IPG Photonics 2016 Investor Day

Download IPG Photonics 2016 Investor Day

Post on 04-Jan-2017

212 views

Category:

Documents

0 download

TRANSCRIPT

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    IPG Photonics CorporationThe Fiber Laser Company

    (NASDAQ: IPGP)

    2016 Investor Day

    May 11, 2016

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    Welcome and Overview

    Tim Mammen

    Chief Financial Officer and Senior Vice President

  • Safe Harbor Statement

    The statements in this presentation that relate to future plans, market forecasts, events or performance are forward-looking statements. These statements involve risks and uncertainties, including, risks associated with the strength or weakness of the business conditions in industries and geographic markets that IPG serves, particularly the effect of downturns in the markets IPG serves; uncertainties and adverse changes in the general economic conditions of markets; IPG's ability to penetrate new applications for fiber lasers and increase market share; the rate of acceptance and penetration of IPG's products; inability to manage risks associated with international customers and operations; foreign currency fluctuations; high levels of fixed costs from IPG's vertical integration; the appropriateness of IPG's manufacturing capacity for the level of demand; competitive factors, including declining average selling prices; the effect of acquisitions and investments; inventory write-downs; intellectual property infringement claims and litigation; interruption in supply of key components; manufacturing risks; government regulations and trade sanctions; and other risks identified in the Company's SEC filings. Readers are encouraged to refer to the risk factors described in the Company's Annual Report on Form 10-K and its periodic reports filed with the SEC, as applicable. Actual results, events and performance may differ materially. Readers are cautioned not to rely on the forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

    3

  • Agenda

    4

    Welcome and Overview ..Tim Mammen

    Current and Future Market Opportunities. Trevor Ness

    Accessories Felix Stukalin

    Strategic Growth ProjectsYuri Erokhin

    Medical Gregory Altshuler

    TelecomMark Cannata

    Manufacturing

    Devices and Components.. Eugene Scherbakov

    Diodes..Alex Ovtchinnikov

    Break

    China Trevor Ness

    Financial Review.. Tim Mammen

    Summary and Growth Strategy............................................................................ Valentin Gapontsev

    Q&A Session

    Tours and Lunch

  • IPG Overview

    Global leader in industrial fiber lasers

    FY 2015 sales of $901 million; YOY growth of 17%

    $4.53 diluted EPS; up 20% YOY

    Q1 2016 sales of $207.2 million; YOY growth of 4%

    $0.99 diluted EPS; up 2% YOY excluding foreign

    exchange transaction loss/gain

    Growing acceptance of fiber lasers replacing traditional lasers

    Products are sold to OEMs, systems integrators and end

    users for use in many industries

    Global operations with over 3,700 employees

    5

  • Investment Highlights

    Expanding $4.8 billion opportunity for all lasers Approximate average annual growth rate of 6%

    Recognized leader in the rapidly growing fiber laser market Estimated 12% CAGR from 2015 to 2020

    Significant competitive advantages First mover advantage

    Performance, product range and reliability

    Lowest cost (vertically integrated model)

    Strong IP position

    Vertical integration and direct sales model drives industry-leading

    margins (54.6% GM in FY 2015, 55.2% GM in Q1 2016)

    Broad geographies, end markets and applications Asia & Australia 51%, Europe 33%, North & South America 15%

    6

    The technology leader and most profitable

    company in the rapidly growing fiber laser market

  • $-

    $1,000

    $2,000

    $3,000

    $4,000

    $5,000

    $6,000

    $7,000

    $8,000

    All Lasers Fiber Lasers All Lasers Fiber Lasers

    2015 2020

    Forecast

    Materials Processing Advanced Applications Medical

    7

    Rapidly Taking Share in Large, Existing Laser Markets

    $4,800

    $1,480

    $6,751

    $2,600

    ____________________

    Source: Laser Focus World, Industrial Laser Solutions, Strategies Unlimited, Optech Consulting and IPGP estimates.

    (000)

    Fiber, 31%

    2015 - Share of Total Laser Market

    Fiber, 39%

    2020 - Share of Total Laser Market

  • Materials Processing Diverse End Uses and Customers

    8

    Automotive

    General Manufacturing

    Heavy Industry

    Oil & Gas

    Shipbuilding

    Nuclear

    Construction

    Aerospace

    Shipbuilding

    Semi/

    Electronics

    Displays

    Consumer

  • Expand addressable market and enhance future growth opportunities by

    addressing new application and customer specific requirements

    Recent & New Product Introductions

    9

    Marking & Engraving

    Cutting

    Welding

    Fine Processing

    Additive Manufacturing

    Brazing

    Drilling

    Welding of Alloys and Specialty Materials

    Cladding & Deposition

    Ablation

    Display & Imaging

    3D-Cinema

    Entertainment and Projection

    Micro-processing

    Medical Devices

    Bio-Medical

    Sensing & LIDAR

    CURRENT FUTURE

  • Future Opportunities in Micro-processing

    10

    Semi/PC Board/Display, $153

    Solar/LED/ Other, $367

    Excimer/DUV ,$719

    CO2/EUV , $193

    Addressable Market,

    36%Other Applications,

    64%

    Significant area of growth for ultra-fast pulsed lasers, and shorter

    wavelength lasers at the green and ultra-violet wavelengths

  • Other Applications Provide Potential Additional Longer

    Term Growth Opportunities

    11

    ____________________

    Source: Strategies Unlimited, IPGP estimate of potentially addressable market.

    Fiber participation is relatively low in these other applications. Longer term opportunity will depend

    on successful product development and market acceptance of fiber laser products.

    2015 2020

    (US$ mm)

    $192

    $161

    $67

    $455

    $372

    $628

    Displays & Light Shows

    Sensors, LIDAR & Inspection

    Mid-IR Spectroscopy

    R&D

    Defense

    Medical

    $569

    $236

    $108

    $594 $524

    $1,042

  • IPGs Defensible Laser Position

    12

    Strong IP Portfolio

    Vertical Integrated Business Model

    Manufacturing Scale

  • 13

    Three Distribution Channels

    OEMs/Integrators Direct Sales Representatives

    End User

    End User

    End User

    End User

    End User

    End User

    End User

    End User

    Factory 1

    Factory 2

    Factory 3

    End User

    OEM

    Large Manuf.

    OEM

    Integrator

    Representatives

    Direct Sales

    Direct Sales

    Direct Sales

    Leveraged Sales Model Maximizes Market Reach

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    Current and Future Market Opportunities

    Trevor Ness

    Senior Vice President, World Wide Sales and Marketing

  • IR Lasers

    UV Laser

    Ultrafast

    Visible Fiber Lasers

    Systems

    Accessories (Felix Stukalin)

    Strategic Growth Projects (Dr. Yuri Erokhin)

    Medical Applications (Dr. Greg Altshuler)

    Telecom (Mark Cannata)

    Diverse Product Lines and Market Opportunities

    15

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    IR Lasers

  • IPG Laser Wavelengths, Mode of Operation and Power

    Wavelength

    Mode of Operation

    Laser Power

    Fe:ZnSe/S

    3.4 -5.2 mm

    IPG manufactures lasers with average

    power ranging from a few Watts to

    hundreds of kW (virtually unlimited)

    UV ~0.36 mm

    Ultra-violet

    Blue, green, yellow , orange and red 0.45-0.73 mm Ytterbium ~1.07 mm

    Visible Near-Infra-red

    400 nm 700 nm 1.5 mm

    Diode

    ~0.98 mmErbium

    ~1.5 mm

    Thulium,

    Holmium

    ~2 mm

    Cr:Zn/Se/S

    1.8-3.4 mm

    > 5 mm

    Mid-Infra-red

    CW: the laser is ON all the time

    Quasi-CW: the laser is modulated in ms to ms range

    Pulsed: the laser is switched on for 10-9 s

    Ultrafast: the laser is switched on for 10-12 t0 10-15 s

    Any wavelength, any

    pulse duration, any

    average power:

    ANY APPLICATION

    17

  • Overview:

    IR fiber lasers are the laser of choice in

    materials processing applications

    Strategy:

    IPG fiber lasers have the broadest product

    range, the highest performance and

    reliability, the lowest cost of ownership and

    offer unmatched integration capabilities

    Margin Profile:

    Vertical integration and direct sales model

    drives industry-leading margins

    Growth Targets:

    Fiber lasers forecast to outpace laser market

    growth, with CAGR of 15% though 2019

    IR Lasers Overview

    18Source: Optech Consulting and IPGP estimates.

