Hello, and welcome to Coherent's Markets Day. I will now turn it over to your host, Paul Silverstein, Vice President of Investor Relations at Coherent.
Thank you, Liz. Good morning or good afternoon, and good evening to those of you who are joining us from Europe or Asia. It's my pleasure to kick off today our industrial market investor webinar. This is the second in a series of planned market deep dives with a goal of providing greater insight into our various market opportunities, including size, growth rates, underlying key trends and drivers, and our competitive positioning and competitive differentiation. We started this market webinar series last quarter with an investor webinar focused on our communications market. The audio and PowerPoint presentations for that webinar are available on the investor relations section of our website. Joining us today in the order in which they are presenting are the following Coherent executives: Dr. Sanjai Parthasarathi, our Chief Marketing Officer, will address Coherent's overall industrial market opportunity.
Martin Seifert, VP and GM of Coherent's newly formed Fiber Laser business unit, will discuss our precision manufacturing vertical business. Dr. Chris Dorman, EVP of our Laser segment, will discuss our semiconductor capital equipment business. Dr. Kai Schmidt, SVP and GM Excimer Laser Business Unit, will address how our excimer lasers are enabling various applications across markets and verticals. Following the conclusion of the four presentations, which are prerecorded, we will host a Q&A session, during which sell-side analysts will have the opportunity to ask questions of Sanjai, Martin, Kai, and Chris. For any investors listening into the call who would like to ask a question, please feel free to send your questions to me at paul.silverstein, silver like the color S-T-E-I-N @coherent.com, and I will ask on your behalf. Please note that we will not be addressing our aerospace and defense vertical in today's webinar.
Far smaller than the other three verticals within our industrial market, and is sufficiently different from those other three to warrant a separate discussion at a later date. The presentations and Q&A session from today will be available for replay on Coherent's website for 12 months. Please feel free to reach out to me following the event. I will welcome any feedback that you may have. I'd like to remind everyone on this call that this presentation contains forward-looking statements relating to future events and expectations, including our expectations of future financial operational results and growth, and the health, growth, and opportunities in the markets we serve, that such statements are based on certain assumptions and contingencies and involve risks and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements in this presentation or in previous disclosures.
Risk factors that could cause actual results to differ materially from those set forth in this presentation are set forth in slide four of the investor presentation, the company's annual report on Form 10-K for the fiscal year ended June 30th, 2023, and as may be identified in filings of the company. Coherent disclaims any obligation to update any forward-looking statements, which, unless otherwise indicated in this presentation, speak only as of December 14th, 2023. It is now my pleasure to turn the microphone over to Sanjai.
Thanks, Paul. Hello, everyone. I'm Sanjai Parthasarathi, Chief Marketing Officer of Coherent. In 2013, I joined what was then II-VI, and then in July 2019, I had the distinct honor and privilege of being appointed the first CMO. Over my 30+-year career in the industry, I've been fortunate to have had the opportunity to work in all the markets that Coherent addresses, in diverse roles ranging from R&D to manufacturing to sales and marketing. Today, I too would like to welcome all of you to our second Markets Day, in which we will provide enhanced transparency and attempt to simplify and make our exciting story even better understood and even more meaningful to the investment community as we continue to seek to enroll new long-term-oriented investors whose interests are aligned with ours.
As Paul noted, today's event focuses on the opportunity for us in one of our four major markets that we operate in, the industrial market. We will review our growth opportunity, key underlying drivers, positioning, and competitive differentiation in this market. We will discuss our current and future innovative technologies, as well as products that address both our growth opportunity, our competitive positioning, and our differentiation in key segments, what we refer to as verticals, that focus on within the industrial market. Let me begin with our total addressable market opportunity across all of our markets, namely industrial, communications, electronics, and instrumentation. We expect our aggregate TAM across all four of these markets to double over the next five years from over $64 billion currently. We further segment our markets by defining verticals within each market.
