The laser industry, explained

BluGlass Limited (ASX:BLG) Non-Executive Director Jean-Michel Pelaprat shines a light on the laser industry.

Paul Sanger: I'm joined today by photonics industry pioneer and veteran Jean-Michel Pelaprat to shine a light on the laser industry and dive into this essential and high-growth market segment. Jean-Michel is a Co-Founder of New York Stock Exchange-listed laser pioneer Nuburu, and Non-Executive Director of Australian laser manufacturer BluGlass Limited (ASX:BLG). He has over 30 years experience establishing, commercialising and scaling photonics and semiconductor businesses and is Co-Founder and Director of Nuburu, a US-based company recognised as a pioneer and industry leader in blue laser systems for the industrial 3D printing and display sectors.

Before founding Nuburu, Jean-Michel held numerous leadership positions in high-growth photonics businesses, including President and CEO of Vytran, a fibre optics capital equipment company supplying optical communications, fibre lasers, medical devices, sensing and aerospace applications. He was VP and General Manager of Coherent, managing the diode pump business unit and the semiconductor group. Over several years, he grew both businesses by over four times and substantially increased profitability. Jean-Michel, thank you for joining me today.

Jean-Michel Pelaprat: Thank you very much.

Paul Sanger: Jean-Michel, before we get into discussing laser technologies and their incredible markets, can you first tell us what is a laser?

Jean-Michel Pelaprat: A laser converts electrical power, essentially electrons, into optical power, which is photons in high-power laser beams, which are coherent laser beams. Coherent meaning that all the photons, all the light inside, is at the same frequency and are all in phase, unlike LEDs, which are non-coherent laser sources and therefore emits in a very large angle, a little bit like a light bulb, if you like. Lasers are highly focused, and that's a trademark essentially of the lasers. So, the coherent aspect of the lasers provides two key features. Number one is not only it provides highly focused beam, but that high-focused beam can stay for long, long distances. In fact, you can actually send laser beams to the moon and look at that. So, highly focused for long distances. And the second aspect is that lasers are monochromatic, meaning they're generating light in the very small portion of a spectrum, either in the blue or in the visible and the infrared, but very narrow line width. Those two aspects of lasers make them highly demandable for many applications in the industry, science and medical.

Paul Sanger: Jean-Michel, lasers and their applications are possibly not something that Australian investors would think about very often. However, lasers underpin all leading industries and technology capabilities around the world. Can you give us more of an understanding of the impact and importance of lasers and what roles they play in technology and the world?

Jean-Michel Pelaprat: So, lasers are an essential and ubiquitous technology. They are used in many applications. That goes from material processing, to defence, to aerospace, to medical applications, to biotech and to high-technology manufacturing and packaging. In fact, lasers are underpinning the major trends in the world, such as the electrification of the world and in particular blue lasers. The digital globalisation and consumer electronics and the sustainability. In fact, blue lasers enable high-performance processes, which make the whole overall processes very green. So, I can understand that the average Australian investor may not be aware about all the aspects of the lasers, but in fact lasers are essential and critical in our day-to-day life.

Paul Sanger: There are two very different segments of the laser industry, the invisible and visible segments. Can you explain the difference and why this is important?

Jean-Michel Pelaprat: Of course. So, there are indeed two segments. The traditional segments is the invisible, which is in fact the near-infrared wavelength, just about one micron and above. And this is a traditional laser that is being used in key markets, such as telecommunications, material processing and modern manufacturing, but also a number of applications in aerospace and also in medical applications. But there's been a new market, essentially, in the visible that has been driven by gallium nitride technology that has been coming for the past few years that is the fastest-growing segment within the laser market and provides superior, in fact, quite superior advantages compared to the infrared.

The value of the blue lasers resides essentially in two aspects. Number one is the absorption of blue light in many materials, but particularly in metals is much higher than it is in infrared. For instance, in copper, which is used in many applications, in mobility and battery and so forth, the absorption is 14 times better than it is in the infrared. Gold is 66 times. Aluminium is about three to four times, depending. So you can see we're not talking about 10 per cent, 20 per cent, we're talking at factor of 10, a factor of 50, a factor of 60. That's tremendously.

The second aspect of blue lasers compared to infrared is they can make much tighter-focused beams. So, the intensity, or the power density, if you want, is much higher. The combination of those two things enables a quantum step into many applications. For instance, in manufacturing, you are able to go faster by a speed increase of three times or even 10 times with higher-quality products or welding, for instance, or 3D printing, and highly sustainable, much more efficient processes. So this is again a quantum step into the industry. It is very similar into the medical application, aerospace or biotechnology.