  • IPGs Core Existing Applications

    $1,453

    $1,867

    $569 $662

    $385 $431 $520

    $718 $644

    $1,323

    $278 $352

    $219 $333

    $144 $183

    2015 2020 2015 2020 2015 2020 2015 2020

    High Power Marking Fine Processing Micro Processing

    All Lasers Fiber Lasers

    Materials Processing Laser Market

    ____________________

    Source: Laser Focus World, Industrial Laser Solutions, Strategies Unlimited, Optech Consulting and IPGP estimates.

    Opportunity for Continued Fiber Laser

    Market Share Gain is Significant(US$ mm)

    (Excludes lithography)

    New Applications

    19

  • $462

    $967

    $182 $356

    $591

    $364

    $219

    $180

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    $-

    $200

    $400

    $600

    $800

    $1,000

    $1,200

    $1,400

    2015 2020 2015 2020

    Cutting Welding & Other High Power

    Fiber Lasers All Other Lasers Fiber Market Share

    Fiber Laser Penetration of High Power Applications

    7%9%

    17%

    40%

    27%

    Welding Applications

    Power Train

    Tube Welding

    Car Body ScannerWeldingCar Body Seam Welding/ BrazingOther

    81%

    3% 16%

    Cutting Applications

    Flat SheetCutting

    Tube Cutting

    3D Cutting

    (US$ mm)

    Welding

    Opportunity -

    potentially

    much more

    significant

    20

  • IR Laser Applications

    Welding

    Additive ManufacturingCladding

    Cutting Brazing Drilling

    Marking Surface Treatment

    21

  • High Power Cutting

    Market estimated at 7,500 systems per year.

    Underlying growth rate est. at 5-7% per annum

    - World leader with commanding market

    position with room to grow

    - Total market size expanding; ease of use,

    lower cost, higher power trends

    - Fiber penetration estimated at 35% in Y15

    with potential to grow to 80% by Y2020

    81%

    3% 16%

    Cutting Applications

    Flat SheetCutting

    Tube Cutting

    3D Cutting

    Source: Strategies Unlimited & IPGP estimate

    22

  • Y15 High Power Laser Cutting

    Fiber Disk/OtherFiber CO2

    High Power Cutting

    Approximately 30 major OEMs

    Total market size of kW scale

    machines approximately 7,500

    units, forecast to grow at CAGR

    of 5-7% through 2020; over

    10,000 machines

    Fiber forecast to grow to 80%

    market share by 2020, remainder

    CO2 & Disk

    Estimate 60-70% IPG share of

    industry sales achievable by 2020

    Some fiber opportunity not

    available to IPG due to OEM

    own laser/competitionSource: IPGP estimate

    35.2%55.6%

    9.2%

    23

  • High Power Welding

    Remote Welding

    Laser Seam StepperSpot Welding

    Seam Welding Braizing (aesthetic,

    roofs, trunks)

    Fine Welding

    24

  • Introduction Laser Welding Market

    Source: Optech Consulting, Sep. 2015;

    Strategies Unlimited Mar. 2016; IPG estimates

    0

    100,000,000

    200,000,000

    300,000,000

    400,000,000

    500,000,000

    600,000,000

    2015 2019

    Welding Market USD - Laser Sources

    CAGR7%

    0

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    2015 2019

    Global HP Laser Welding Market - Analysis by units (excl. Surface Treatment)

    25

  • Niche Welding

    Applications

    Transitions in Welding Medium and Long Term

    High Strength Steel

    Aluminum

    Titanium

    Alloys

    Thick Materials

    Automotive

    Aerospace Construction

    Heavy Equipment

    Railways

    Shipbuilding

    Transportation & Storage

    Decreasing cost of laser welding, new laser welding technologies, know-how,

    software & algorithms

    In many instances strength of the laser weld > welded material

    Diverse Materials Diverse Industries Limited Materials

    Aircraft

    Autos

    Bridges

    Buildings

    Pipelines

    Rails

    Railcars

    Ships

    Storage Tanks

    Trucks

    Diverse Products

    FUTURECURRENT

    26

  • High Power CW Welding

    TAM Expecting to grow to 2,200 units by Y19

    (conservative estimate)

    Estimated CAGR of 6-7%, expected to outpace market

    growth for 2016 ~10-15%

    Welding covers a wide industry cross section that

    encompasses aerospace, construction, consumer

    appliances, furniture, heavy industry and automotive

    Opportunities include CO2 displacement, new braising

    technologies, new remote welding solutions,

    penetration of new industries and flagship customers

    Auto

    Welding -

    other

    Source: Strategies Unlimited, Optech Consulting and IPGP estimates.

    38.5%

    61.5%IPG has strong traction within

    automotive segment.

    Over 850 HP lasers installed in

    welding applications with

    automotive end users globally.

    2015

    27

  • 2D currently undergoing testing, prototypes to

    apps labs and test customers this quarter

    3D alpha testing expected in Q316,

    prototypes in Q316

    New IPGWeld software and the scan

    controller seamlessly interfaces to IPG lasers

    and scanning systems

    With the addition of the application software,

    IPG is able to offer a complete remote

    welding solution to Integrators and OEMs

    Target to capture 50% of industry sales,

    incremental $45-$50M

    Market size scanning ~380 lasers in

    Y15, our sales

  • High Power Scan head

    New Product Introductions: High Power Scan head

    Launch:

    Q2 2016

    Market Opportunity*:

    $140M estimated by Y19

    Strategy:

    Customer testing from Q2 in multiple

    geographies

    $90

    $140

    2015 2019 (E)

    Market Opportunity*(US$ mm)

    *Source: Optech/IPG

    [Product Image]

    Description:

    Scan head for high speed welding in 2D and 3D for

    use with kW class lasers

    Applications/Markets:

    Automotive; body in white, seat welding, battery

    welding

    Advantages:

    Ease of use, lightweight, competitively priced, 2D &

    3D IPG is able to provide complete solution laser +

    beam delivery + chiller + software

    29

  • New Product Introductions: Trifocal Brazing

    Launch: Launched Q2 Y15, several large

    automotive manufacturer wins, multiple

    global engagements

    Market Opportunity*:

    Market size estimated at 140 units, growing

    to 380+ by Y20

    Strategy: Rapid deployment globally to

    become technology of choice for brazing

    $34.5

    $65

    2015 2019 (E)

    Market Opportunity*(US$ mm)

    Source: Optech Consulting, Sep. 2015;

    Strategies Unlimited Mar. 2016; IPG estimates

    Description: IPG's new YLS-5000-BR trifocal laser

    brazing allows cleaning of the base metal parts improving

    filler material flow, resulting in reproducible brazed joint

    with increased strength and better appearance

    Applications/Markets: Brazing of Electrogalvanized

    Material, Automotive manufacturing

    Advantages: Unique three beam approach, cleaning

    and braising. Highly reproducible brazed joint with

    increased strength and better appearance

    Trifocal Brazing

    30

  • Unique Quasi-CW Fiber Lasers

    Medical Devices

    Micro welding

    Computer

    Components

    Deep Engraving

    Drilling (aerospace)

    Cutting

    Spot Welding

    Batteries

    Seam Welding

    QCW has grown strongly in past 3 years to $56M in Y15

    Market opportunity to displace YAG remains with 5000+

    per annum still produced in China. Expect 20-30% of

    market to transition to QCW

    Unique technology with high peak power, has typically

    displaced old YAG lasers which are large, inefficient and

    unreliable

    Target to grow to $100M by Y20

    Fine welding, brittle material cutting, high power drilling

    31

  • Pulsed Lasers

    Main market application marking &

    engraving across most/all industries,

    ablation, cleaning, micro-processing

    Increased competition in low power

    pulsed market; erosion of ASPs

    IPG working in higher power

    applications, sales up 20% in Q1

    with good pricing/margin

    New integrated marking platform

    (laser + scan head + software)

    gaining traction

    Opportunities in higher power

    applications growing; coatings

    removal, cutting applications

    1-100 W, 1-200 ns, up to 1 mJ Low Divergence

    High Beam Quality

    New 100 W to 5 kW, 100-600 ns, 10-

    100 mJ High Throughput

    High Pulse Energy

    Strategy Defend volume market,

    expand applications and trend to

    high power

    32

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    UV Fiber Lasers

  • New Product Introductions: UV Fiber Lasers

    Launch:

    Ready for introduction

    Market Opportunity*:

    >$110 million

    Low Power UV Laser

    $110

    $140

    2015 2019 (E)

    Market Opportunity*(US$ mm)

    *Source: IPG Estimates

    Description:

    Laser marking module with 2-axis scanner

    integrated with IPG UV laser

    Applications/Markets:

    UV marking for white plastics and cabling;

    electronics, aerospace

    Advantages:

    IPGs Complete UV Marking Module Provides

    Ease-of-Integration, High Performance and

    Reliability to Integrators and OEMs at a

    competitive cost point

    34

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    Ultrafast Fiber Lasers

  • Pico and femto pulses enable

    microprocessing and medical applications

    Key process areas are micro cutting,

    scribing, 3D micro-milling, micro hole

    drilling and blind hole machining, laser lift-

    off, selective material removal and ultrafine

    marking

    Typical industries include production of

    consumer and appliances, semiconductor

    industry, medical device manufacturing and

    medical procedures

    Leverage IPG fiber laser technology into

    the $130+M ultrafast laser market segment

    by developing compelling new lasers

    differentiated by performance, form factor

    and total cost of ownership

    Ultrafast Lasers

    Ultrafast lasers have short pulses of pico (10-12 s) to femtosecond (10-15 s) duration, pulse duration so short that little of no thermal damage occurs when laser interacts with materials.

