BMW Deal Underlines IPG's Processing Power
IPG Photonics is supplying fiber-lasers to BMW, breaking the tight hold of its rival Trumpf on sales of material processing lasers to German auto-makers.
The vertically-integrated diode laser manufacturer is due to deliver ytterbium fiber-laser systems with 63 kW in total output power to BMW in the final quarter of 2008.
“Our main target was to break into German car makers," said Valentin Gapontsev, IPG Photonics CEO.
“For us this has really opened the door for market penetration in cars," he said of the deal, which will actually supply tools for welding car doors.
It adds to a list of existing automobile customers that includes Hyundai, Nissan, Toyota, and the PSA group that makes Peugeot and Citroen cars.
In the three months ended June 2008 84 percent of IPG Photonics total $56 million revenues came from material processing applications. Sales into this area grew 6 percent sequentially and 42 percent over the same time in 2007.
IPG says its systems offer much better yields than early experimental laser material processing tools. Some of these performed so badly that they turned automotive manufacturers' senior management against the technology. The Oxford, Massachusetts, headquartered company's manufacturing equipment now seems to be changing that perception.
Its MBE-grown GaAs laser diodes, available in powers up to 25 W, combine in the higher power systems to offer significant power efficiency savings compared to other laser technologies. Making its own diodes as well as performing subsequent integration gives IPG Photonics another competitive advantage, allowing it to deliver systems comparatively quickly.
On a per-watt basis, IPG says its systems cost only 15 percent of the typical cost of other systems on the market. Although the automotive industry in particular is conservative, making existing supplier relationships hard to overturn, these numbers are difficult to ignore.
The heavy focus on capital equipment sales continues to serve IPG well, as it recorded a $8.6 million net profit in the quarter, up from $6.4 million year-on-year.
It says that its overall sales in the September quarter will grow further, predicting that it will receive between $57 million and $61 million in that period.