On the eve of market success for ultrafast lasers
The long-awaited market success of ultrafast lasers is within reach. As just one example, researchers in Europe and the US recently reported sustainable fusion reactions ignited by short laser pulses, generated by factory-sized systems. This technology might offer a virtually unlimited source of clean energy in about a decade or two.
Meanwhile, solar energy is starting to replace fossil fuels. Solar cell manufacturing has created a new market for high power ultrafast lasers. Cold ablation, enabled by short laser pulses, proved to be a lot more reliable than mechanical cutters used for solar cell manufacturing in the past. The solar cells need to be cut into numerous segments, which are connected sequentially to increase the output voltage and improve efficiency. This may be the first really high-volume market for this technology, developed over the last 50 years. It is long overdue.
Several niche markets for ultrafast lasers are well established: semiconductor processing and inspection, laser eye surgery, and glass cutting for smartphones are a few examples. Coherent (now part of II-VI) was a leading supplier of ultrafast lasers since the 1980s. Several smaller companies struck gold, including EOLITE, Fianium, and New Wave Research. All were acquired by customers or competitors over the last decade. Yet, we have not seen a single unicorn in the ultrafast laser market.
Limited size of market opportunities constrains business growth and valuations. Success in larger markets does not come for free. It often requires innovation to support significant reductions in product cost.
IPG Photonics is a great example of a company developing a high-volume market by reducing the cost of their products—high power fiber lasers. These were not ultrafast lasers, but they were good enough for cutting leather and welding metal. IPG invested heavily into vertically integrated manufacturing to reduce the cost of products. It is a $10 billion company now, dominating the CW fiber laser market. In a recent conversation with LightCounting—a market research and consulting company—Dr. Eugene Shcherbakov, CEO of IPG Photonics, jokingly commented that “the company has no competitors.”
YSL Photonics took a similar approach for manufacturing ultrafast fiber lasers, and it is targeting higher volume markets with lower cost products. The company was founded by Dr. Chen Kangkang in 2010, as he was receiving a PhD in laser physics from the University of Southampton in the UK. It took him five years to prove that he could build reliable products and start attracting significant investments to scale up the business.
Among the first investors was his classmate from Southampton, Weijia Yang. Dr. Yang spent a few years working at Fianium after completing his doctoral studies. Fianium was a start-up also developing ultrafast fiber lasers, which was acquired by NKT in 2015.
Weijia Yang (left) was among the first investors in YSL Photonics. Credit: YSL Photonics
Yang joined YSL Photonics as a partner and brought in an investment from his family. Yang’s grandfather had been a factory owner in China and became a factory manager. Eventually, Yang’s father took over the company’s management and privatized it soon after the Chinese government legalized private businesses in the 1980s. That business managed to last over turbulent decades of Chinese history, make a profit, and invest in next-generation technologies. Sadly, Weijia Yang passed away in 2019, but his family remains an investor in YSL. People come and go, but strong families persevere.
Similarly, Fianium had demonstrated patterning of solar cells with ultrafast fiber lasers, while working closely with the ill-fated Solindra, which did not survive a sharp decline in solar cell pricing. Nonetheless, the ultrafast fiber laser technology is widely used by solar cell manufacturers in China. Companies come and go, but good technologies persevere.
YSL Photonics is lucky to be at the right place at the right time, but the company has not taken its luck for granted. It invested heavily into vertically integrated manufacturing, following IPG’s example. It developed a new fiber amplifier technology using doped photonics crystal fiber, enabling high pulse energy lasers. It is also making fiber rods now to produce even higher (up to 1 mJ) ultrafast pulses.
Starting a company in Wuhan, China—known as China’s “optical valley”—was a blessing in the long run for YSL. The company has been able to attract talent in fiber manufacturing, electronics, and finance. Chen tells LightCounting that technology is the easy part of starting a business. Finance is the hard part.
YSL Photonics rarely comments on their business growth and opportunities that they have been able to leverage. But it will have to start sharing more data with the global financial industry when the company goes public in a year or two.
Apart from the solar cell market, YSL makes lasers for patterning of OLED displays. Very short pulses are critical for both applications: A line of material can be removed without melting the films around it. This process is referred to as cold ablation and we will see more applications of it in the future. Patterning of thin films on flexible substrates and even membranes is also possible with ultrafast lasers, enabling manufacturing of flexible displays and other high-end electronics.
The market size will also depend on the number of factories using ultrafast lasers. Current trends for diversifying the supply chain and bringing critical technologies closer to home suggests that more factories will be built around the world. Automation makes labor costs less of a barrier, while the cost of transportation is going up. All these trends bode well for YSL Photonics and others.
Dr. Vladimir Kozlov is founder and CEO of LightCounting Market Research. He previously served as Vice President of Fianium Inc.
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