Laser Marketplace Seminar review (continued)

Feb. 13, 2014
Here is a continuation of Laser Focus World's coverage of the 2014 Lasers & Photonics Marketplace Seminar held on February 3, 2014.
Gail Overton 720

Here is a continuation of Laser Focus World's coverage of the 2014 Lasers & Photonics Marketplace Seminar (you can see John Wallace's overview in his 2/4/14 Photon Focus blog by clicking the link here. Held on Monday, February 3 in conjunction with SPIE Photonics West 2014, theSeminar takes both a quantitative and qualitative approach to the lasers and photonics markets and complements the Annual Laser Market Review & Forecast feature article in the January 2014 issue of Laser Focus World, as well as the comprehensive "The Worldwide Market for Lasers" report from Strategies Unlimited (Mountain View, CA), the market analysis arm of Pennwell.

If you weren't able to attend the Seminar, these presentation reviews may pique your interest in attending next year....

Allen Nogee quantifies the laser markets
Strategies Unlimited senior analyst, lasers & LED Lighting Allen Nogee reported that 2013 laser sales grew to $8.8 billion dollars--modest 1.7% growth over 2012 laser market sales of $8.6 billion and below the 3.5% growth that we forecast in last year's laser market review primarily due to increased weakness in the optical storage sector, lithography, R&D, and military laser sales. For 2014, the forecast for worldwide laser sales is a healthier 6% increase to $9.3 billion dollars.

Nogee revealed that each year, China sells more and more lasers and buys less from US and European suppliers; for 2013, he said that China purchased $750 million dollars in lasers and sold $280 millions' worth. Since laser sales slightly lag but overall track the stock market, 2014 is foreseen as a bullish year, with communications lasers still leading the applications mix followed by materials processing and medical lasers. As the Cloud cannibalizes optical storage laser sales, gesture-recognition infrared laser diodes are seeing a tremendous surge for all-things Kinect and sensing-related. Mid-IR spectroscopy and flow cytometry join the ranks of healthy laser sales products, along with medical lasers (not hurt at all by the medical device tax).

In 2014, R&D markets are expected to recover somewhat as the sequester fades, and semiconductor markets should improve as well. In the materials processing arena, kilowatt macromaterials processing growth should increase nicely around 4.5% as fiber lasers continue their double-digit growth. Allen Nogee can be reached at [email protected] if you have any questions on the laser markets.

Mark Douglass of Longbow: It's the economy, stupid
Longbow Research Sr. equity analyst - industrial technology Mark Douglass didn't come out and say "It's the economy, stupid," but his macroeconomic overview clearly indicated that the laser markets (and especially industrial laser sales in "tooling" applications) are closely tied to the global economy. Douglass sees a transition to industrial growth in 2014 after the industrial activity peak in the summer of 2012 following the recession of 2008/2009. Though the Purchasers Manufacturing Index (PMI) just fell recently and the stock market has shown a dip, these are short-term trends on growing optimism that the global economy is gathering steam.

Although China's PMI contracted in December and January 2013, China is relying more and more on internal growth rather than depending on Europe and its woes. And while double-digit China growth is unsustainable, 7.5% growth in GDP isn't half bad. The US favorable three-year outlook does have some pitfalls: Douglass said that you only need 170 workers today to do the work of 1000 in 1950, and that we have only recovered 22% of the jobs lost in the great recession versus an 82% recovery in production. What does it mean? Less people can do more, leaving more people unemployed.

Despite the unemployment prospects, more and more industries will continue to automate and lasers are a big component of that formula. However, Douglass reminded the audience that upfront cost and profitability margins are still hurdles for lasers; they are still more expensive than an arc welder, for example and have a ways to go in that regard.

OSA's Hausken emphasizes "early peak" photonics
Rounding out the morning market-focused presentations was a presentation from Sr. engineering and applications advisor for The Optical Society (OSA; Tom Hausken. His look at "The Optics Market: From the Exotic to Commodities" summed up the optics industry as comprised of $24.5 billion dollars in free-space optics, $11 billion in optical fiber, $0.5 billion in planar technologies, and $20 billion in vision correction for a total $56 billion dollar optics industry.

Hausken explained that overall sales growth is not based on the continuing growth of any one application space, but is really the addition of a series of "early peak" application sales that rise steeply and then taper off, and yet add to a steep (or healthy) growth curve. He reminds us that laser and photonics purists don't realize that optics is not just for scientific markets and research, but for eye glasses and other non-exotic products. Flat-panel glass, for example, from companies like Corning is a $4B industry that is approaching the scale of the entire laser market. Like Allen Nogee, Hausken sees sensing and medical applications as being key to future growth in the optics industry.

