Prepare for change

Dec 21st, 2018
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IMAGE. In December 2018, the Trumpf group acquired Philips Photonics GmbH, a VCSEL manufacturer. This may serve as an example for new technologies that may surprise us in 2019. (Credit: Trumpf group)

What a great year! Now it’s time for holidays with family and wonderful food. And then I want to sit by the fireplace with a good Scotch in my hand to look back and also to think what the New Year may bring.

To start, the old year was busy and successful for most companies in the industrial laser business. After a stunning 2017, in which fiber laser manufacturer IPG Photonics delivered an incredible 40% growth at the level of $1 billion revenue (!), 2018 was still a year of growth. But as Trumpf’s CEO Nicola Leibinger-Kammüller put it in last July: "There are increasing signs that this long phase of recovery could soon be over. We want to be prepared for that."

Sorry, we have to face politics

It may not be an issue that people really like to think about, but if we want to make a forecast for next year, we have to look at the political situation. In 2018, America’s president raised tariffs—and China has responded. Now it looks like they're taking a little pressure off the gas. Still, the tariffs are a serious problem for photonics companies such as IPG Photonics; it has been discussed elsewhere and deserves an extra post in the future to summarize the damage it has done so far.

When I look at 2019, it is Europe that worries me most. It may have reached its economic climax, and looks weaker than ever on the political side. Merkel, May, and Macron–who will still be in charge at the end of 2019? Merkel is in her last term and has already given up party leadership. Any new political coup here in Berlin may terminate her era ahead of the scheduled end in 2021. The post-Merkel era will be different; many small parties will compete for power. And, yes, stability may change to uncertainty.

Then there is Brexit. Whether it happens or not, it will change the European Union forever. And it will have severe impact on the economy. If we look just at science: European and UK scientists are working very closely on a wide range of projects funded by the European Commission. Any separation will weaken the position of European research in the global competition for new fields such as quantum technology or artificial intelligence. Already in 2018 British universities started to create a kind of dual academic citizenship to foster alliances that will work after the B-Day on March 29. It won’t be easy. And the economy… I think I should grant myself another whisky, as long as the Scotch supply lasts.

What about lasers?

Yesterday I called Arnold Mayer from Optech Consulting. I have followed his forecasts for many years and I think he is the leading analyst for industrial laser markets. Well, even he couldn't give me a clear forecast of how the markets will behave in 2019. But then we talked about recent news from Trumpf:, which took over Philips Photonics, a VCSEL maker, just a few days ago.

This is something that we both found very interesting. VCSELs are vertically emitting laser diodes that are used in 3D face recognition of smartphones and future lidar technologies. Although kW power is possible with 2D arrays of these devices, we were not aware of large scale material processing applications yet. So it seems that Trumpf is making a bet on future developments.

This might be wise when even kW lasers become a commodity now. IPG’s Valentin Gapontsev said in a recent investor call: “…competition in continuous wave laser products at less than four kilowatts has increased. Some competitors have also announced continuous wave lasers with power output of up to 10 kilowatts.” So commoditization, particularly in the Chinese market will be one trend in 2019.

What about big data, artificial intelligence, and quantum technology you may ask. Well, China, North America, and Europe have announced big initiatives to fund research on the quantum stuff. I don’t expect that to show up on any shop floor soon.

Quantum technology looks quite different for the other two topics: big data and AI. It was at the recent EuroBlech trade show that I stumbled upon my first view of AI applications in laser material processing. It is coming, I am sure.

For big data, I would like to share a thought from a recent interview with Stefan Traeger, CEO of Jenoptik: “As an industry, we are still positioned so that we produce a digital dataset and someone else makes money with it. And we forget that the most important resource of the future will be the data itself—the sensor becomes a commodity. What’s really going to make the money is an integrated solution of sensor and data processing.”

So this might be another trend in 2019: Whoever produces (big) data in photonics may think about new ways to make money with it. This could be process data that is used for predictive maintenance in large manufacturing schemes (aka Industry 4.0). Or what Traeger referred to--you may have new data processing schemes added to a sensor that create value. For example, in computed tomography software accounts for a large portion of value added.

There is so much more to say about 2018, but we have to look forward and prepare ourselves for the things to come. A first detailed overview will be given at the Laser Focus World Lasers & Photonics Marketplace Seminar during SPIE Photonics West. Personally, I think we will see a lot of changes in 2019. It might look dangerous for established fields, but there is also a chance for something new to excel.

PS: If you are still looking for a nice meal on New Year’s eve, you may consider a Swiss cheese raclette. Some scientists from Stuttgart University took an 8 kW thin disk laser to prepare this gourmet dish.

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