INVESTOR PRESENTATION June 2019 Safe Harbor Statement The - PowerPoint PPT Presentation

INVESTOR PRESENTATION June 2019

Safe Harbor Statement The statements in this presentation that relate to future plans, market forecasts, events or performance are forward-looking statements. These statements involve risks and uncertainties, including, risks associated with the strength or weakness of the business conditions in industries and geographic markets that IPG serves, particularly the effect of downturns in the markets IPG serves; uncertainties and adverse changes in the general economic conditions of markets; IPG's ability to penetrate new applications for fiber lasers and increase market share; the rate of acceptance and penetration of IPG's products; inability to manage risks associated with international customers and operations; foreign currency fluctuations; high levels of fixed costs from IPG's vertical integration; the appropriateness of IPG's manufacturing capacity for the level of demand; competitive factors, including declining average selling prices; the effect of acquisitions and investments; inventory write-downs; intellectual property infringement claims and litigation; interruption in supply of key components; manufacturing risks; government regulations and trade sanctions; and other risks identified in the Company's SEC filings. Readers are encouraged to refer to the risk factors described in the Company's Annual Report on Form 10-K and its periodic reports filed with the SEC, as applicable. Actual results, events and performance may differ materially. Readers are cautioned not to rely on the forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. 2

PRODUCT ACROSS ALL INDUSTRIES are made better AND at lower cost with IPG FIBER LASERS

Revolutionizing the Laser Industry Traditional Lasers IPG Fiber Lasers Ultra High Power Continuous Wave (CW) Lasers Carbon Dioxide (CO 2 ) High Peak Power Lasers with Quasi CW (QCW) Option Adjustable Mode Beam and QCW Lasers High Power Nanosecond Pulsed Lamp-Pumped Nd: YAG Pico & Femtosecond Pulsed  Expensive  Inefficient  Higher Productivity  Efficient  Bulky  Frequent Maintenance  Compact  Minimal Maintenance  Unreliable  Costly Consumables  Reliable  No Consumables  Difficult to Operate  Not scalable  Robust  Scalable 4

Our Mission Making our fiber laser technology the tool of choice in mass production 5

Key Takeaways Vertical integration, Global market leader in manufacturing scale, fiber laser technology and technology across multiple end driving industry- markets and applications leading margins Expanding multi-billion Strong growth in dollar addressable earnings and cash flow market opportunity 6

Dual Growth Strategies in Largest Market (1) Conversion from Non-Laser to (2) Conversion from Traditional Lasers to Laser Technologies Fiber Lasers Global Machine Tool Consumption in 2018: $81B Fiber Lasers a Growing Percentage of Annual Demand Global Cutting Laser Systems in 2018: ~$6B for High-Power Industrial Laser Cutting Sources Laser Cutting Tools 6-7% of Worldwide Machine Tools & Growing $3B $100B $80B $2B $60B Non-Laser Machine Tools $40B $1B $20B Laser-Based Systems $0B $0B 2008 2010 2012 2014 2016 2018 2020 2022 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: Oxford Economics, Optech Consulting and IPG Photonics Corporation Source: Optech Consulting and IPG Photonics Corporation 7

Broadest Portfolio of Fiber Lasers Any wavelength, mode of operation, power, beam parameters or application Diode Holmium Fe:ZnSe/S 10 nm 400 nm 700 nm 1.5 μ m 10 μ m Lasers Lasers Lasers Far-IR X-Ray Ultraviolet Visible Near-Infrared Mid-Infrared UV Blue, Green, Yellow, Ytterbium Erbium Thulium Cr:Zn/Se/S Lasers Orange , Red Lasers Lasers Lasers Lasers Lasers Peak Power (Megawatts) Thick steel cut with Pulse Duration: Pulse Duration: Pulse Duration: Pulse Duration: Pulse Duration: a continuous wave 0.05-50 ms 1-200 ns 0.7-5 ns ~2 ps <500 fs laser Peak Power: 120kW Peak Power: 23kW Peak Power: 1 MW Peak Power: >150 kW Peak Power: >10 MW Peak Power: >20 MW Applications: Applications: cutting, Applications: Applications: thin- Applications: black Applications: thin cutting, welding, welding, soldering, scribing, thin-film film ablation, low-k marking, sapphire metal cutting and Drilling using a soldering, drilling, drilling, brazing, ablation, via drilling and silicon dicing, and glass scribing, drilling, ophthalmic quasi-continuous brazing annealing and flex cutting, glass scribing solar thin films, OLED surgery, high wave laser surface preparation, film cutting, scientific precision, scientific texturing, annealing, marking, drilling and scribing Surface Cleaning using a pulsed laser Micromachining using an ultrafast laser Time Continuous Quasi- Nanosecond Picosecond Femtosecond Nanosecond Wave Continuous Pulsed Pulsed Pulsed Pulsed Wave Throughput Precision 8