Within our industrial market, the focus of today's event, the verticals are precision manufacturing, semiconductor capital equipment, display capital equipment, and aerospace and defense. We will come back to these in more detail later. Our communications market includes our datacom and telecom vertical. We are the world's largest manufacturer of optical communications products and with the broadest and the most vertically integrated portfolio in the industry. Our datacom business is currently driven by the growth of AI. Our telecom business is driven by the never-ending need for network upgrades to address the bandwidth requirements and demands of applications and end users. The demand for bandwidth remains insatiable. Consumer and automotive electronics are the verticals that comprise our electronics market. Within our consumer electronics vertical, we enable advanced sensing applications for smartphones and wearable devices, including AR/VR headsets, through our broad portfolio of lasers, optics, and materials.
Silicon carbide substrates and devices for electric vehicles and energy applications are the focus of our automotive vertical, along with our lasers and optics for autonomous and driver-assistance systems. And finally, we segment our instrumentation market into life sciences and scientific instrumentation verticals. Within life sciences, we serve the biotechnology equipment market, PCR test equipment, for example, as well as the medical laser market with our broad portfolio of optics, lasers, thermoelectric materials, and subsystems. Before I discuss our industrial market outlook, I want to briefly look backward and examine recent trends in order to provide context for both our industrial market outlook and the importance of this market to our overall operating model.
Our industrial market accounted for $404 million, or 38% of our revenue in the first quarter of our fiscal 2024, and $1.76 billion, or 34% of our revenue for all of fiscal 2023. Our industrial market revenue sequentially declined over each of the past four quarters. This decline was primarily due to the economic environment, with customers delaying orders and deliveries, and because of the lower utilization of the installed base, led to a decline in the quarterly service revenue. In the first quarter of fiscal 2024, we saw a continuation of this downward trend in the industrial market, with our industrial market revenue having decreased 2% sequentially and 12% year-over-year, driven by ongoing macroeconomic weakness across most of our industrial vertical, including, most notably, display capital equipment and precision manufacturing.
Ongoing growth in the front end of our semi cap vertical was the exception. Now let's look forward. We estimate our overall industrial TAM in calendar 2023 at $22.3 billion. We estimate this TAM will grow at approximately a 9% CAGR over the next five years to over $34 billion in calendar 2028. Within this TAM, our growth and market size estimates for our key verticals are as follows: Precision manufacturing on an 8% CAGR, with this opportunity growing from $9.3 billion in calendar 2023 to almost $14 billion by calendar 2028. Our precision manufacturing vertical consists of a broad portfolio of optics, lasers, and turnkey manufacturing systems, all related to laser materials processing, for applications that range from fading jeans to precision welding of electric vehicle batteries.
Semiconductor capital equipment, a 7% CAGR, with this vertical growing from $4.2 billion in calendar 2023 to almost $5.8 billion by calendar 2028. Our semiconductor capital equipment vertical serves the wafer fabrication equipment market with a broad range of advanced materials, optics, and lasers, from wafer chucks to diamond windows for EUV lithography. Display capital equipment, also a 7% CAGR, with this opportunity growing from $1.2 billion in calendar 2023 to approximately $1.7 billion by calendar 2028. Embedded in this assumption is a very conservative estimate of the adoption of MicroLEDs in large format TVs. Our display capital equipment vertical focuses on enabling display manufacturing processes such as laser annealing for OLED displays and display cutting.
Finally, our aerospace and defense business consists of optics, materials, and lasers for applications in intelligence, surveillance and reconnaissance, satellite communication, contested space, and directed energy. As Paul previously noted, we will not be discussing in this webinar our fourth industrial vertical of aerospace and defense, besides this high-level characterization. Our precision manufacturing vertical encompasses a very broad range of applications across very diverse markets. With complete verticality from materials to turnkey laser solutions, we intersect with any industrial laser process within the application areas of automotive manufacturing, medical device manufacturing, machine tools, consumer goods, and industrial, electrical, and electronics. We enable a wide variety of applications, including EV battery welding, fine cutting of stents, additive manufacturing, high-temperature superconducting oxide wire, and even bleaching of jeans.
Based on the ubiquitousness of the Coherent brand equity for quality laser products, Coherent has excellent penetration in many of these markets going back decades. Our diverse range of opportunities within precision manufacturing offers a stable foundation of revenue growth, upon which we have been investing to realize a sustainable track in high-growth markets. Within precision manufacturing, we are especially focused on addressing certain key high-growth opportunities. These include, most prominently, EV battery manufacturing, which arguably is the largest growth manufacturing market today and for the foreseeable future. A significant portion of this opportunity is welding, where our unique and innovative ARM fiber laser technology provides best-in-class weld quality for the range of challenging conductive materials and material combinations. Martin will take us through this technology later.