    36

  • New Product Introductions: Picosecond Fiber Lasers

    Launch:

    Ready for introduction

    Market Opportunity*:

    $190 million annual industrial

    picosecond laser market opportunity

    Strategy:

    IPG will accelerate ultrafast market

    growth by providing robust, easy to

    integrate economical fiber lasers

    Industrial Picosecond IR Laser

    $190

    $300

    2015 2019 (E)

    Market Opportunity*(US$ mm)

    *Source: Strategies Unlimited

    Description:

    Air-cooled, rack-mountable chassis featuring

    remote head produces 50 J pulses at high

    repetition rate totaling >50 Watts average power

    Applications/Markets:

    Sapphire scribing (LED)/cutting (watch glass),

    high strength glass cutting (smartphone/tablet),

    thin film ablation (display/electronics)

    Advantages:

    Compact, affordable, reliable picosecond laser

    37

  • New Product Introductions: Femtosecond Fiber Lasers

    Launch:

    Initial units available

    Market Opportunity*:

    >$600 million annual industrial

    femtosecond laser market opportunity

    Strategy:

    IPGs robust, affordable fiber lasers will

    enable femtosecond laser processing to

    enter the mainstream

    Industrial Femtosecond IR Laser

    $620

    >$1B

    2015 2019 (E)

    Market Opportunity*

    *Source: Strategies Unlimited

    Description:

    Air-cooled, rack-mountable chassis featuring

    remote head produces 500 femtosecond pulses

    at high repetition rates totaling >10 Watts

    average power

    Applications/Markets:

    Medical (Laser Eye Surgery), Scientific,

    Ultra-precise micromachining

    Advantages:

    Compact, affordable, reliable femtosecond laser

    38

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    Visible Fiber Lasers

  • Overview:

    IPG provides visible fiber lasers in many wavelengths, including red, yellow,

    orange, green. These sources can be utilised in many application areas such as

    materials processing, medical and entertainment. For example green wavelength

    has distinct advantages for fine processing of highly reflective metals like Copper,

    gold and platinum

    Strategy:

    Penetrate emerging micro applications and enable new applications through the

    introduction of visible fiber lasers with unprecedented performance levels

    Competition:

    IPG Green Fiber lasers provide unprecedented levels of average power with

    reasonable pulse energy in a rack-mountable industrial footprint with an elegantly

    compact remote laser head

    Green Fiber Lasers Overview

    40

  • New Product: High-Power High Rep Rate Green Fiber Laser

    Launch:

    Expected Q3 2016

    Market Opportunity:

    Kilowatt-class HRR green laser creates a new

    market segment

    Strategy:

    IPG is partnered with leading OEMs in the

    PCB, Aerospace and Semi Equip industries to

    pioneer new applications

    High-Power Quasi-CW Green Fiber Laser

  • New Product: Nanosecond Green Fiber Laser

    Market Opportunity*:

    $250M annual micro materials laser

    market in Semi, PCB and Solar

    Strategy:IPG partners with leading micro materials

    processing companies to pioneer new high

    pulse energy green applications

    High Pulse Energy Green Nanosecond Fiber Laser

    $263

    $451

    2015 2019 (E)

    Market Opportunity*(US$ mm)

    *Source: Strategies Unlimited, 2016 Worldwide Laser Report

    Description:

    Rack-mountable 100 Watt nanosecond laser

    providing up to 500 milliJoule pulse energy

    through a compact remote head

    Applications/Markets:

    Solar Cell thin film ablation and wafer dicing,

    precision via drilling for microelectronics PCBs

    Advantages:

    Unique combination of throughput and precision

    stemming from high pulse energy and short 1.5

    nanosecond pulse width

    42

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    Laser Systems

  • Resonators Lasers Process Heads

    Adding Value Through Integration

    INTEGRATED LASER, ACCESSORIES

    AND CONTROLLER TO DRIVE

    LASER, OPTICAL PROCESSING AND

    ROBOT

    $15-$20K

    $50K to $1.0

    million

    $4-$10K

    $10-

    $20K

    $8-$100K

    COMPLETE SYSTEMS $200k to $5 million +

    Amplifiers

    Chillers

    and Power

    Supplies

    $3K

    Couplers, Switches &

    Delivery Fibers

    $5-40K

    $4-$10K

    44

    http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjYp6quka3MAhXC2B4KHVtWDqkQjRwIBw&url=http://www.im-machinery-asia.com.sg/category/ermaksan/&psig=AFQjCNGBv-9jNKW-i0n6lqoQDhxBKvBkcQ&ust=1461788680681659http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjVpcaf-azMAhXJpR4KHWYcAkcQjRwIBw&url=http://islphotonics.com/en/maximus&bvm=bv.120551593,d.dmo&psig=AFQjCNGjOnGSAKOtxlDhfASQN3gItondLQ&ust=1461782204697356http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi8mfLX-azMAhWEkx4KHSPDCfsQjRwIBw&url=http://www.ipgphotonics.com/products_WD30.htm&bvm=bv.120551593,d.dmo&psig=AFQjCNFn_8jNcH5BI__E4ugFrr5beG8C6w&ust=1461782332445163

  • Overview:

    IPG manufactures complete integrated systems for welding, cladding, cutting, drilling. The

    systems are typically customised solutions i.e. 50kW laser welding cell with IPG laser,

    welding head, control software for US customer welding rockets. We integrate the industrys

    best lasers with IPG high precision motion systems, optics, beam switches, processing

    heads and software.

    Strategy:

    Penetrate new applications for lasers and expand product portfolio through the development

    and introduction of specialized laser-based systems to meet the specific needs of

    manufacturing end users whose requirements are not met by standard systems or in certain

    geographic areas where fiber laser systems are not currently available

    Growth Targets:

    Target to develop systems business of $200M + by 2020

    Laser Systems Developing New Applications and

    Opportunities

    45

  • Laser Systems Overview

    New system platforms offering specific laser and beam delivery tailored to specific

    applications

    Small format 2D

    cutting

    Small format multi-axis

    welding, cutting & drilling

    Micromachining

    Multi-axis welding,

    cutting & drilling

    Multi-axis pipe

    welding system

    Tube and Profile Welding

    Laser Seam Stepper Orbital Pipe Welding

    46

  • Laser Equipment: YLS-50000-CT 50 KW Welding Laser

    IPG FLC D50 Welding Head

    LC170 Chiller

    Motion System 6-Axes Robot, 10 ft reach

    10 ft linear track

    Rotary worktable 22 ton 8 ft dia

    Tip/Tilt 2-axes positioner

    Robotic Laser Processing System

    Application: Welding Aerospace Components

    Example. Seam welding 1 inch thick copper

    High Power Automated Welding System

    47

  • 5-Axis Pipe Welding System

    New Product Introductions: Laser Systems

    Launch:

    First system delivered in Q1 2016

    Market Opportunity:

    Large application area with zero

    penetration by lasers today

    Description:

    Multi-axis high power fiber laser pipe welding

    system

    Applications/Markets:

    Pipelines, construction

    Advantages:

