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nLight Gains Traction in China Laser Market

Date: 2019-02-19

nLight, the US-based maker of high-power industrial semiconductor and fiber lasers that listed on the Nasdaq index earlier this year, has reported a sharp increase in sales as it gains key customers in China.

For the three months ending June 30, the Vancouver, Washington, company delivered a net income of $4.7 million as sales rose nearly 50 percent year-on-year to $51.7 million.

In response to that jump in sales, nLight’s CEO Scott Keeney highlighted good traction in China, commenting: “Industrial and micro-fabrication business was particularly strong in China in the quarter, with the region growing almost 60 percent year-over-year.”

The apparent momentum in the critical Chinese market Keeney reported initial qualifications at several new strategic accounts–appears to contrast with last week’s indications of a slowdown from IPG Photonics, the market leader in high-power fiber lasers.

IPG’s uncertain outlook prompted a 27 percent fall in the value of its own stock, and also dragged down nLight’s valuation by more than one-fifth.

In a conference call with investors Keeney struck a far more optimistic note than his opposite number at IPG, saying: “We are benefiting from strong overall demand and are expanding our design wins with new and existing customers. In the China market, we continued to see strong demand across the industrial and micro-fabrication end markets.”

He added: “We have focused in China on developing relationships with a set of strategic customers, and we are seeing the benefit of these efforts from ramp volumes in this geography.”

No effect from tariffs yet

Keeney also reported that nLight had not yet seen any meaningful impact from the “Section 301” tariffs imposed by the US last month, or from retaliatory actions by the Chinese government. nLight’s biggest customer is currently Suzhou Quick Laser Technology.

But since nLight’s final products on the whole do not end up deployed in the US, they are not ultimately subject to the new tariffs as currently structured, explained the CEO. “We also have flexibility in our manufacturing capabilities, and the ability to manufacture our products here in the US, and assembly capabilities in China,” Keeney added.

nLight’s results coincided with its release of a new 3kW that the firm claims to feature the industry’s most compact footprint. In a company release Jake Bell, nLight’s general manager for industrial lasers, said:

“These fiber lasers deliver the highest power available in the smallest size. This gives end users a considerable advantage in shop floor utilization while incorporating the latest technologies for laser processing performance, reliability and serviceability.”

Following that up in his investor call commentary, Keeney said that the company would release another two fiber laser platforms that would “significantly expand” its capability beyond 8 kW – the kind of power regime where IPG currently has a virtual monopoly.

“These new platforms will better position nLight to address the large market in high-power cutting applications,” said the CEO. “They will enable numerous applications in advanced manufacturing, and they will come with a substantial reduction in our costs.”

Keeney added that these new higher-power platforms were the focus of discussions with the new and larger “strategic” customers that nLight is hoping to engage with in the future. “We’re not in a position to announce anything today, but that's the direction that we're going,” he said, adding that by incorporating the company’s latest laser diode and fiber technologies, those new platforms should also help improve profit margins.

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