What's next for the competitive laser market?

March 17, 2022
nLight’s CEO shares his company’s inspirational story and an outlook for the future of photonics.

Following the lunch break, nLight CEO and founder Scott Keeney joined me on the stage for a fireside chat-style keynote. Keeney started nLight roughly 21 years ago based on a vision that semiconductor lasers would improve in terms of efficiency, power, brightness, and reliability, while ultimately redefining a wide range of markets. Today, nLight serves three primary sectors: industrial, aerospace and defense, and microfabrication.

Keeney took nLight public in 2018, shortly after presenting a keynote at LPMS. And as we all know, a lot has changed since then. One big change for nLight was the amount of business the firm does in China. Much of the change centers around how the world has changed, including the tariffs issued by the Trump Administration shortly after the company went public.

Frankly, that was a surprise. We saw not only changes with respect to China, but a global manufacturing recession that occurred thereafter, he says. “The capital markets also changed pretty significantly, most notably in China. There are key markets in China that became far less attractive than they were up through 2018. I see continued opportunities for lasers, and especially semiconductor lasers continuing to improve at a rapid rate. I think were still in the early innings.

While China was a significant market for nLight at the time, it had interesting opportunities outside of China, leading the company to focus on growing its business in those core markets. nLight has been growing on average of over 20% a year, in part because of its market diversity.

One such growth marketspace. For instance, the NASA satellite measuring changes in polar icecaps with a level of precision that has never been achieved in the past. Were getting to the point where lasers are playing an important role [in space], he says. And it’s pretty interesting on everything from additive manufacturing with laser processes to build rocket engines to guidance systems.

China advice

Don’t pretend you’re an expert on China. China has an incredibly rich culture with a fantastic set of opportunities. But its complex, he says. When weve tried to put China into a more simplistic sort of lens, businesses outside of China have gotten into trouble more often than not.”

The timescale is different. You have to think in terms of much longer timescales, he says. Its a concept of how China oscillates, not between left and right in terms of sort of decentralization, centralization, and we could see those cycles continue.

Putting photonics in perspective

Its hard to think of a single important technology in the works today or that could change the world where lasers arent involved,” says Keeney. “The opportunities are very broad, very richand substance becomes the challenge. Where tech companies make the mistake is they have new technology that is great for a lot of different things. But they dont focus on the one thats going to get across the chasm.”

Within the photonics community, Keeney suggests manufacturers focus on applications that can make a difference. “As an industry, we should be very proud of the work were doing. But were small. And I dont think its helpful to hide things,” he says. “We have a narrow set of markets. We need to be very thoughtful about our efforts.”

Insights into acquisitions

Prompted by audience questions, Keeney also shared his views on mergers and acquisitions. Acquisitions can be incredibly powerful, but theyre very difficult to do well, he says. The reason for the difficult comes down to culture, explains Keeney. “An acquisition is fundamentally bringing together two groups. And where that overlap is, and where those teams exist, depends on the particulars. At the end of the day, thats what youre doing.”

nLight has been successful in its acquisition strategy by making sure it spends the time needed getting to know people. “Thats one of the big challenges with the pandemic is when you cant go and interact with people with the same level of depth in the past,” he says.

One example of a successful acquisition was a company called Nutronics. The thesis was fundamentally about vertical integration of spaces, explains Keeney. “The idea that vertical integration somehow just naturally leads to lower costthats a major fallacy. People need to be really careful.” For nLight, vertical integration of Nutronics was more about “breaking down, what economists would call vertical market failure…where if the engineers on both sides were working together as one company, we would optimize things in a better way.”

Parting words

With new working in quantum, new work in UV, new ways to deal with pandemic, new medical devices, and new additive manufacturing technologies, there is a lot within the photonics community to be excited about, explains Keeney. Knowing that nLight lasers are playing meaningful roles in an array of important applications (everything from helicopters ferrying people out of Afghanistan to new surgical applications) is understandably encouraging. “It’s something that I personally have found very rewarding,” he says.

What keeps Keeney up at night also resonates with anyone in business today. “The supply chain…this is a really difficult time to manage.”

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About the Author

Peter Fretty | Market Leader/Group Editorial Director, Laser & Military

Peter Fretty began his role as the Market Leader, Laser & Military in June 2023; the group encompasses the Laser Focus World, Military & Aerospace Electronics, and Vision Systems Design brands. He also serves as Group Editorial Director, Laser & Military (effective spring 2023) and served as Editor in Chief of Laser Focus World since October 2021. Prior to that, he was Technology Editor for IndustryWeek for two years.

As a highly experienced journalist, he has regularly covered advances in manufacturing, information technology, and software. He has written thousands of feature articles, cover stories, and white papers for an assortment of trade journals, business publications, and consumer magazines.

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