    High productivity vs incumbent technology

    48

  • Macro and Micro Laser Systems Market

    38%

    9%

    2%

    19%

    10%

    11%10%

    Macro and Micro Laser Systems 2015 - Approximately $9.6 Billion*

    Cutting

    Welding & Brazing

    Other High Power

    Micro-processing Excluding DUV & EUV

    Fine Cutting, Welding & Drilling

    Marking

    Other Low Power

    *Source: Strategies Unlimited, Optech Consulting and IPG Photonics estimates

    49

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    Accessories

    Felix Stukalin

    Senior Vice President, U.S. Operations

  • CU

    TT

    ING

    WE

    LD

    ING

    MA

    RK

    ING

    Laser System Lasers & Chillers Couplers, Switches &

    Delivery Fibers

    Cutting Heads

    Typical Laser System Architecture

    Welding Heads

    Integrated ModulesScan HeadsPulsed Laser Controller +

    Software

    51

    http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjYp6quka3MAhXC2B4KHVtWDqkQjRwIBw&url=http://www.im-machinery-asia.com.sg/category/ermaksan/&psig=AFQjCNGBv-9jNKW-i0n6lqoQDhxBKvBkcQ&ust=1461788680681659http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjYp6quka3MAhXC2B4KHVtWDqkQjRwIBw&url=http://www.im-machinery-asia.com.sg/category/ermaksan/&psig=AFQjCNGBv-9jNKW-i0n6lqoQDhxBKvBkcQ&ust=1461788680681659http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwik4cm99azMAhWBWx4KHQHGAH4QjRwIBw&url=http://en.hglaser.com/product/df3015pluslasercuttingmachine.htm&bvm=bv.120551593,d.dmo&psig=AFQjCNF-LNl-GddHYh2idBbwCUm6v4oV2A&ust=1461781141035740http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjVpcaf-azMAhXJpR4KHWYcAkcQjRwIBw&url=http://islphotonics.com/en/maximus&bvm=bv.120551593,d.dmo&psig=AFQjCNGjOnGSAKOtxlDhfASQN3gItondLQ&ust=1461782204697356http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi8mfLX-azMAhWEkx4KHSPDCfsQjRwIBw&url=http://www.ipgphotonics.com/products_WD30.htm&bvm=bv.120551593,d.dmo&psig=AFQjCNFn_8jNcH5BI__E4ugFrr5beG8C6w&ust=1461782332445163http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjVpcaf-azMAhXJpR4KHWYcAkcQjRwIBw&url=http://islphotonics.com/en/maximus&bvm=bv.120551593,d.dmo&psig=AFQjCNGjOnGSAKOtxlDhfASQN3gItondLQ&ust=1461782204697356http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiq6M7Tkq3MAhXMHB4KHY3BDE8QjRwIBw&url=http://www.vy-tek.com/machines/Fiber-Galvo-Marking/fibercab.html&bvm=bv.120551593,d.dmo&psig=AFQjCNH4FwLBmohlhYbFzWLqiwlzgOqAcw&ust=1461788899592603http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi8mfLX-azMAhWEkx4KHSPDCfsQjRwIBw&url=http://www.ipgphotonics.com/products_WD30.htm&bvm=bv.120551593,d.dmo&psig=AFQjCNFn_8jNcH5BI__E4ugFrr5beG8C6w&ust=1461782332445163

  • Strategic Rational

    Significant greenfield revenue opportunity

    Facilitates higher power laser sales through integrated subsystem

    solution

    Enables new laser material processing applications through optimized

    beam delivery and process control

    Captures more value from laser processing by integrating lasers, with

    beam delivery, controllers, software and process monitoring

    52

  • Product Development of Laser Process Heads

    Develop product platforms for highest volume applications

    Leverage expertise into more specialized and new applications

    IPG Differentiators

    Achieve highest quality through technological superiority

    In-house high power optics and coating capability

    Extensive testing with high power laser

    Advanced application expertise

    Offer superior performance though integration with laser source

    Provide lower cost through vertical integration

    IPG Strategy

    53

  • Value

    Cutting and welding heads are sold at 10% of laser price

    Advanced process heads are sold at 30% to 50% of laser price

    Marking heads are sold at 30% of laser price

    Sensors and advanced features are sold at significant premium

    IPG can offer better value to IPG customers

    Performance

    Power of IPG fiber lasers advanced faster than process heads

    Existing offering have power limitations above 20 - 30 kW for welding and

    above 6 kW for cutting

    IPG in-house optics technology and sealed designs solve power limitations

    Sales and Service

    One-stop shop from IPG for the laser, processing head and application

    Enhanced opportunity for advanced applications development

    Service and warranties are aligned with integrated solution

    Service and support benefits from IPGs worldwide infrastructure

    Major IPG Opportunity for Integrated Heads

    54

  • Total available in 2015 ~$150M, projected 2020 ~$280M to $300M

    Targeting >60% market penetration by 2020 ~$180M

    IPG currently provides 100% in Switches and Process Fibers

    IPG current share is less then 10% in Process Heads and Scanners

    Total Available Market* Accessories Sold with IPG Lasers

    TAM 2015 2020E

    TOTAL $150M $280M-$300M

    Welding heads $35M $80M

    Cutting heads $50M $80M

    Scanning heads $30M $60M

    Beam Switches $22M $45M

    Process Fibers $13M $25M

    *Market size estimate by IPG

    55

  • Recent Products Introduced in 2015

    Highest power handling in the

    Industry 12kW

    Ultra-stable capacitive height

    sensing

    Hermetically sealed design

    Motorized Focus and Pierce

    Sensing options

    CU

    TT

    ING

    WE

    LD

    ING

    SC

    AN

    NIN

    G

    WE

    LD

    ING

    Wobble and Seam Tracking

    combined in one product

    Unique Product

    Provides improved weld quality

    and better visual finish

    Variety of Wobble shapes at a

    frequency of 300Hz

    Power Handling of up to 12kW

    Remote Scanning

    Applications

    Plug & Play with QCW or

    CW lasers

    Up to 2kW laser power

    handling

    Calibrated Scan Field

    IPG CUTTING HEAD WOBBLE & SEAM

    TRACKING MODULE

    MID-POWER

    SCANNING SYSTEM Optimized for welding applications

    of up to 50kW

    Hermetically sealed design

    Provides unmatched results in

    penetration depth

    50kW WELDING HEAD

    35mm+ of penetration

    depth in SST at 50kW

    56

  • Highest power handling in the

    Industry 15kW

    Ultra-stable capacitive height

    sensing

    Hermetically sealed design

    CU

    TT

    ING

    WE

    LD

    ING

    MA

    RK

    ING

    RE

    MO

    TE

    WE

    LD

    ING

    IPG Wobbler design is now

    available in a compact and

    lightweight architecture

    Wobble frequencies of up to

    1000Hz

    Power Handling of up to 6kW

    Integrated Module

    Optimized for Marking

    applications

    Completely sealed

    design

    Includes Controller and

    Software

    IPG HP CUTTING

    HEADD30 WOBBLE & SEAM

    TRACKING MODULE

    UV INTEGRATED

    MARKER Highest power handling in

    the Industry 15kW

    Hermetically sealed design

    Through the lens vision

    Plug and Play with IPG

    Lasers

    Available with IPG Controller

    and IPGWeld software

    2D/3D REMOTE

    WELDING

    New Products for 2016 Introduction

    57

  • Next Level of Integration - Specialized Beam Delivery

    Systems Expand Market Opportunities

    Seam Stepper

    Integrated robotic welding unit

    addresses large resistance

    spot welding market

    Welding with Seam

    Tracking Sub-system

    Welding unit with seam

    tracking capability addresses

    pipe and seam welding market

    Cladding Heads and 3D

    Cutting Heads

    Specialized cladding and 3D

    cutting heads for emerging

    material processing applications

    58

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    Strategic Growth Projects

    Dr. Yuri Erokhin

    VP, Strategic Marketing

  • Industry Trend

    Major cinema players upgrading image quality and overall moviegoer

    experience, opportunities in other entertainment and signage markets

    Transitioning projectors from Xenon Bulb to laser luminaires

    Opportunity

    ~$200M annualized IPG revenue potential beginning to ramp in 2017

    IPG Solution

    Key Differentiators versus laser diode based illumination alternatives:

    Improved image quality: higher brightness & contrast, lower speckle

    Increased optical efficiency of next gen projector designs

    Reduced overall Cost-of-Ownership

    Leverages IPG existing fiber laser technologies

    Successful product introduction at CinemaCon-2016 Significant interest

    from leading projector makers and high-end theater operators

    Laser Luminaire: Large Greenfield Opportunity

    605/11/2016

  • Cinema Market Opportunity: Up to $2.4B Over 8-10 Years

    SegmentScreen

    Count

    TAM over

    8-10 years

    Ultra-Premium

    IMAX, Dolby, etc.