We also see opportunity to generate meaningful incremental revenue from our re-entry into the high-power fiber laser market, which offers a largely incremental TAM of over $2 billion, most of which is driven by cutting applications. Some of you may be familiar with our first entry into this market opportunity and the subsequent outcome. The silver lining of that effort is that we have learned from our mistakes. We now have a world-class, vertically integrated supply chain for all the key components of a fiber laser and the manufacturing capability to build at scale. We view medical device manufacturing as an additional significant opportunity within the precision manufacturing vertical. We have decades of experience and have developed the broadest product portfolio for medical device manufacturing applications.
This end market, which has been growing consistently, is now poised for acceleration with the rapid increase in the number of people that need and can elect open access to medical technology. More specifically, we expect increased growth in medical devices to be driven by an aging population and an increasingly health-conscious global middle class, together with the efficiency of telehealth. Let us now discuss the market size, growth forecast, and key drivers of and for our target growth opportunities. For EV battery manufacturing, we forecast 11% CAGR through 2028, using a $300 million TAM in calendar 2023. While much of the current production capacity resides in China, both North America and Europe are investing heavily, and emerging markets, such as India, are also starting to ramp investment.
We recently announced the opening of our first India applications lab at the IIT Madras Research Park in Chennai, India. Our applications lab provides greater accessibility for our customers to engage and develop differentiated processing technologies for our products. We see a great opportunity to gain share in these high-growth markets based on new products and technologies that offer best-in-class cost of ownership. While we estimate the battery welding currently accounts for around 75% of the EV battery TAM, we also see the opportunity for additional incremental revenue from other ramping applications within EV battery manufacturing, such as foil cutting and slurry drying. We believe we are well positioned to grow faster than market for each of these three EV battery manufacturing applications. Let us now turn to high-power fiber lasers, which are mostly used for cutting applications.
These applications represent a large greenfield market opportunity for Coherent, given our re-entry into this market. Here we have two differential incremental revenue opportunities: a fiber laser platform, a new fiber laser platform for the end market and components. For the standalone laser, we estimate the current TAM for our high-power fiber lasers to be around $1.7 billion. Taking into account some overlap with the EV battery opportunity, we estimate the TAM for fiber laser cutting, excluding EV, to be over $1.2 billion. For our components, there is a rapidly growing opportunity for handheld lasers used for welding in China that are replacing manual arc welders. Given a compelling ROI based on labor savings growth estimates, we forecast an over 20% five-year market CAGR for high-power fiber laser components.
Although smaller than the EV and the high-power fiber laser market opportunities, medical device manufacturing presents another sustainable and a resilient growth opportunity for Coherent within our precision manufacturing vertical. We estimate this opportunity as currently having a $300 million TAM that has been growing by approximately 5%-7% CAGR over the next five years. We expect this market growth rate to accelerate, driven by previously noted population and telehealth trends. In addition, we see the potential to leverage our strong product and technology solutions for this market opportunity and gain share and enhance our already leading position as a global supplier of laser systems for medical device manufacturing market. We enjoy a global footprint and are well positioned for the established markets in North America and Europe and the emerging markets of China and India.
I would now like to discuss in greater detail the underlying drivers of laser demand for lithium-ion battery production required for EV manufacturing. Let's first start with the growth in gigafactories for battery production. Gigafactory capacity is slated to grow at an 18% CAGR from now to calendar 2028. We can also see the extensive use of lasers in the entire battery production process, starting from slurry drying to welding to finally marking of the cells. While laser welding is and will remain the dominant revenue in the EV battery market, we expect laser applications in foil cutting and slurry drying to grow and thereby demand incremental demand for our diode lasers and fiber lasers. With our detailed understanding of battery production for each battery technology, we have a correlation between battery capacity and laser volume.
