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Photonics West: laser markets look good thru 2012

24 Jan 2011

After a stellar 2010, the global market for lasers is set for steady but sustained growth over the next couple of years.

After expanding by a remarkable 27% in 2010, the global market for lasers is expected to enjoy robust growth in 2011 and into 2012, thanks largely to a sustained recovery in materials processing and communications applications.

Speaking at the annual Laser Marketplace Seminar held in parallel with Photonics West in San Francisco, California, the market analysis by Pennwell’s Steve Anderson and David Belforte painted a picture of a very healthy industry, following the pain of 2009.

Belforte, the Editor-in-Chief of Industrial Laser Solutions and a veteran observer of the market for lasers in materials processing, now expects 2011 and 2012 to be strong years for the sector. That is in marked contrast to last year’s talk, which Belforte admitted had been one he’d rather not have had to present, describing it as “a horrible story”.

But after coming through the deepest recession that the laser materials processing sector had ever experienced with market growth of around 20% in 2010, Belforte’s conservative prediction is for a further 16% expansion in 2011, to reach close to pre-recession levels.

If correct, that would approximate to a market for industrial laser sources worth $1.7 billion in 2011, up from just under $1.5 billion in 2010.

While the materials processing sector was hit particularly badly by the impact of the recession on manufacturing, Belforte noted that two key drivers of the recovery had been the continued strength of the Chinese manufacturing sector, coupled with the growing success of diode-pumped solid-state (DPSS) and fiber lasers. The key reason behind that was the diversity of markets served by DPSS and fiber sources, whereas carbon dioxide lasers are highly exposed to metal cutting applications alone.

Blockbuster year
In a wider analysis of the entire laser sector, Laser Focus World Editor Anderson described 2010 as a “blockbuster” year, culminating with a whirlwind of activity in mergers and acquisitions as companies with large cash holdings and growing stock values flexed their financial muscles.

In another clear signal of recovery in 2010, Anderson cited data from the SPIE and OSA societies showing that photonics jobs postings jumped 92% from depressed 2009 levels.

This time last year, the Pennwell team had forecast total laser market growth of only 11% in 2010, underestimating the speed and magnitude of the recovery. That was in part a reflection of the sudden rebound of the semiconductor industry, where in 2010 chip production increased by some 30% over 2009, and spending on capital equipment more than doubled.

That has had a huge impact on demand for lithography stepper systems, translating directly to a 74% boom in sales of excimer lasers for lithography applications in 2010. Anderson predicted more muted growth of only 5% in 2011 in response to a flattening-out of demand in the semiconductor equipment market – albeit from record highs reached in July 2010.

Although data storage remains the third-largest application sector within the wider laser market, the growing consumer trend away from traditional storage media saw revenues from this application remain virtually flat in 2010, as declining selling prices eroded any gains in unit shipments – as evidenced by the very low price of a typical Blu-ray Disc player nowadays.

Another sector that under-performed the average in 2010 was medical, where the alarming 35% fall in sales witnessed in 2009 was followed up with subdued growth of only 7% in 2010. Anderson did point to a stronger recovery in 2011, however, with sales of medical lasers expected to grow by 13% to reach $432 million.

One area that will very likely fare less well than most in 2011 is the scientific market for lasers, which enjoyed a bumper year in 2010 and recorded a revenue increase of some 17%, thanks largely to spending prompted by the economic stimulus program in the US. This year, the market for lasers used in science is expected to return to its typical single-digit level of growth.

Growth areas
But, overall, both Belforte and Anderson were confident of sustained market growth in 2011 and 2012, citing a raft of applications that would demand growing numbers of lasers. Specific growth areas will likely include pico-projector systems, for which unit sales could run into tens of millions in the coming years, as well as the new segment of “sensing” consumer applications. The latter includes the Microsoft “Kinect” gaming platform, which uses near-infrared sources to detect gamers’ movements – with 8 million Kinect units already sold to date.

And although major cuts to some photonics-based military projects, such as the Airbrone Laser, are expected in 2011, many others – such as directed energy weapons, infrared countermeasures and “dazzling” lasers are seen as priority areas.

Coupled with growing applications in photovoltaics and flat-panel display manufacturing, Anderson wrapped up with an overall projection that the total laser market would grow 11% to in excess of $7 billion in 2011, and close in on $8 billion in 2012.

The only caveat against that prediction is a lingering sense of macroeconomic uncertainty, where any unexpected shocks could derail the recovery. According to Anderson, many laser companies remain a little uncomfortable with that lack of visibility, but it is apparent that the laser industry has got its own house under very good order, and is in as strong a position as it could be to benefit from a stable global economy.

• The Strategies Unlimited reports "Worldwide Market for Lasers: Market Review and Forecast 2010" and "Mid-Infrared Lasers 2010" are available now at www.strategies-u.com.

JENOPTIK  -  Optical SystemsSPECTROGON ABBristol Instruments, Inc.AlluxaEaling UGSpectrum Scientific Inc. -  SSI OpticsInfraTec GmbH
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