    Mostly 3D

    2,000$200M-

    $400M

    Very Large

    Screens

    2D and 3D

    5,000$250M-

    $450M

    Large Screens 10,000$300M-

    $600M

    Medium Screens 38,000$425M-

    $950M

    55,000*

    screens

    $1.2B to

    $2.4B**

    Very Large

    Screens 2D

    and 3D

    Large Screens

    Primarily 2D, some

    3D capable

    Medium Screens, Mostly 2D

    3D Ultra

    Premium

    Projected Top-Down Laser Luminaire

    Market Adoption

    Laser

    Str

    ength

    Segm

    ents

    Fib

    er

    La

    se

    rs o

    r

    dio

    de

    s

    * Remaining 85.000 (+/-) screens WW are small size**Revenue opportunity is exclusive of service

    61

  • Laser Projection is rapidly gaining

    traction in signage and

    entertainment

    High impact advertising

    campaigns

    Theme parks and museums

    Architectural projection mapping

    Concerts, other performances

    Laser projectors enable lower

    costs, easier field installation and

    superior image quality

    Laser Opportunities in Signage and Entertainment Markets

    2015 Freightliner unveiling autonomous truck - Hoover Dam

    promo event. 60 projectors with 1.17M lumen

    http://www.barco.com Projection mapping: A map to spectacle

    $50M annualized RGB Fiber Laser

    Illumination Source opportunity

    Creating Technology design; Barco Entertainment projection system

    62

    http://www.barco.com/

  • FPD market segments are undergoing

    disruptive structural shifts:

    Accelerated growth of high resolution

    smartphone displays

    iPhone adopts OLED displays in 2018

    High-Res OLED tablets

    Laser Annealed Low Temperature

    Poly-Si (LTPS) is key enabler of these

    products

    $500M market today, dominated by

    Excimer Lasers

    Flat Panel Display Anneal Market Opportunity

    Unique Flat Panel market opportunity

    for IPG UV fiber lasers Source: DisplaySearch, 2014

    Source: Samsung Display

    63

  • UV Fiber Laser Flat Panel Market Opportunity

    Excimer Laser Anneal (ELA) is an incumbent LTPS process

    ELA process (excimer) suffers from high cost, both initial capital requirements and high ongoing equipment maintenance

    96% of LCDs (by area) still fabricated on a-Si will transition to high mobility backplane fiber laser opportunity

    3-5x lower operating cost vs. ELA expands OLED to next generation smartphone, tablet and laptop displays

    >$300M IPG opportunity

    IPG patent pending processes under evaluation with three major WW Flat Panel Manufacturers

    DisplaySearch, Jan., 20th, 2014

    *Source: Samsung

    By 2018 Samsung Projects Proliferation of LTPS

    into High End Tablets

    64

  • Ablates paint from the surface

    Vacuum removes 99.9% of residue

    Does not require chemicals which produce toxic

    sludge or plastic beads

    Manual paint stripping requires:

    F-16 4 people

    16 to 18 people for a C-130

    Dept. of Defense current paint stripping costs >

    $800 million per year (2015 Air Force LCMC)

    Many applications outside of aerospace:

    Cleaning of molds, casts, tanks, pipes &

    other surfaces

    New generation of Nano-Second Pulsed laser

    with average power up to 4 kilowatt

    Pulsed product limits thermal damage to

    cleaned surface

    Laser Ablation for Paint Stripping and Surface Cleaning

    Sources:

    *Potential alternative report for the portable handheld laser small area

    supplemental coating removal system, prepared for USAF by SAIC, Feb. 2001

    ** Penn State Applied Research laboratory, Automated Rotor Blade Stripping

    System (ARBSS) study for the USN, 2005

    Environmental Benefits:

    0

    5

    10

    Media Blast* Solvent* LaserAblation**

    Solid

    waste

    (lb

    .) g

    enera

    ted

    Per

    1 lb.

    on p

    ain

    t str

    ipped

    Paint Stripping Method

    Plus 165 lbs of Liquid Waste

    65

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    Medical

    Dr. Greg Altshuler

    President, IPG Medical

  • Large Medical Laser and Systems Market

    67

    ($ in Millions)

    *Includes Ophthalmic, Surgical, Cosmetic, Dental and Veterinary applications

    Source: BCC Research

    $4,110

    $7,759

    $628$1,042

    $0

    $1,000

    $2,000

    $3,000

    $4,000

    $5,000

    $6,000

    $7,000

    $8,000

    $9,000

    2015 2020

    Laser medical systems*,$MM

    Laser sources for medicalsystems**, $MM

    **Source: Strategies Unlimited

    4-8 Times Larger Opportunity for Laser Medical Systems

  • Medical Laser Sources by Type

    Lamp Pumped SSL35%

    CO220%

    Eximer laser4%

    Fiber laser9%

    Diode Pumped SSL

    12%

    Diode laser20%

    2020

    Lamp Pumped SSL37%

    CO221%Eximer laser

    4%

    Fiber laser5%

    Diode Pumped

    SSL16%

    Diode laser17%

    2015

    IPGM believes it can target 20% to 30% growth

    Laser Medical Systems use legacy technologies such as flash lamp pumped

    and gas lasers with slow transition to new diode and fiber laser platforms

    68Source: Strategies Unlimited

  • All spectrum of wavelengths for safer and more effective selective

    photothermolysis and tissue surgery

    Pulse width from CW to picosecond and femtosecond

    High-quality laser beam enables tight focusing of energy for precise

    and safe surgery and delivery of laser energy to tissue through

    ultra-thin quartz fiber

    Low cost compare with old laser technology

    Small system size, air cooling

    High reliability, no water and lamp replacement - low ownership cost

    Opportunity for dramatic improvement of existing laser medical

    applications and development new medical technologies

    Fundamental Advantages of Fiber Lasers for Photo-medicine

    69

    69

  • Overview:

    IPG Medical provides turn-key solutions for development and manufacturing

    of lasers and laser-based medical systems

    ISO 13485 certified and FDA registered manufacturer (2016)

    Research and development in Marlboro (USA) and Fryasino (Russia)

    Production of components and final product in Fryasino (Russia) and final

    product for US market in Marlboro (USA)

    Strategy:

    IPGs unique fiber lasers new game-changing products which are more

    efficient, safe and cost-effective and enable new medical procedures

    Penetrate new medical applications, such as urology (BPH and Lithotripsy),

    aesthetic (hair removal, vascular and pigment, skin texture and tightening,

    body contouring, tattoo), dental (surgery and tissue regeneration),

    ophthalmology, through the development and introduction of new products

    Approach the market in partnership with leading medical device companies

    in particular fields or direct distribution in selective field and territory

    Growth Targets:

    We target medical opportunities from $70M - $150M in 2020

    IPG Medical Overview and Strategy

    70

  • IPG:

    Conducts joint research, design and development of the new product

    platform for professional dental use

    Manufactures laser console and application modules on exclusive basis

    Biolase:

    Commercializes the final medical products with Biolase accessories in the

    professional dental field under Biolase brand

    Exclusive, performance-based distribution rights

    Expected revenue beginning in 2016

    Dental Laser Partnership

    71

  • New IPG products based on QCW Tm fiber laser: laser for Lithotripsy and

    Benign Prostatic Hyperplasia & Lithotripsy would replace flash-lamp pumped

    Ho:YAG laser platforms with more than 10,000 installed base

    2 times faster speed of human stone dusting with significantly lower retropusion

    than current gold standard Ho laser has been demonstrated in vitro study

    (Super Pulse Tm Laser for Lithotripsy, ASLMS Annual Meeting 2016)

    First product would be launched in 2016 in Russia pending regulatory approval

    US and worldwide market would be approached in partnership with leading

    urology partner with product launch in 2018

    Urology Opportunity

    72

    IPG Consumable Surgical Fiber with proprietary connector

  • Gum regeneration for periodontology and implantology

    New solution with IPG proprietary patent pending fractional dental

    laser technology

    Dentistry Opportunity

    Laser patterns on gum

    tissue treatment

    Replacement of tissue

    grafting

    Before Tx 3 w after TxALD 2015, G. Altshuler et al.: Laser

    Patterned technology: a new natural method

    of tissue regeneration

    73

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    Telecom Products

    Mark Cannata

    Director, Sales and Marketing, Telecommunications Products

  • Product Line Today

    Optical amplifiers and Raman lasers

    Optical transmission and DWDM systems

    Markets/Customers

    Fiber-based Fiber to the Home (FTTH) and Cable TV (CATV)

    Arris, Calix, Portugal Telecom

    Ultra-long haul

    ABB, Saudi Electricity Company, Rostelecom

    IPG Differentiators

    Highest power amplifiers, any wavelength/any power Raman

    Proprietary signal processing system technology for ultra-long haul telemetry and DWDM applications

    Eliminates mid-span optical regeneration in long-haul links

    Provides industrys highest density amplification with the lowest electrical power utilization

    Amplifier Market Size

    $520M (2016) growing to $630M (2020)1; 15% CATV amplifiers / 85% transport amplifiers1

