Laser industry health in 2014

Fiber lasers break the economic tie

A picture of the laser industry's health is emerging now that we are in the midpoint of 2014, as first-quarter reports from leading industrial laser product manufacturers have been published. As expected, the financial news is mixed—just as it is for companies in other manufacturing sectors. IPG Photonics led in performance with a 22-percent growth in fiber laser revenues, Coherent revenues for industrial lasers grew 19 percent on sales for glass cutting equipment for smartphones, and Jenoptik and GSI were up 18 and 5.4 percent, respectively, on sales for microprocessing. On the downside, Rofin-Sinar (arguably number three in industrial lasers) dropped by 9 percent, as sales of macro-processing lasers underperformed but fiber laser sales began to ramp up. Newport had a strong quarter overall, but the industrial line dropped by 4 percent, and ESI had a tough quarter in the semiconductor market with revenues down by 33 percent—same with Ultratech at -47% in the same sector.

In telephone earnings calls with investment analysts, CEOs sloughed off the negative news on earnings and generally trumpeted a return to health in important markets in Europe (except in Germany, which has been steadily healthy) and China (which remains a puzzle to most who follow that market).

Let's look at Europe first, which is showing signs of employment gains in the central countries, stagnation in Turkey (a key laser market) brought about by political turmoil, and weak signs of recovery in Italy (a major laser market) and France (a sluggish manufacturing market overall). Germany offsets the less-than-bright news by riding the turnaround in the auto industry, as companies are gearing up for new models based on new platforms that use laser processing in assembly operations.

In Asia, Japan—always an important source of laser processing systems—is flexing its manufacturing muscle, as that country's economic recovery seems to be taking effect and export sales are showing strength. China continues to send out mixed messages, as some companies ILS tracks had a slower growth experience in exports to other Asian nations while domestic laser revenues lagged due to pricing issues as the overall manufacturing environment was turgid. The previously hot laser markets in Thailand, Vietnam, Singapore, and Malaysia slumped due to political unrest. India was brighter than had been the case as manufacturers looked for government support, and the recent change in government power is seen as a good sign for growth in the industrial sector.

A recent report by me on industrial lasers in the Americas predicted continuing growth in the US and low growth in Latin America led by Brazil (metal cutting and medical device manufacturing are hot), while the rest of South America on the Atlantic side was judged to be a slow-growth situation and the Pacific side looked perkier. In the US, the auto, aerospace, and medical devices markets turned up and microprocessing in general showed strength. Manufacturing in the US remains "bullish" for the next decade, according to the National Associaton of Manufacturers.

Overall globally, welding and cutting remain the major markets for industrial lasers in the macro sector, while marking is still the major one in micro laser applications—although pricing pressure makes this market less attractive. And for the remainder of 2014, we expect that fiber lasers at all power levels will continue to drive growth in the industrial sector.

David A. Belforte

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