We estimate our current TAM to be around $300 million, growing at 11% CAGR from calendar 2023 to calendar 2028, as referenced earlier. Let us now turn to medical device manufacturing, where we can see a significant number of medical devices available to address a large variety of treatments and surgeries. In contrast to EV production, all medical devices have very different applications, each with a unique set of manufacturing challenges. Across medical device manufacturing, customers place great emphasis on process quality and reliability that translate to lowest cost of ownership and lowest power consumption that align with the laser technology and our core organizational values.
This market was a proving ground for the use of lasers for welding, and today this market has rapidly expanded into cutting, marking, and micromachining as more and more lasers are being applied to enable manufacturability for smaller devices and more diverse devices. We are well-positioned in this market by virtue of having the broadest range of laser solutions and laser technology. Finally, we are excited by the growth of high-power fiber laser applications. As previously noted, this market transcends multiple applications, including battery welding and cutting. Martin will help us with his deeper dive into this market, and he'll share his enthusiasm about our current and planned intersection. I would now like to share my excitement about our semiconductor capital equipment vertical.
As previously noted, we estimate the semiconductor capital equipment vertical presents a $4.2 billion TAM in calendar 2023, that we project will grow by 7% CAGR to almost $6 billion by calendar 2028. This is against a backdrop of a global semiconductor industry, which is projected to become a $1 trillion by 2030. Some of the key mega drivers include the growth of artificial intelligence, digital transformation enabled by the Internet of Things, and the increasing demand for electric vehicles. And the semiconductor capital equipment market is closely tied to the performance of the overall semiconductor industry. More specifically, the semiconductor capital equipment market opportunity for Coherent depends on factors such as the demand for semiconductors, technology advancements, and capacity expansion.
As the semiconductor industry continues to evolve and innovate, the capital equipment market also evolves and will need to continue to innovate in order to meet the growing requirements for more advanced and efficient manufacturing processes for next-generation devices. Coherent is well positioned to do it all. Our semiconductor capital equipment vertical includes all of the lasers, optics, and materials used for semiconductor capital equipment tools to produce semiconductor devices. The process flowchart shows where our products are used in both front-end-of-line and back-end-of-line semiconductor manufacturing process, spanning wafer inspection, EUV and DUV lithography, and marking on packaged devices. Not only do we play a significant role in enabling various parts of the semiconductor process flow, but in addition, some of our products are helping our customers to push the limits of equipment performance for the emerging next-generation process node.
Enhancing the outlook for the semiconductor industry, and thereby our semiconductor capital equipment vertical opportunity, geopolitical trends have led to over $100 billion of announced investment by governments throughout the world in onshoring new fabrication facilities and expanding existing onshore facilities. I already highlighted that semiconductor sales are projected to grow to $1 trillion by 2030. What does this $1 trillion semiconductor market mean for us? Our materials, optics, and lasers all play a significant role in enabling the tools for the industry to march towards this $1 trillion milestone. Underlying our projection of a 7% CAGR for the entire semiconductor capital equipment market, annual total semiconductor capital equipment spend historically has been highly correlated with the annual global semiconductor industrial revenue, with the former typically 15% of the latter.
Accordingly, we are expecting a semicap equipment CAGR in line with the semicap industry CAGR revenue through 2028. Front-end of line, which accounts for the bulk of our semicap equipment revenue and where we enjoy a market-leading position, represents 85% of the semiconductor equipment capital expenditure. We believe that we are uniquely positioned in the front end of the market. This is where our customers are pushing the technology envelope, and our unique materials, lasers, and optics perform a differentiating function. Commensurately, last fiscal year, 85% of our semiconductor capital equipment revenue came from front-end of line applications. Our strength in the front-end of line processes, including lithography, inspection, and annealing, positions us to grow faster than the market. These processes are fundamental to manufacturing advanced semiconductor components, ensuring that we are at the forefront as the industry progresses.
Fiscal 2023 was a record year for our semicap revenues, with double-digit year-over-year growth, and we expect to reach new highs in fiscal 2024. Simply put, we are excited and very optimistic about our outlook for our semicap vertical. Chris will showcase some of the key enabling technologies for semicap equipment later. Let's move to the display capital equipment vertical. As previously noted, we estimate our display capital equipment vertical presents a $1.2 billion TAM that we project will grow to almost $1.7 billion by calendar 2028, which amounts to a 7% CAGR from calendar 2023 to 2028. Our display capital equipment vertical is all about laser sources and optical systems that will be used to produce displays. Service is also a very important part of our display capital equipment business, and Kai will discuss that later.