    Differentiated Products for Growing Market

    75

    1 Ovum, Total OC Forecast Spreadsheet: 201420, August 2015

  • Optical Amplifiers for Broadband and CATV

    76

    IPG EDFAs for FTTH NetworksRF Overlay for CATV delivery

    32-port Front Access64-port with integrated WDMs

    ~10W amplification

    OEM EDFAs for CATV NetworksFiber Deep architectures

    e.g. RFOG, Node Segmentation

    Node EDFA

    Head-end CATV EDFA

  • Optical Transmission - Line Cards, Modules, DWDM Systems

    77

    IPG DWDM and Optical TransportRepeater-less 40x100G DWDM 400+ Km

    Menara Optical System Modules

    100G CFP/CFP2/QSFPData Center / metro / Regional

    And DWDM Connectivity

    10G OTN XFP

    System in a Module

    10G SFP+

    Vendor Agnostic Plug-and-Play

    Addressable Optical Networks Market:

    $12.8B in 2016 to $15.4B in 2020

    All Growth in 100G+ Line Cards and Pluggable Modules

  • Product Line Tomorrow (with Menara)

    Patented System in a pluggable module integrating all line card functions;

    transponder-less transport

    Short Reach to Ultra-Long Reach, 1G to 100G+ DWDM for all network segments

    Markets and Customers

    Major network operators, CATV MSOs, Data, Wireless

    Optical network equipment manufacturers

    Large and Growing Optical Line Card Market Opportunity

    100G+ market growing from $5.4B in 2016 to $8B by 2020

    IPG + Menara Differentiators

    Vertically integrated transponder technology- optics, ASICs, manufacturing

    ASIC with patented mixed-mode coherent & multilevel 100G+ signal processing

    Plug-and-play functionality with all vendor transmission and switching equipment

    Optimized DWDM solutions with transponder blade elimination

    Software Defined Network control

    Synergies

    Vertical integration of IPGs optical transmission solutions

    Add new addressable markets for IPGs telecom portfolio

    Leverage IPGs resources to accelerate time to market, lower cost, expand Menaras

    current markets

    IPG to Enter Large and Growing Optical Pluggable

    Systems Market with Menara Acquisition

    78

  • 100% of Optical Networks 5yr Growth in 100G Line Cards

    79

    Ovum, Optical Networks Forecast Spreadsheet: 201520, December 2015

    2016

    $12,830M2020

    $15,350M

    $2.5B Growth

    In 100G+ Transmission Line Cards

    Terminals, L2/OTN

    switching, $1,973

    ROADMs, Amplifiers,

    $1,967

    10G, 40G TXP, $3,536

    100G, >100G MXP/TXP,

    $5,360

    Terminals, L2/OTN

    switching, $2,002

    ROADMs, Amplifiers,

    $2,531

    10G, 40G TXP, $2,915

    100G, >100G MXP/TXP,

    $7,900

    $0.0

    $5.0

    $10.0

    $15.0

    $20.0

    $25.0

    2012 2013 2014 2015 2016 2017 2018 2019 2020

    Re

    ven

    ue

    ($

    bn

    )

    Optimistic Most likely Pessimistic

  • Growing Telecom Opportunity

    80

    -

    20,000.00

    40,000.00

    60,000.00

    80,000.00

    100,000.00

    120,000.00

    140,000.00

    160,000.00

    Current Business With Menara 3-5 Year Opportunity

    Telecom Acquisition Adds Scale to Business and Expands 3-to-5 Year Growth Opportunity to between $100 million and $150 million

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    Manufacturing: Devices and Components

    Dr. Eugene Scherbakov

    Managing Director, IPG Laser GmbH and SVP, Europe

  • Vertically integrated volume manufacturing provides cost and

    technology advantages

    Leverages scientific and manufacturing expertise in different locations to

    develop new technologies and implement low cost high volume

    manufacturing

    Capitalizes on labor intensive component and finished product

    manufacturing in lowest cost geographic locations

    Benefits from proximity to large end markets and customers

    Manufactures in strategic locations where there is strong IP protection

    Manufactures close to customers, providing excellent service

    Proven Vertical Manufacturing Drives Leading Results

    82

  • Vertical Integration Drives Significant Benefits

    83

  • Major Global Production Facilities

    Total: 57,000 sq.m.

    Clean Rooms: 10,000 sq.m.

    Employees: 1,400

    Total: 38,600 sq.m.

    Clean Rooms: 10,000 sq.m.

    Employees: 1,113

    Total: 50,000 sq.m.

    Clean Rooms: 8,000 sq.m.

    Employees: 1,100

    Production Facility and

    World Headquarters

    Oxford, MA

    IPG Laser Facility

    Burbach, Germany

    NTO Facility

    Fryazino, Russia

    84

  • Vertical Integration & Production Location

    Fab Operations

    Semiconductor Wafer Growth

    Diode Processing, Chip Mounting

    & Burn-In

    Laser diode

    Packaging

    Up to 120-watts

    Optical Preform

    Silica based glass

    MCVD method

    Dope with rare

    earth ions

    Fiber Draw

    Draw towers

    Fiber Block

    Modules

    Up to 2000 Watts

    Final Assembly

    Coupling

    Final burn in

    Shipment

    Components

    Bragg Gratings

    Isolators, Couplers

    Deep in technology

    Deep in experience

    Optical Delivery

    Systems: Welding

    & Cutting Heads,

    Scanners, process

    fibers

    US, Germany & RussiaUS

    Germany & Russia

    US & Russia

    Germany & Russia

    US, Germany & Russia

    US, Germany & Russia

    US, Germany & Russia

    US, Germany & Russia

    85

    http://www.netmotion.com/graphics/oth/testwh_wafer6.jpghttp://oldsite.vislab.usyd.edu.au/photonics/fibres/fabrication/images/still1.jpghttp://images.google.com/imgres?imgurl=http://www.optolinkcorp.com/products/Isolators/images/isolators.jpg&imgrefurl=http://www.optolinkcorp.com/products/Isolators/GFF_main.htm&h=140&w=216&sz=19&tbnid=7advMCaROZievM:&tbnh=65&tbnw=101&hl=en&start=8&prev=/images?q=Fiber+optic+isolators&svnum=10&hl=en&lr=&rls=GGLG,GGLG:2006-08,GGLG:en&sa=N

  • Core Technologies Manufactured at IPGs Facilities

    Core Technologies U.S. Germany Russia

    Diode Fab/Front End

    Laser Diode Packaging

    Active and Passive Fibers

    Laser Crystals

    Fiber & Bulk Gratings

    Fiber Couplers & Combiners

    Fiber Blocks & Modules

    Bulk and Micro Optics.

    Thin Film Coatings

    Laser Assembly

    Laser Systems Assembly

    Optical Heads & Scanners

    86

  • IPG's Commercial Products

    10 20 100 200 400 600 1000 2000 4000 5000 8000 10000 15000 20000 50000

    Output Power [W]

    IPG offers more than 510 different fiber lasers for micro and

    macro applications!

    2015 - First 6kW ECO laser

    WPE>50%2013 - First 100kW HPL

    87

  • NTO Sales 2013-2015 at Internal Transfer Prices

    88

    0.0

    20.0

    40.0

    60.0

    80.0

    100.0

    120.0

    140.0

    160.0

    180.0

    200.0

    2013 2014 2015

    HP Lasers LP Lasers Systems Laser Heads

    Telecom Medicine Components

    ($ in millions)

    $109

    $129

    $173

  • Components Production: Fibers

    386180

    384578

    728823 793 834

    66

    6756 192

    497

    418

    200

    402

    644

    795879

    985

    1,331

    0

    200

    400

    600

    800

    1,000

    1,200

    1,400

    2008 2009 2010 2011 2012 2013 2014 2015

    To

    tal

    len

    gth

    , km

    Active Fibers NTO IRE-Polus

    IPG Laser GmbH

    1,554575

    1,4302,712 2,500 3,129

    3,4034,2181,541

    2,134

    3,388 3,7133,600

    6,120

    7,800

    3,095

    985

    3,564

    6,1006,213

    6,729

    9,523

    12,018

    0

    2,000

    4,000

    6,000

    8,000

    10,000

    12,000

    14,000

    2008 2009 2010 2011 2012 2013 2014 2015

    To

    tal

    len

    gth

    , km

    Passive Fibers NTO IRE-Polus

    IPG Laser GmbH

    89

  • Components Production: Fiber Blocks

    6,813 5,353 8,27610,457 12,839 13,456 13,031

    14,263

    15,756

    4,133

    24,480

    32,27834,838

    41,032

    52,600

    79,570

    22,569

    9,486

    32,756

    42,735

    47,677

    54,488

    65,631

    93,833

    0

    10,000

    20,000

    30,000

    40,000

    50,000

    60,000

    70,000

    80,000

    90,000

    100,000

    2008 2009 2010 2011 2012 2013 2014 2015

    Qu

    an

    tity

    , p

    cs

    Year

    Fiber Blocks: Production in Germany and Russia

    NTO IRE-Polus

    IPG Laser GmbH

    90

  • 817 1,020 1,214 1,125

    5,785

    2,951

    6,011 5,640

    7,697 7,434 6,616

    6,578

    -

    -

    2,637 4,011

    5,334 6,181 7,940

    11,579

    -

    2,000

    4,000

    6,000

    8,000

    10,000

    12,000

    14,000

    16,000

    18,000

    20,000

    2008 2009 2010 2011 2012 2013 2014 2015

    Qu

    an

    tity

    of L

    ase

    rs, p

    cs

    Pulsed Lasers. Production in US, Germany and Russia.

