29 Apr 2015
Fiber laser company senses opportunities emerging in new applications beyond cutting and welding.
After reporting yet another surge in both sales and income, IPG Photonics CEO Valentin Gapontsev said that new uses for fiber lasers beyond the traditional areas of materials processing were emerging.
At just under $199 million for the first three months of 2015, the Oxford, Massachusetts, company’s quarterly revenues met earlier expectations, and were up 17 per cent on the same period last year – despite some unhelpful foreign exchange trends.
Gapontsev described that and a 29 per cent increase in quarterly net income to $57.4 million as a “terrific” start to the year, with the company continuing to pile up cash. It now holds more than half a billion dollars on its balance sheet, alongside negligible debts.
Among the emerging application areas is laser paint-stripping of aircraft and ships, an idea that IPG has previously worked on in collaboration with the US Air Force. But with no existing vendors currently capable of supplying and supporting such equipment, IPG looks set to solve that problem itself.
Gapontsev, who said that the market for such systems looks to be worth hundreds of millions of dollars in the US alone, explained that fiber lasers could greatly simplify the process of removing paint. Following a decade-long period of development, the technology is set to move into a genuinely commercial phase.
The CEO added: “Now, the long-term project is turning from qualification to mass production. Recently we received a request from a leading customer to become a key supplier of complete systems. We’re looking at it very seriously. It’s a complex system but we are ready to take responsibility.”
One recent move that may help IPG to put together more systems was the $5 million acquisition of a controlling stake in a Belarusian firm specializing in tools and controls for multi-dimensional, high-power laser systems.
Edison Welding video: stripping paint with a Q-switched laser:
Cutting gets bigger in Japan
A highlight in the latest quarter was a marked uptick in adoption of fiber lasers bound by cutting equipment vendors in Japan, who are starting to catch up with rivals in Europe. Gapontsev told investors that IPG had capitalized on this switch, with sales to Japanese cutting OEM customers up nearly 40 per cent in the quarter.
He also suggested that IPG may be about to muscle in various other important laser applications, including that of using ultraviolet (UV) sources to anneal electronic backplanes in displays production.
At the moment, excimer lasers are used for that processing step, but Gapontsev believes that fiber sources may start to replace the gas sources - just as they have displaced carbon dioxide lasers for metal cutting and welding.
The CEO said: “We have [achieved] very good results in the development of new technology for annealing silicon polycrystal films on the basis of our high-power UV fiber lasers, which we believe has a good chance to replace the present excimer laser technology in OLED display manufacturing.”
Other applications beyond the core cutting and welding areas that IPG is eyeing include cinema projection, for which the company says it has developed a speckle-free red/green/blue fiber laser technology, and lidar sensors based around fiber lasers for driver-free vehicles.
No China crisis
Meanwhile in China, where there are wider macroeconomic concerns as the country’s rate of economic growth has slowed to its lowest level in 20 years – a mere 7 per cent – IPG’s CFO Tim Mammen told an investor conference call that sales of fiber lasers were broadly unaffected.
He believes that this is because China’s government wants the country to become a location for advanced manufacturing as well as the production of high-volume goods, and this means more lasers for manufacturing in general.
In fact, IPG’s sales in China increased 23 per cent year-to-year in the latest quarter, as the company works closely with its customers there to develop applications such as an advanced welding process that could replace the use of rivets in aerospace structures.
Looking to the current quarter, Mammen and Gapontsev said that they were expecting another jump in sales to around $220 million, with plenty of headroom to further grow fiber laser uptake in the traditional areas of cutting, welding and fine processing. Mammen said he believed that less than half of the cutting market had been penetrated thus far by fiber lasers.
“Our order flow and book-to-bill remain at strong levels in our three main geographies and we expect that to continue in the near term,” Gapontsev said. “We remain focused on gaining share in our established materials processing applications, developing new product applications that will expand our available market and applying our lasers in large scale and novel applications beyond our core applications in materials processing.”
• Despite that positive sentiment from IPG’s management, the company’s stock price slipped a couple of percentage points – although at just under $93 on the Nasdaq exchange on April 28th, it continues to trade at levels close to an all-time high, valuing IPG at close to $5 billion.