Overall, end market display demand is slated to grow from $120 billion in calendar 2023 to over $140 billion in calendar 2028, a five-year CAGR of 3.6%. During the same period, the increasing growth of OLED displays and our strong position in that segment results in our TAM revenue estimate of a much higher 7% CAGR. Let's now look at the OLED manufacturing process. OLEDs are built on thin-film silicon backplanes. In particular, for medium-sized displays, such as smartphones today and more automotive and IT displays in the near future, a low-temperature polysilicon, LTPS, backplane is used for high pixel density and fast switching. In the LTPS process, amorphous silicon is deposited and then annealed in situ to form polysilicon.
This annealing process is the most critical process for LTPS OLED display manufacturing, and for us, it accounts for over 80% of our display equipment revenues. The majority of OLED phones have flexible OLED displays, thus a laser lift-off process is also required. Then these large panels need to be cut into smaller panels before finally being cut into typical smartphone shapes. State-of-the-art mobile phones strive to guarantee a large active area. Accordingly, cuts must be precise and without damage. UV lasers are therefore the preferred choice, and here again, we offer an optimized portfolio of laser sources. Let's now look at the specific segments of the display end market. The largest share of the total display demand is contributed by mobile phones, where laser equipment plays a critical role.
We stand to benefit from key trends in the display market, including the increasing penetration of OLED into smartphones and, in the near future, into larger form factor IT displays such as PCs and tablets, as well as the proliferation of OLEDs for AR/VR displays and automotive displays. After a few years of macroeconomic-driven weakness in the display market, we expect modest market recovery over the balance of fiscal 2024 and are excited by coming Gen 8 OLED fabs for laptop and notebook computers and the eventual adoption of MicroLEDs for large format TVs. We have already started receiving orders for Gen 8 OLED fabs that will manufacture OLED panels for IT displays such as tablets and PCs. Let's look at the evolution of display technology. CRTs were the first modern displays, followed by LCDs and then by brighter and lower power-consuming OLEDs, including foldable smartphones.
We are at the cusp of a new display technology, namely immersive MicroLED displays. New technologies will only be used if there are distinct and compelling advantages for the consumer, which in the case of OLED, is high-quality content imaging. MicroLED technology will first be used in watches, with a couple of the largest consumer electronics companies already having announced planned adoption, followed eventually by larger TVs and automotive displays due to the extraordinary brightness and the image quality of such displays. Let's now look at the advantages of MicroLEDs, which are the next natural evolution in the display market. These displays, in addition to brightness, offer a whole host of advantages, including the smallest pixel sizes, ability to integrate with micro lens arrays for maximizing brightness, and integration with in-display sensors.
At a very high level, we estimate that if 0.5% of the annual TV market adopts MicroLED technology, that shift will translate into a $500 million TAM for our products. Here, we can see the typical size of the pixels for three different display technologies. I'm sure you can appreciate all the extra real estate that is now available for sensor integration. A big difference between MicroLEDs and OLEDs are that MicroLEDs are grown on epi wafers, so for small displays, such as within an AR/VR headset or a watch, one can easily size chips and assemble. However, in order to build a large display like a TV screen, these MicroLEDs have to be transported from the epi wafer onto the thin film transistor backplane, or in other words, mass transfer is mandatory.
In addition to the need for laser annealing, mass transfer opens up a huge opportunity for us. Kai will further detail these in his presentation. Here we show all the processes in a MicroLED manufacturing process for TV screens. Besides laser annealing and laser lift-off, two additional critical steps are enabled by our UV lasers. These are mass transfer and laser repair. Due to the materials and the microscopic dimensions used, lasers, especially UV lasers, are mandatory, not only for the transfer, but also for laser lift-off.
Finally, as a wrap-up, I would like to showcase smartphone production as a great all-encompassing example of the role our laser solutions play in precision manufacturing, semiconductor capital equipment, and display capital equipment, three verticals of our industrial market group that we reviewed today. Thank you for your attention. Now, let's hear from Martin Seifert on some exciting news from our precision manufacturing vertical and our newly created fiber laser solutions business unit. Over to you, Martin.
