STURBRIDGE, MA—In early 2004, most economic indicators pointed to sustained growth in the industrial laser sector, and the majority of companies that supply products into this market were, for the most part, upbeat in their view of prospects for the year. This forecast proved true.
Most encouraging from a marketing perspective is the strength of the industrial laser markets, which show no declines across the board for all applications, ranging from sheet metal cutting to product marking. In fact, marking/engraving—now drawing more than half the industrial lasers installed—shows no signs of saturation as demand for more product traceability and security issues drive the market growth. And a return to capital equipment demand in the semiconductor segment bodes well for solid-state laser growth. Most industry suppliers tell Industrial Laser Solutions (ILS) that the coming years should see a return to low double-digit growth in this laser industry sector.
The global market for industrial lasers is dominated by three industrialized producing regions: North America (essentially the United States), Europe (primarily Germany), and Asia (Japan and China). Among the regions that are the major markets for industrial lasers are the United States, Germany, Japan, and China. So, economic activity in these countries determines the health of the global industrial laser market. This assessment is not to demean countries with substantial markets, such as South Korea, Taiwan, Italy, and the United Kingdom, which are important second-tier users. Each of these countries, except for China, was either just recovering from or was still in the throes of economic downturn in 2003. Except for Germany and South Korea the picture for industrial laser sales brightened in 2004, and even in those countries signs of a turnaround in 2005 are evident.
The wild card in the industrial laser game is China, where unit sales of low-power lasers remain strong and the beginning of a substantive market for high-power lasers is apparent. However, on a revenue basis, China lags the other producing, consuming, and exporting nations. The most recent official figures (2003) show China sales of industrial lasers systems at about 5% of global sales revenues. On a unit basis ILS believes China produced about 10% of the total units manufactured in 2003. A note of clarification is called for; some analysts peg Chinese manufacture of CO2 lasers at 10,000+ units, most of which are replacement tubes for existing installed systems. (ILS only counts original lasers that are integrated into production systems.)
ILS adds China sales into a composite number for Asia, which shows that region accounting for about 26% of global unit sales in 2003. European companies built about 29% of the lasers and North America, dominated by low-power CO2 units, represented about 45% of the total. The adjusted unit production numbers for 2004, ~31,000, is a 16% increase over 2003, and this increase was lead by substantive gains expected in China and Japan, coupled with nominal growth in North America and Europe. For 2005 ILS expects units sales will increase by at least 7%, with the splits about the same as 2004.
On a revenue basis, industrial laser sales in 2004 at $1.125 billion grew by 10% over 2003. The apparent discrepancy between unit and revenue growth percentages is explained by a drop in unit prices of low-power lasers built in and for China that precipitated strong price cutting in the global market. Also, sales of high selling price multi-kilowatt solid-state lasers dropped in 2004 due to a reduction in the number of these units purchased by the auto industry. For 2005 ILS sees a 6% increase that reflects stability of low-power unit selling prices and a return of high-power solid-state sales.
Adjusted sales of low-power CO2 lasers grew 26% in units and 13% in revenues in 2004. Expectations are that these numbers will increase 8% in units and 7% in revenues in 2005. This market sector will continue to be driven by marking/engraving applications that account for more than 90% of sales. High-power CO2 laser sales grew an adjusted 12% in units and 14% in revenues as demand for cutting power from the fabricated metal sector increased. For 2005 ILS expects this market will increase 6% in units and revenues as growth continues in traditional applications.
In the 2004 solid-state sector, non-diode-pumped unit sales increased 7% and revenues grew 4% as selling price pressures drove down unit prices. For 2005 ILS expects growth of 7% in units and 4% in revenues as pricing pressure continues and diode laser sales make inroads.
In the diode-pumped solid-state laser sector, where decreasing unit prices are making these lasers more attractive compared to lamp-pumped units, 2004 sales grew 4% in units and revenues. For 2005 ILS expects that sales of these lasers will grow 5% in units and 2% in revenues as unit selling prices continue to decline.
—David A. Belforte,
Industrial Laser Solutions