    IPG Photonics

    IPG Laser GmbH

    NTO IRE-Polus

    Pulsed Lasers Production

    91

    5,916

    3,159

    9,246

    10,468

    14,05114,829

    15,681

    18,604

  • High Power Lasers (P > 1KW)

    92

    352 461 724 886

    1,051

    164 191 413

    842 947

    1,398

    2,015

    2,758

    -

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    3,500

    4,000

    4,500

    2008 2009 2010 2011 2012 2013 2014 2015

    Qu

    an

    tity

    of L

    ase

    rs, p

    cs

    High Power Lasers. Production in US, Germany and Russia.

    IPG Photonics

    IPG Laser GmbH

    NTO IRE-Polus

    259276

    590

    1,266

    1,518

    2,241

    3,021

    3,883

  • Low- & Mid-power Lasers (P < 1KW)

    93

    939 827 1,043 1,230 1,518

    1,755

    3,441

    1,083

    694 1,454

    1,583 1,635

    1,957

    2,759

    3,616 634

    1,677

    -

    1,000

    2,000

    3,000

    4,000

    5,000

    6,000

    7,000

    8,000

    9,000

    10,000

    2008 2009 2010 2011 2012 2013 2014 2015

    Qu

    an

    tity

    of L

    ase

    rs, p

    cs

    IPG Photonics

    IPG Laser GmbH

    NTO IRE-Polus

    1,259

    1,647

    2,3172,686 2,940

    3,652

    5,148

    8,734

    Low- & Mid-power Lasers. Production in US, Germany and Russia.

  • Scale in High Power Laser Sales

    -

    1,000

    2,000

    3,000

    4,000

    5,000

    6,000

    7,000

    2007 2008 2009 2010 2011 2012 2013 2014 2015

    >500W

    >1KW

    IPG has shipped more than 19,000 lasers with output power of

    more than 500-watts since 2007

    94

  • Rapid Penetration of the Laser Market Across All Products

    95

    -

    5,000

    10,000

    15,000

    20,000

    25,000

    30,000

    35,000

    2007 2008 2009 2010 2011 2012 2013 2014 2015

    Approximately 160,000 IPG lasers in the field since 2007

    Total Units Sold

  • IPG is already an important player in automotive welding field; ~$108M

    revenue in 2015 (primarily for welding, some cutting)

    Potential upside in automotive welding is substantial

    Many OEMs are just starting to use fiber lasers

    Huge potential substitution for spot/ arc/ other joining technologies

    Move to lightweight materials creates opportunities for fiber lasers

    Strong growth potential in electric vehicle batteries

    Many new products; trifocal braising, high power scan head, three beam

    LSS aid application and market growth

    However- this is a difficult and time consuming market to penetrate

    Requires extensive design in work with auto OEMs

    Long preproduction time frames

    Competition with other joining techniques

    Automotive IPGL

    96

  • Automotive Outlook for HP Lasers

    Auto HP units for joining forecast to

    grow from 718 in 2015 to 1,200 in 2019

    IPG targeting to grow sales in joining

    from ~50% to 65% through superior

    technology, technical differentiation,

    applications wins, regional excellence

    and strong commercial position

    Opportunity is $200M+ by 2019 (mid

    and HP welding, cutting and ablation)

    Existing market forecast could have

    strong upside from electric vehicles

    0

    200

    400

    600

    800

    1000

    1200

    2015 2019

    Total IPG

    Growth in HP Lasers for

    Automotive Joining

    97

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    Manufacturing: Diodes

    Dr. Alexander Octchinnikov

    SVP, Components

  • Most technically advanced, highest volume and lowest cost in the industry

    Key Benefits:

    Cost control: Advantage of internal manufacturing

    Quality control: Key subcomponents manufactured internally

    Technology/IP control: Significant process know how, trade secrets & strong

    patent protection

    Unprecedented flexibility: Rapid product development and introduction into

    volume production

    Scale and Scope:

    Full vertical integration: Not a single manufacturing step or key subcomponent

    is outsourced

    High-volume manufacturing: IPG is largest manufacturer of high power pump

    laser diodes

    Highly automated robotic manufacturing: Most automation processes and

    equipment are designed and manufactured in-house

    IPG Diode Manufacturing: Significant Competitive Barrier

    99

  • Enhancing vertical integration

    Capitalizing on next-generation pumps

    Increases output power per chip and reliability

    Lowers manufacturing cost volume of packaged diodes

    Improving utilization of existing global facilities

    Result: Driving down cost and maintaining significant competitive

    advantage

    Ongoing Strategic Initiatives and Cost Improvements

    100

  • Total Worldwide Facilities:

    ~135,000 sq. ft. production floor area and ~750 employees

    Diode Manufacturing Steps and Facilities World Wide

    Front-End U.S. Germany Russia

    Wafer Fab Operation

    Wafer Growth (MBE)

    Wafer Processing

    Facet Passivation and Coating

    Chip-On-Submount AssemblySubmount Manufacturing

    COS Assembly

    Back-End U.S. Germany Russia

    Test and Burn-InScreening out low-reliability lots

    and individual devices

    PackagingManufacturing of various types of

    pumps

    101

  • Requires most technical expertise

    and capabilities

    Highly qualified technical staff,

    proprietary designs, equipment and

    technology ensure industry best diode

    performance and reliability

    Capital Intensive

    Ensures redundant high-volume

    manufacturing operation

    Over-capacity in MBE and Wafer

    Processing equipment

    Strategic stock of MBE-grown qualified

    wafers

    FRONT-END: Wafer Fab Operation Oxford, MA

    102

  • Scale of OperationIPG assembles over 0.5 million Chip-On-Submount

    each month

    Vertical IntegrationIPG manufactures submounts internally

    AutomationManufacturing is based on automated equipment

    (some built in-house), and proprietary processes

    Paperless Manufacturing Production processes are fully DB-traceable:

    translates to higher yields and little direct labor

    FRONT-END: Chip-On-Submount Assembly Oxford, MA

    103

    These advantages result in high yield, little direct labor and subcomponent cost;

    thus IPG manufacturing is cheaper than off-shore contract manufacturing

  • PurposeKey operation to screen out weak devices

    to ensure long-term reliability of pumps

    ScaleIPG has industrys largest TEST/BI facility:

    over 100,000 COS devices are tested

    simultaneously

    Competition Barrier to EntryAll TEST/BI equipment has been designed

    and manufactured internally for a fraction of

    an open market price

    Long-term BenefitEvery COS used in IPG Fiber Lasers

    undergoes rigorous screening by burn-in:

    elevated temperature and elevated current

    BACK-END: Test & Burn-In Operation in

    US, Germany and Russia

    104

    TEST/BI operation ensures high reliability of DIODE pumps:

    Contributes to low cost of ownership of Fiber Lasers, and

    Minimizes IPG need for field service

  • Packaging is the most labor-intensive part of pump

    manufacturing and the most value-added operation

    Facts about IPG Packaging operation:

    Pioneered commercialization of single emitter pumping

    over 20 years ago

    Produces industrys most efficient pumps

    All automated equipment and processes used in PKG

    operation:

    Designed and manufactured internally for a fraction of open

    market analogues cost, and

    More productive than commercially available analogues

    Cost of subcomponents:

    IPG is the only company in the industry that

    manufactures all micro-optics and packages mechanical

    subcomponents internally

    More than 90% of BOM are internally manufactured parts

    and components

    BACK-END: Packaging Operation in

    US, Germany and Russia

    105

    PLD130

    PLD70

    PLD40

    PLD40 3 COS 40 W CW

    PLD70 6 COS 60 W CW

    PLD130 12 COS 120 W CW

    PLD80 6 COS: new design > 70 W CW: Q2

    PLD90 6 COS: next design; new package > 80 W CW: H2

    Most commonly used pumps

    New pumps: introduced through 2016

  • Labor ProductivityIPG continues to increase PACKAGING

    labor productivity through wider robots

    utilization and automation

    Internal development and manufacturing

    of automation equipment

    BACK-END: Packaging Manufacturing Cost in

    US, Germany and Russia

    106

    Manufacturing Cost of IPG PACKAGING operation is lower than

    overseas contract manufacturing

    1.00

    1.28

    1.56

    2.00

    2.35

    0.00

    0.50

    1.00

    1.50

    2.00

    2.50

    2011 2012 2013 2014 2015

    Labor Productivity Improvement

    in PKG Operation

  • High volume production levels of pump diodes, proprietary processes

    and use of unique chip and package designs allows IPG to increase

    yields, lower component costs and assure high quality

    Summary: Diode Production a Significant Advantage

    ____________________

    Source: IPGP estimates.