Paul Sanger: Jean-Michel, given their application importance and versatility, can you tell us about the size of the market?

Jean-Michel Pelaprat: Well, the overall laser market is expected to be around US$25bn in 2025. As I mentioned, the segments, or the visible segment, which is driven by the gallium nitride market, is going fast-paced is expected to be about 10 per cent or $2.5bn also in 2025.

Paul Sanger: Jean-Michel, who are the consumers of these sorts of lasers, who buys these laser systems?

Jean-Michel Pelaprat: The end users or consumers are not different in fact to the infrared lasers. They are original equipment manufacturers or OEMs. They are system integrators that serve all the market segments, I mentioned a bit earlier. And, of course, the end users. So, we're talking about, for instance, the automotive market, automotive manufacturers and their tiers level that are supplying to them. Same in defence. But also system or end users in the medical market or the other markets I mentioned.

Paul Sanger: So, while investors may not know many of the world's leading laser companies, your end customers are a who's who of high-tech and consumer tech today.

Jean-Michel Pelaprat: That's right.

Paul Sanger: Jean-Michel, given the enormous market opportunity and disruptiveness of visible lasers, what does the competitive landscape look like? Is the market highly fragmented like the semiconductor industry?

Jean-Michel Pelaprat: Actually it is the opposite of the semiconductor industry. The gallium nitride semiconductor lasers is not very fragmented. Let me just say that the supply chain, going from making the chips to the complete laser or laser system that goes to the end user, I would say there are two segments of that. There is what I call the low end in terms of manufacturing, which is people making the device and the low-level integration. And then there's the other one, which are the laser manufacturers or the laser system manufacturers. This is sort of the two hands of the supply chain. On the low end, which is where BluGlass is participating, it's really a handful of manufacturers, and the two key manufacturers are also making LEDs and are essentially focusing on what I would say selected wavelength, a small mix of selected wavelength and high volume, highly commoditised single product.

And there's a high demand actually for customers about selected different wavelengths, different packages, customisation, which is really where actually BluGlass plays a large role into. So, that's the first part of the market. On the high end, which is Nuburu, which you also know reasonably well, on the laser and laser manufacturer, is very similar. There is actually about a handful of suppliers worldwide and the differentiation from one to the other is how they integrate the blue lasers into their system, laser and laser system, to preserve, I would say, the focusability, the brightness of the laser and to be very efficient. This is where there's differentiation, in the way they integrate the blue lasers inside their system.

Paul Sanger: Jean-Michel, you've had a long and successful crew in the industry, which has seen incredible innovation and change over the past three decades. What have been some of the biggest disruptors you've seen in the industry and what do you think will be the next big catalyst?

Jean-Michel Pelaprat: I have been indeed around for some time, you can see with my white hairs here, but I would say that I would focus on three of them. The first one is in the 1990s, I witnessed essentially the transformation of communication from copper to fibre optics. And it was a tremendous change, quantum step, to what we know today as essentially digital communications.

The second one, also in the 1990s, is the shift from traditional lamp systems or lasers into diode-pumped solid-state that enabled the penetration of lasers into the manufacturing world, essentially the modern manufacturing using lasers.

And then the third one is in the early 2000s, where fibre lasers, new lasers, fibre lasers reinforced the penetration and it really expanded the penetration of lasers into the manufacturing sector, enabling for the very first time using a laser 24/7. That was a revolution. It is interesting to see that in all those three cases the technology that helped to do that is semiconductors. So, hopefully the fourth one we're seeing today is the blue laser gallium nitride.

Paul Sanger: And John-Michel, to finish up, can you tell us why blue laser will be the next quantum leap?

Jean-Michel Pelaprat: That's a very good question, Paul. Let me answer that in a simple way. I think you've already got from me that the quantum leap in manufacturing is enormous. If you look at the simple number, we're not talking about a small increase, we're talking about a 10x increase, whether it's in quality and speed, and so on. And that's an enormous quantum step. That's really what blue provides essentially. In addition to this, blue enables a number of new applications that were not accessible or available in the past. We're talking about drastic improvement in, let's say, quantum computing, quantum sensing, and many applications in the blue. But, quite frankly, the more exciting, and I can say that after 40 years in the industry, is the applications we don't know. If something of the past have told us is that we always discover new applications, some are small, but some are very big. So, I can't wait to see those.

Paul Sanger: John-Michel, this has been an interesting and informative discussion. Thank you so much for your time today.

Jean-Michel Pelaprat: Thank you very much for having me.