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2020 Market for Industrial Lasers and Laser Systems Down 10% – Impact of COVID-19

16th November 2020

The impact of COVID-19 is one of the most discussed topics in many industries including the laser industry. We searched the internet for quantitative data on the impact, but visiting relevant sites did not reveal data beyond company revenues. In the following, we provide a first estimate for the 2020 global market for industrial laser systems and lasers.

The global market for laser systems for materials processing is expected to reach $ 16 billion in 2020. This corresponds to a decrease by 10% vs the USD 17.9 billion we reported in January for the year before. For industrial lasers we also expect a decrease in the range of 10% and a market volume in the range USD 4.0 billion for 2020. The expected decrease for 2020 appears moderate given the grim macroeconomic environment that developed under the impact of COVID-19. The decrease also appears moderate when compared to the massive decrease of global sales of the machine tool industry this year.

Industrial lasers and laser systems are production equipment. Their demand follows the investment cycles of the end industries. Major end industries for industrial lasers and systems include the 3C industry, and especially the mobile electronic devices industry, the automotive industry, as well as a broad range of end industries for major applications such as cutting and marking.

When we entered 2020, the industrial laser and system market was in a continued downturn trend which started mid 2018. The quarterly sales figures of major industrial laser and system suppliers such as IPG Photonics, Coherent, and Han’s Laser, show strong growth in 2017 and a decrease in the second half of 2018. The downturn in the industrial laser and systems market was triggered by deteriorated economic expectations for major end industries, in particular the automotive and the consumer electronics sector.

2020 Global Market for Laser Systems in Materials Processing in US $ Billion - The diagram shows the longterm trend 1999 to 2019 and the 2020 forecast.
2020 Global Market for Laser Systems in Materials Processing

Many comments have been made about the role of China in the industrial laser market in the last decade. The Chinese market had lead growth rates for industrial lasers and systems for several years, when it markedly decreased in 2019. The increase was driven by wide adoption of laser processes in Chinese manufacturing in a short time. The decrease in 2019 also is a reaction on the rapid growth in the years before. The decrease came with the above mentioned deterioration in major end industries, the trade conflicts, and the partial shift of foreign manufacturing investments to neighboring countries.

2020 Industrial Laser Systems Market Trend - The diagram compares the 2020 downturn (COVID) with the 2009 downturn (financial crisis) asnd provides a forecast for the 2020 market by geography and by market segment.
2020 Industrial Laser Systems Market Trend

The market condition at the beginning of the year laid ground for the moderate decrease by 10% of the industrial laser market in 2020. The market for laser systems for microelectronics processing – for manufacturing semiconductors, flat panel displays, printed circuit boards, and solar cells – had just started to recover from the downturn in 2019. The recovery in the microelectronics processing segment was not halted by COVID, and demand for laser systems in the segment is expected to grow in 2020. However, other segments of the market for industrial laser systems are expected to decrease in 2020, especially those comprising standard machines adding processing capacity rather than being technology buys. The analysis of all market segments combined leads us to the expectation of a 10% decrease for the industrial laser systems market. For the market for laser sources we expect a similar trend. While the price decay for commodity lasers continues, technology leaders successfully sell higher spec and quality lasers at premium prices. Growth rates for single segments of the industrial laser market are expected to range from double-digit losses for lasers for standard systems to positive growth rates for several segments of microelectronics processing. In China, quarterly sales of the major local laser and system manufacturers have recovered in Q2 and Q3 from the low Q1 levels, laying ground for full year figures which will exceed the 2019. For Europe, North America, and Japan we expect that sales in 2020 will be markedly down.


2019 Laser Materials Processing Systems Market Reaches $ 17.9 billion, Down 9%

10th January 2020

The global market for laser systems for materials processing reached a volume of $ 17.9 billion in 2019, down 9% vs the previous year. The 2019 market estimate is based on data for the first three quarters and company guidances for the fourth quarter. The decrease in 2019 follows nine years of continued growth. The industrial laser systems market grew from $ 5.3 billion in 2009 to a record volume of $ 19.8 billion in 2018. In 2017 and 2018 alone the market increased by 50% due to a combination of drivers including the rapid adoption of laser manufacturing in China, a market push by decreased laser prices, and an end market pull in the consumer electronics and automotive industry.

In 2019, the macroeconomic environment deteriorated. According to the International Monetary Fund global GDP growth was down to 3.0% in 2019 vs 3.6% in 2018. The corresponding World Bank figures are 2.4% in 2019 and 3.0% in 2018. Major end industries for laser systems cut their equipment spending, notably smartphone makers and car manufacturers. The downturn in spending for laser equipment can also be seen as a correction after years of strong growth. The factory floors are well equipped with new laser technology, and given the decreased economic growth expectations less equipment was purchased in 2019.

Looking at China, the country has become the largest market for laser materials processing equipment with a 30% share in worldwide demand. Due its large share in global industrial manufacturing China’s leading position in laser equipment consumption is well justified. Moreover, the country is rapidly building its own laser industry. The share of imported laser equipment is decreasing, resulting in reduced export growth opportunities for equipment manufacturers outside China.

Often discussed, the USA China trade row and the associated tariffs have a detrimental effect on the laser equipment market. The resulting decreased global economic growth weighs also on the laser equipment market. Some of the overseas manufacturing investments in Asia are being shifted from China to neighboring countries, thus reducing laser equipment demand in China, but also creating export opportunities elsewhere, including for laser equipment manufacturers in China.

Looking ahead into 2020, the repeatedly downward revised GDP growth forecasts and the uncertainties in the important consumer electronics and automotive industry weigh on revenue expectations for the laser sector. The presently available data indicates that first quarter 2020 revenues will be clearly down year-on-year. We will update our view on the full year 2020 when more data becomes available.

Global Market for Laser Systems in Materials Processing
Global Market for Laser Systems in Materials Processing

Laser Market Overview

Optech Consulting covers the laser market since 1992. The data in our market reports is based on primary market research and numerous  discussions with companies, worldwide.

Below, we provide aggregated data from our market research.

The following definitions apply:

  • A “laser source” is a laser.
  • A “laser system” is a system (machine) including a laser.
  • Exceptions:
    • For microlithography we count the DUV or EUV light source as the system. We do not include the full value of the wafer stepper/scanner.
    • For FPD annealing we count the laser source and the projection optics as the system.


Global Market for Lasers and Laser Systems for Materials Processing, 2019, 2020(e), in USD billion

 20192020 estimate
Global laser market4.64.0
Global laser systems market17.916.0
Global Market for Industrial Lasers and Laser Systems: 2019 and 2020 preliminary estimate (as of 11 November 2020)

Global Market for Laser Systems for Materials Processing, by Year in EUR / US$ billion

Year198619971998199920002001200220032004200520062007
World Market in EUR Billion0.69 2.32.93.24.74.53.93.74.74.86.16.35
World Market in USD Billion0.64 2.63.33.44.34.03.74.25.86.07.78.7
Year200820092010201120122013201420152016201720182019
World Market in EUR Billion6.43.85.97.27.98.08.810.711.715.016.815.9
World Market in USD Billion9.45.27.910.010.210.711.811.813.016.919.817.9
             
Global Market for Industrial Laser Systems 1086 to 2019 in USD Billion and in EUR Billion

2018 Market for Lasers and Laser Systems for Materials Processing

Please follow the link for more information on the 2018 market.

 


2017 Market for Lasers and Laser Systems for Materials Processing

The following diagrams show historic market data.