    -40%

    -20%

    0%

    20%

    40%

    60%

    80%

    100%

    120%

    -

    1,000,000

    2,000,000

    3,000,000

    4,000,000

    5,000,000

    6,000,000

    2009 2010 2011 2012 2013 2014 2015

    % C

    han

    ge i

    n P

    ackag

    ed

    Dio

    de C

    ost

    Teste

    d C

    hip

    s P

    rod

    uced

    Diode Production and Cost Trends

    Tested Chip Production Cost/watt % decrease (base yr 2009) Annual cost decrease %

    107

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    China

    Trevor Ness

    Senior Vice President, World Wide Sales and Marketing

  • Broad Established Presence in Growth Market

    109

    Shenyang

    Beijing

    Shanghai

    Shenzhen

    Wuhan

    Micro Process Application Lab

    10 year presence

    ~150 employees servicing customers in 17 locations.

    Broad Geographic Coverage close to customers

    Best service and support in the industry drives sales

    NingboChengdu

    Jinan

    Remote service station

    Branch office/application lab/service station

    Qingdao

    NanjingSuzhou

    Chongqing

    NingDe

    Hangzhou

    Guangzhou

    ZhengZhou

    Headquarter

    Central warehouse

    Automotive application

    lab

    Sheet Metal cutting

    application lab

  • TAM in China

    110

    Total addressable market for IPG is $916M , IPG has 36% sales position

    big enough space for growth.

    20

    40

    60

    80

    100

    120

    140

    160

    180

    200

    220

    142

    203

    104

    M$

    147

    240

    260

    280

    300

    320

    288

    Marking/

    Engraving/

    Cleaning

    Micro

    processing

    Micro

    welding

    HP welding

    / adhesive

    manufacture

    Cutting

    (metal/

    non-metal)

    Resource:

    Input from major IPG

    Chinese OEMs

    Beam Delivery

    System

    32

  • Diverse and Growing End Markets Drive Laser Sales

    111

    Welding:

    Automotive: seat welding, body in white, electric vehicles (productivity and weight reduction trends)

    Heavy industry: locomotive, oil and gas, pipe lines

    Emerging applications replacing traditional non-laser welding: white goods, elevator manufacturers,

    cabinet/furniture

    New applications to drive production efficiency

    Remote welding, scanner welding and trifocal braising

    Cutting and Welding Optical Heads:

    Optical head; IPG is growing its penetration into a large opportunity, selling optical heads into

    cutting, welding and scanning applications

    $32M annual addressable market in China)

    Cutting:

    Fiber laser has significant and growing share vs other sources

    Hundreds of OEMs

    OEMs expect underlying annual growth of 10%

    Significant installed base of 12K+ expected to be replaced by fiber laser during next 2-3 years

    IPG is well positioned with strongest product portfolio, superior quality, highest reliability and largest

    service coverage

    Chinese industry is intent on adopting advanced technologies to enhance

    manufacturing capability

  • Diverse and Growing End Markets Drive Laser Sales

    112

    Marking and Engraving:

    High power pulse fiber laser (>=100w)

    Cleaning/cutting, engraving, mold making

    Display applications

    Emerging Applications:

    Additive manufacturing

    Cleaning and ablation

    Fine and Micro Processing:

    International and Chinese local electronic brands are accelerating adaption

    of laser process: quality and efficiency improvements

    QCW lasers are entering new applications (micro-welding replacing YAG)

    and new customers

    UV and Pico second laser are quickly adopted on a large scale: marking

    and precise cutting of brittle materials

  • Manufacturing

    Low cost manufacturing in Russia

    Highest volume vertically integrated producer

    Cost and product solution

    Broadest product range

    High-end and low-end offerings

    Vertical integration drives lowest cost

    Service and support

    Unrivaled service capabilities drives sales

    Future Strategies

    113

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    Financial Review

    Tim Mammen

    Chief Financial Officer and Senior Vice President

  • 115

    Investment Highlights 2014 2015 Revenue growth ~17%

    17% CAGR from 2011 to 2015

    Highly diversified revenue stream and business model

    Customers, powers, geographies, applications

    Vertically integrated model driving gross margin

    High return on R&D and SG&A drives strong operating margins

    Strategically focused and efficient R&D that creates value

    Track record of profitability and financial discipline

    Strong return on invested capital (excluding cash)

    43% in 2015

    Financial Highlights

  • Sales and Gross Margin Growth

    116

    ____________________

    (1) Gross margin includes stock-based compensation of $2.2mm, $3.2mm, $4.2mm, $5.3mm, $1.2mm and $1.4mm for

    2012, 2013, 2014, 2015, Q1 2015 and Q1 2016, respectively.

    $562.5

    $648.0

    $769.8

    $901.3

    $199.0 $207.2

    54.2%52.5% 54.1% 54.6% 54.2%

    55.2%

    0.0%

    10.0%

    20.0%

    30.0%

    40.0%

    50.0%

    60.0%

    70.0%

    $0

    $100

    $200

    $300

    $400

    $500

    $600

    $700

    $800

    $900

    $1,000

    2012 2013 2014 2015 Q1 2015 Q1 2016

    Gross Margin(1)

    (%)Sales ($ mm)

    Revenue ($mm) Gross Margin

  • Operating Leverage Improvement

    117

    $562.5

    $648.0

    $769.8

    $901.3

    $199.0 $207.2 $208.9 $218.1

    $283.8

    $342.0

    $82.0 $70.0

    37.1%33.7%

    36.9% 38.0%

    41.2%

    33.8%

    0.0%

    10.0%

    20.0%

    30.0%

    40.0%

    50.0%

    60.0%

    70.0%

    80.0%

    $0

    $100

    $200

    $300

    $400

    $500

    $600

    $700

    $800

    $900

    $1,000

    2012 2013 2014 2015 Q1 2015 Q1 2016

    Operating Margin(1)

    (%)Sales & Operating Income(1) ($mm)

    Revenue ($mm) Operating Income ($mm) Operating Margin____________________

    (1) Operating income includes stock-based compensation of $8.6mm, $11.7mm, $15.2mm, $19.0mm, $4.1mm and $5.0mm for

    2012, 2013, 2014, 2015, Q1 2015 and Q1 2016, respectively.

    (2) Operating margin includes FX gains/(losses) of $2.6mm, $8.8mm and ($5.0mm) for 2015, Q1 2015 and Q1 2016, respectively.

    (2)

    (2)

    (2)

  • Strong Cash and Liquidity Position

    Long-term CapEx target

  • A Diverse Mix with Year-over-Year Growth

    119

    $135.3

    $344.1

    $53.8

    $13.3 $21.5

    $131.6

    $426.1

    $81.0

    $13.2

    $34.9

    $124.8

    $499.6

    $99.5

    $13.8

    $56.5 $28.6

    $118.2

    $22.6 $3.0 $8.6

    $0

    $50

    $100

    $150

    $200

    $250

    $300

    $350

    $400

    $450

    $500

    $550

    Pulsed High-Power Medium-Power Low-Power QCW

    ($US mm)

    IPG Sales by Product Lines

    2013 2014 2015 YTD 2016

  • Investment Highlights

    Expanding $4.8 billion opportunity for all lasers Approximate average annual growth rate of 6%

    Recognized leader in the rapidly growing fiber laser market Estimated 12% CAGR from 2015 to 2020

    Significant competitive advantages First mover advantage

    Performance, product range and reliability

    Lowest cost (vertically integrated model)

    Strong IP position

    Vertical integration and direct sales model drives industry-leading

    margins (54.6% GM in FY 2015, 55.2% GM in Q1 2016)

    Broad geographies, end markets and applications Asia & Australia 51%, Europe 33%, North & South America 15%

    120

    The technology leader and most profitable

    company in the rapidly growing fiber laser market

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    Summary and Growth Strategy

    Dr. Valentin Gapontsev

    Chief Executive Officer and Chairman of the Board

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    Q&A