Thank you, Sanjai. Hello, my name is Martin Seifert, head of the newly formed Fiber Laser Business Unit. I've been in the specialty optical fiber and high-power fiber laser industry since the late 1990s. I'm very excited about my new role and the complementary tools that have come together as a result of the acquisition of legacy Coherent. The Fiber Laser Business Unit was recently created with the purpose of realizing what we believe will be one of the most significant long-term sales synergies of the combined companies. Let me give you some perspective on the way we segment the market and share how we will address each opportunity. As Sanjai indicated, the precision manufacturing vertical covers a variety of applications. To understand, track, and identify growth opportunities, we segment this vertical into six sub-verticals. Automotive manufacturing encompasses the production of cars and light vehicles.
The machine tool sub-vertical includes servicing the integrators that produce large format machines, such as flat sheet cutters, production line builders, or automation houses who stretch the technology into three dimensions via robotics, vision, and other sensors. Medical device manufacturing covers the production of stents, catheters, implantable devices, and surgical instruments. Consumer goods refers to products such as home appliances. Additive manufacturing, as well as industrial, electrical, and electronics, are self-explanatory. Our global footprint, service infrastructure, and competitive product position in each sub-vertical market, combined with our customer intimacy, provides ample opportunities to drive shared gain. Our special interest in automotive manufacturing, electrical components and systems will be addressed later. In precision manufacturing, we provide our customers with products at every level of the value chain, from bulk optical materials to laser solutions and everything in between.
Our diverse laser product families intersect with every sub-vertical wherever there is a laser being used for manufacturing. This is reflected in the significant $11 billion integrated machine market. As legacy II-VI and legacy Coherent, we independently enjoyed decades of success in these sub-verticals. Now integrated as one, we are able to pursue several new high-growth opportunities. Today, we will focus on the combined growth areas around high-power fiber laser applications served by our new business unit. The global market for high-powered fiber lasers is around $1.7 billion today. Several years ago, high-power fiber lasers eclipsed all other laser technologies at providing reliable, high brightness, cost-effective laser solutions for cutting and welding. The industry has developed such confidence in this technology that in some cases, particularly in automotive applications, materials are used that can only be cut and welded effectively with fiber lasers.
Examples are the new lightweight and safe boron steels. The welding and cutting market categories served by fiber lasers each have specific and isolating attributes. Cutting applications dominate the market, though more recently, e-mobility copper joining applications have moved the needle more towards welding. With regard to welding, cut sheets are often subsequently stamped, folded, and joined with a welding process to form sturdy shapes for myriad functions. A production line could have between two and perhaps 20 of a given laser system installed and typically requires a rigorous qualification process executed by experienced professionals in well-equipped labs. Cutting represents by far the highest unit volumes, accounting for approximately 75% of total industrial fiber laser consumption. This is a market in which we currently do not participate, but as it will become clear later, represents a great opportunity for us.
While there is strong competition from both Western and Chinese laser companies, we are well-positioned with significant patent protection in the U.S., Europe, China, and Japan for the adjustable ring mode laser or ARM laser. This enables us to expand our excellent market position in prismatic and cylindrical battery cells and to gain market share in other copper joining applications. Underlying our view, the rapid growth of electric vehicles and the production ramp-up required to meet the forecast demand for batteries, motors, and power electronics is very well known. The rapid growth in the EV battery market that Sanjai mentioned will require significant numbers of laser systems for production. Battery facilities are now known as gigafactories for the gigawatts of energy storage they build.
We can draw a direct correlation between new battery capacity installation and the required number of laser units to build them. As a result of the acquisition, Coherent enjoys access to the most sophisticated joining markets, including the still young, high-growth EV battery welding market, with our patent-protected ARM laser technology. The ARM laser is essentially two lasers in one: a ring-shaped outer beam that accomplishes what is known as preheat and post-heat for annealing, and then a small, very bright central beam that performs the welding step. The independent control of the ring and the center beam, in addition to other key features, have proved revolutionary to laser welding for both weld quality and metal combinations that were previously considered to be unweldable. This is one of the two key features of our main patent.
