Under the Tariff, Will Material Processing Promote the Development of the Global Laser Market Once Again?
Previously, the two major driving forces of the laser market in 2018: OLED screens and VCSELs pointed out two key factors in the development of the global laser market. One of the best applications in 2017 was material processing, especially nLignt and IPG Photonics. And high-power lasers for materials processing produced by companies such as Coherent.
For example, in 2017, the gross revenue of the macro (1KW+) material processing laser sector was US$2.3 billion, an increase of 54% compared to 2016 revenue in this sector. It should be pointed out that the average annual growth rate of processing high-power materials is about 5-7%, so 2017 is of great significance to this field. The question now is: Can this growth trend continue until 2018?
Most of the growth of KW + lasers in 2017 came from Asia (especially China) and Europe, and the growth in North America was relatively flat. Most of the growth in KW + laser revenue in Europe and Asia can be attributed to three factors: 1) The laser use rate has increased as laser tools have replaced non-laser manufacturing; 2) Large-scale manufacturing projects requiring the use of laser tools have been increasing ;3) Due to trade restrictions and tariffs, concerns have arisen about rising laser prices in the future.
The industry’s debate on which of the above three factors has the greatest impact has been ongoing, but there is no doubt that these three factors cannot be ignored. Laser tools are rapidly replacing non-laser tools, and a good economic development can drive many projects. Concerns about trade restrictions also encourage consumers to buy in advance.
Since the threat of tariff and trade restrictions may play a role in the growth of the 2017 KW + laser, consider the impact of this threat on the laser sector in 2018. On June 15th, President Trump approved a 25% tariff on China’s US$50 billion worth of Chinese-made products, including laser machine tools, optical products, and lasers other than laser diodes. In response, China has announced its own list and plans to levy a 15% or 25% tariff on related products exported to the United States. This list mainly includes products such as fruits, meat and steel pipes, but does not include lasers.
Given the above factors, the revenue growth rate of high-power lasers in 2018 is expected to be much slower than 2017, but it will still be above average.