Advantages of Our Fiber Lasers Record Modular / Monolithic Highest Beam MOPA Reliability Power Scalable Design Power Quality Configuration Efficiency Architecture Faster Lower Small Efficient Easy Systems Processing Operating Integration Footprint Cooling Speed Costs 9

Significant Barriers to Entry Business: Technology: Vertical IP & Process Integration Know-How & Scale 10

Vertical Integration Fab Operations Semiconductor wafer growth Laser Diode Packaging Diode processing, chip Optical Preform Over 200 watts of output mounting & burn-in power from 100 μ m core fiber Silica based glass MCVD method Dope with rare earth ions INTEGRATED SYSTEMS DEEP IN TECHNOLOGY Welding | Cladding DEEP IN EXPERIENCE Drilling | Ablation Components Bragg Gratings | Isolators | Couplers Process Heads and Switches All fiber beam delivery Modules Laser Sources Coupling | Final burn in | Shipment Up to 2000 Watts 11

IPG Diodes: Highest Volume, Lowest Cost, Leading Power 12 Million 100% 90% 10 Million 80% Packaged Diode Costs % Chg. 70% Tested Chips Produced 8 Million 60% 6 Million 50% 40% 4 Million 30% 20% 2 Million 10% 0 Million 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Tested Chip Production Cost/Watt Decrease (2009 Base Year) Source: IPG Photonics Corporation 12

Global Presence Clean Clean Oxford & Marlborough, MA, USA Room Room ► Wafer fab operation, chip-on- Percent Burbach, Germany Percent Contractors ► Components and final assembly submount assembly, wafer G&A 4% 415,000 ► packaging, components and final ~1,300 employees 7% Sales 650,000 R&D assembly sq. ft. 5% 11% sq. ft. ► ~2,000 employees 6,294 Clean Room Current Percent Fryazino, Russia ► Components and final assembly Employees ► ~1,700 employees 550,000 sq. ft. Manufacturing 73% RoW Other US Other Asia 0% China 9% 14% 15% 4% Germany US 8% 6,294 37% Sales by Current Russia Region, 2018 Employees 29% China Other Europe 43% 20% Germany 21% 13

Total Addressable Market $10B $9B $8B $7B Estimated $6B New $7B Industrial Laser $5B Lasers Applications Market in $2.8B $4.4B $4B 2018 $3B Metal Processing $2B $1B $0B 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: Optech Consulting, Strategies Unlimited and IPG Photonics Corporation 14

Industrial Laser Market $4B $4B $3B $3B CO 2 , Solid State and Diode Lasers $2B $2B $1B $1B Fiber Lasers Metal Processing 63% Market Share in 2018 $0B $0B 2015 2016 2017 2018 2019 2020 2021 2022 2023 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: Optech Consulting, Strategies Unlimited and IPG Photonics Corporation 15

New Industrial Laser Products High Peak Power (HPP) – QCW Option Adjustable Mode Beam (AMB) + = CO 2 , Solid State and Diode Lasers  Pulses up to 2X peak power  Broadest range of beam profile tunability  Faster piercing, improved processing speed  Virtually eliminates welding spatter  High quality cutting of intricate parts  Increases welding speed and quality  Faster, cleaner hold drilling  Widens range of material thickness in cutting Metal Processing  Reduces material waste  Reliable adjustment of output beam  Ensures consistency of finished parts  Up to 12 kilowatt core & 25 kilowatt total output power  2/4, 3/5 and 6/10 kilowatt configurations 16

Laser Systems Welding, Drilling, Cladding, Ablation & Other Materials Processing Micromachining for Multi-Axis Workstations Precision Workstations Robotic Workcells Microelectronic and for Industrial Parts for Medical Parts for Larger Parts Electronic Parts 17

Emerging Laser Applications Accelerating growth and diversifying end market exposure $7B $6B $5B $4B $3B Sensors and Instruments $2B R&D and Scientific Defense $1B Non-Metal Micro Materials Processing $0B 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: Strategies Unlimited and IPG Photonics Corporation 18

Solid Growth and Industry-Leading Margins $1,800 50% $1,500 40% 36% 34% Revenue ($ Millions) Operating Margin $1,200 30% $900 $1,460 20% $600 10% $648 $300 $0 0% 2013 2014 2015 2016 2017 2018 Revenue Operating Margin 19