of the fibre amplifier stage. This is not a trivial modification, but is in fact a very challenging design.
SPI Lasers has a pulsed laser product that also challenges definitions. It is not like a modulated fibre laser, since it produces pulses in the nanosecond range, like Q-switched lasers. But it is not Q-switched itself and it has some features that are unique from other lasers in the category.
There are so many different flavours of laser, each with distinct advantages and disadvantages, that it is misleading to portray the fibre laser as being so strikingly different that it is disruptive. In other words, it is hard to generalize in the industrial laser market. Each application is unique.
Marking, medical and others
Product marking is growing rapidly as customers put closer scrutiny on sourcing. At the same time, laser marking is becoming a more cost-effective solution. In the last few years, fibre lasers have made strong gains against solid-state lasers for metal marking. While this growth will continue, the easy gains for fibre lasers have already been made and any further gains will be more challenging.
There are many promising opportunities in other applications, albeit more limited. IPG and IMRA have made important wins for the use of fibre lasers for skin rejuvenation and cutting corneal flaps for eye surgery. Northrop Grumman has put a strong effort into the use of parallel fibre amplifiers to generate a multimode but coherent beam for directed energy weapon research. NP Photonics and Koheras are now seeing their efforts pay off in the use of single-frequency fibre lasers for fibre sensors.
For the most part, however, these opportunities require the creation of a new market or a wait for regulatory approvals. When the development does bear fruit, the potential revenue and growth can be especially attractive.
To summarize, fibre lasers have proven themselves as a substitute for the most obvious applications, but the next stage will be more difficult. Much will depend on application development, the supplier community, the solid-state and CO2 laser competitors, and even export regulations. It is also important to understand that CO2 and solid-state laser sales are likely to grow through the same period.
• Tom Hausken is director of photonic market research at Strategies Unlimited, Mountain View, California, US. The company's recent report is entitled "Fiber Laser and Industrial Laser Market Review and Forecast, 2007". For more information, e-mail email@example.com or visit www.strategies-u.com.
• This article originally appeared in the January 2008 issue of Optics & Laser Europe magazine.