In recent years, the industrial application of fiber lasers has undoubtedly become the biggest driving force for the development of the laser industry, and China's huge market is an important guarantee for the sustainable development of fiber lasers. However, since 2018, the overall growth rate of my country's fiber laser market has begun to decline. According to the latest data released by the "2020 China Laser Industry Development Report" (hereinafter referred to as the "Report"), the growth rate of my country's fiber laser market has been In single digits, total sales in 2019 exceeded 8.26 billion yuan.

In this 8.26 billion yuan market, the top three are still IPG, Raycus Laser, and Chuangxin Laser. With the strong rise of domestic brands, IPG's market share has declined significantly compared with 2018, although it is still the dominant but the gap It is gradually shrinking. In addition, nLIGHT's sales in China surpassed Coherent and became the fourth largest fiber laser supplier in the Chinese market. Coherent dropped from fourth to fifth.

Data source: 2020 China Laser Industry Development Report

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The fastest growing market share is Raycus Laser. What's interesting is that Raycus' increased share just fills up the lost share of IPG. The ups and downs of the two giants reflect the fierce market competition: under the dual background of trade wars and price wars, the gross profit margins of the two fiber laser giants have declined to varying degrees. IPG's annual gross profit margin in 2019 was 46.1 % (40.5% in the fourth quarter), a decrease of 8.7 percentage points from 2018; while Raycus Laser’s gross profit margin in the first three quarters of 2019 was 31.9%, a decrease of 18.4 percentage points from the first three quarters of 2018.

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Note: The sales indicated on the left label are estimated based on the total sales disclosed in the "Report" and the share of each company. If there is a conflict with the data disclosed in the corporate financial report, the corporate financial report shall prevail.

In addition to Raycus Laser, Chuangxin Laser's market share has also expanded (3% increase over 2018). However, in the face of the price war that covers the entire industry, Chuangxin Laser was not immune. In the first three quarters of 2019, the gross profit margin decreased by 6.24% year-on-year to 32.12%. Companies with a basically stable market share include Lianpin Laser, Feibo Laser, Haifu Photonics, JPT and nLIGHT. Among them, Lianpin Laser and Feibo Laser have slightly increased, while Haifu Photonics, JPT and nLIGHT have declined slightly. . In addition to the most obvious decline in IPG share, the overall market share of Coherent and other brands also declined.

Under the trend of import substitution, the three major US laser companies have all declined in China. What impact will the decline in the Chinese market have on their own performance?

For IPG, China is its largest single market. In 2019, IPG's revenue in China dropped by 21.9% year-on-year, losing 7.1% of the Chinese fiber laser market, but the Chinese market still accounted for 40% of its total revenue. In the end, IPG's annual revenue was US$1.315 billion, a year-on-year decrease of 10%. IPG CEO Dr. Valentin Gapontsev once said that before the large-scale outbreak of the new crown virus pneumonia, IPG's business in the Chinese market has shown a momentum of improvement, with an increase in orders in December and January. However, the outbreak of the new crown virus has disrupted IPG's continued business in China, which is expected to reduce its revenue by approximately US$45 million in the first quarter of 2020. With a large-scale outbreak in the United States, the losses are likely to continue to increase.

NLIGHT is also more dependent on the Chinese market. In 2019, nLIGHT's revenue in China exceeded 30% of its total revenue, of which products used in the industrial market accounted for 52% (sales decreased by 19% year-on-year). In the end, nLIGHT's annual revenue was US$177 million, a year-on-year decrease of 7.7%. Scott Keeney, President and CEO of nLIGHT, once said that the continuous growth of the high-power fiber laser sales portfolio in the Chinese market has allowed him to see long-term opportunities in this market. However, with the outbreak of the new crown virus pneumonia, revenue is expected to decrease by approximately US$8 million in the first quarter of 2020.

In contrast, Coherent's dependence on the Chinese market is much smaller. In fiscal year 2019, Coherent sales reached US$1.431 billion, a year-on-year decrease of 24.8%. John Ambroseo, President and CEO of Coherent, said that due to the weakness of the material processing market and the aggressive pricing of Chinese laser manufacturers, its market share has declined, but because Chinese fiber laser manufacturers have to compete with imported products at all power levels , The need for higher performance devices of different wavelengths, which provides more opportunities for semiconductor laser manufacturers in the United States and Germany.