As for whether or not the optics industry is consolidating, Hausken says it really depends on whether or not you define the market broadly or more narrowly. For larger companies that see optical components as a commodity, consolidation is happening. But for small companies playing in niche optical markets, there is a proliferation of new companies, not consolidation.

Executive panel cites opportunities
2014 Lasers & Photonics Marketplace Seminar attendees that I spoke to were all pleased with the rapid-paced, informative Executive Panel entitled "Global photonics market, trends, and opportunities". Moderated by Nufern president Martin Seifert, panelists included Søren Isaksen, chairman of the Board of Directors, Photonics Group, NKT Holding A/S; Peter Leibinger, managing partner and president, Laser and Electronics Division of Trumpf GmbH, and Sri Venkat, Sr. VP/GM, Commercial Lasers and Components, Coherent.

What follows here is a summary of the panel observations and the person who made them (for the details of the questions asked, the entire seminar was videotaped -- please contact Conard Holton for more information on how to obtain a video at [email protected]):

Seifert: On the one micron side of materials processing it is essentially a two-horse race with IPG leading in fiber lasers and Trumpf leading in disk lasers.
Leibinger: Trumpf's $3/W pump laser is only possible with vertical integration and this company policy is the key to its success.
Venkat: Direct diode solutions are not ready for cutting operations; Coherent's pulsed laser portfolio with high peak powers is moving into micromachining applications and challenging CW options.
Isaksen: Today's fiber lasers are only possible due to advances in optical fiber design.
Leibinger: Trumpf doesn't view china as a threat, especially since we bought a chinese tool company and are excited about the prospect of further growing that business.
Venkat: Much of the domestic market in China uses domestically produced chinese lasers.
Isaksen: The internal R&D investment in China will continue to edge out US and European laser options.
Isaksen: OCT and photoacoustic technology is ready for prime time; NKT is happy with its IP protection for its fiber.
Venkat: Government funding gets you to the launch pad, but private industry funding rules future product development and commercialization.
Leibinger: Laser companies are small potatoes compared to the GEs and other mega-corporations; says that laser and fiber manufacturers have to work together and compete together to grab available financing, and that small companies are crucial to playing in niche markets that the Trumpfs and IPGs don't want to play in.
Venkat: Vertical integration is not always possible, so consolidation is necessary in some markets. Feels that 3D printing is unclear as a big market for lasers.
Leibinger: Trumpf had a powder-bed 3D system up until five years ago and stopped production on it; he still thinks laser processing via subtractive technology is the true wave of manufacturing in the future. Hopes there is room for both.
Venkat: CO2 applications will continue to expand.
Isaksen: All countries can make big technology leaps; no technology is too complicated for any country to gain a foothold and expertise.
Isaksen: There are far too many startups in some technology areas like femtosecond lasers; it's good for companies like Nufern selling ultrafast fibers, but it creates a dilution effect.
Leibinger: The ultrafast laser business is nichy; more excited about EUV segment.
Isaksen: Imaging, life sciences is the place to play; sees good growth in that sector.

Needham's Ricchiuti on 3D printing/LAM
James Ricchiuti, managing director, Equity Research at Needham & Company, concluded the Seminar presentations by detailing the history and future of 3D printing, a subset of which is laser additive manufacturing or LAM. I was surprised that the first 3D Systems product was introduced in 1987 and that EOS introduced the first laser sintering system in 1995 (see my recent LAM article at Wohlers Associates pegs the 3D printing industry, both laser- and non-laser-based, at $2.7 billion dollars in 2013.

Ricchiuti says that while there is plenty of hype, much of the activity is real. Dental is big, and GE says they will have 100,000 different design in five years for 3D printed components. Boeing already uses 32 laser-sintered components on the 787 aircraft, and additive manufacturing of metals will continue to be the growth driver. All indications, says Ricchiuti, are that 3D printing market estimates could be conservative.

I would argue that 3D printing took so long to be commercialized because you couldn't easily go online 20 years ago and translate 3D models into software CAD files; I surmise that software availability on the Internet was a big driver for 3D printing success.

We look forward to seeing you next year!

About the Author

Gail Overton | Senior Editor (2004-2020)

Gail has more than 30 years of engineering, marketing, product management, and editorial experience in the photonics and optical communications industry. Before joining the staff at Laser Focus World in 2004, she held many product management and product marketing roles in the fiber-optics industry, most notably at Hughes (El Segundo, CA), GTE Labs (Waltham, MA), Corning (Corning, NY), Photon Kinetics (Beaverton, OR), and Newport Corporation (Irvine, CA). During her marketing career, Gail published articles in WDM Solutions and Sensors magazine and traveled internationally to conduct product and sales training. Gail received her BS degree in physics, with an emphasis in optics, from San Diego State University in San Diego, CA in May 1986.

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