The second key feature of this patent is the uniform laser intensity distribution around the ring beam of the ARM laser. This feature is what enables the creation of a circular weld with precisely controlled and exceptionally uniform penetration, as required for a battery can- cap, for example. The ability to create high-quality, penetration-controlled circular welds is extremely valuable in electrical systems in general. Overall, the ARM laser is the ideal solution for welding copper to itself and with other metals, such as aluminum. Precisely controlled penetration, lowest spatter, and near zero induced porosity ensure electrical connections of the highest integrity, capacity, and lowest risk of subsequently shorting. It also performs superb, controlled penetration welding of classical ferrous metals and aluminum alloys, including the 5,000 and 6,000 series of very challenging materials for the same reasons.
When welding, the precise and narrow working beam creates the least possible heating, which minimizes distortion in precision assemblies. This attribute also enables many applications previously only accomplished with very expensive e-beam weldments done in vacuum chambers. The same advantage benefits high-speed additive manufacturing as well. We see opportunity and are excited by our potential to increase our depth and breadth of customer adoption, and thereby drive meaningful revenue and profit growth in the industrial fiber laser market. Four companies currently control around 75% of the global industrial fiber laser market. Two are Chinese, having emerged in the past five years. Two Western suppliers hold legacy positions. Key competitive trends in the market include the following: First, little, if any, VC funding is flowing into Chinese fiber lasers today. Second, little government subsidy for Chinese internalization of fiber laser technology remains available.
Third, while China is still a very large market, the market outside of China is growing with higher quality revenue. Significant product differentiation drives our market opportunity. Our fiber laser products already meet or exceed the highest technical and lifetime performance requirements from the industry's most demanding global customers. We've already begun implementing numerous projects which are driving down our manufacturing costs while maintaining the industry-leading performance our customers have come to expect. The effect of this will be twofold. We will improve the competitive position of our existing high-performance fiber lasers, while we also enable a much broader customer base, bringing the type of welding and cutting performance within reach of those with more modest acquisition budgets. Thanks to the combination of legacy II-VI and legacy Coherent, we can combine best-in-class laser and laser processing heads to deliver precision laser beams to the materials that matter.
We are now delivering the fully integrated, high-productivity laser solutions that industry-leading companies demand. Rather than sell the laser and scan head as two disparate pieces of hardware, our software combines both control and functionality to achieve optimal system performance. Most recently, we initiated an AI program to both write integrating code and to simplify the application interface between the machine and our clients. Additionally, we now tune all system hardware in unison to improve our world-class performance, which many of our competitors will struggle to match. A great example is the introduction of our new in-process weld monitor, SmartSense+, powered by AI. As I already mentioned, we recently created the Fiber Laser Business Unit. This will accelerate our new product insertion cadence. We are upending old beliefs about copper welding with the spectacular results in batteries and electronics that we've already shown.
Developments aimed at higher power, higher performance, and improving the cost of ownership are achieved by incorporating the best of our technology, from fibers to electronics and everything we manufacture in between. Our opportunity to grow in the welding market is due to the combination of three key factors. First, we are world leaders in copper welding, both in thin sheet and busbars, which is very important for both prismatic and cylindrical batteries for e-mobility. Second, we also lead in the market for fine welding of legacy, new, and difficult materials. And third, we are in a great position to enter the laser cutting market. While we are growing in the welding market, we recognize that the laser cutting market offers an over $1 billion TAM opportunity today, which we expect will provide healthy growth for the new business unit.
In fact, laser cutting systems are forecasted to grow at 11% CAGR from 2023 to 2028. This is a significant greenfield opportunity for Coherent, and we are aware that supplying fiber lasers to the cutting market is competitive. We believe that the combination of legacy II-VI and legacy Coherent has changed the equation favorably. This was, in fact, one of the sales synergies that we envisioned from the merger, and we've wasted no time working on it. The reason we believe we can succeed in the laser cutting market is that more than 95% of our high-power fiber laser bill of materials can be manufactured in-house on platforms that enjoy the benefits of scale. Since the first gallium arsenide epitaxy on six inches ran through our Zurich wafer fab, we've enjoyed world-leading performance for pump chips.
In fact, our newest 65 W chip is unrivaled and will soon be assembled on our new manufacturing lines in the Philippines. Similarly, our specialty fiber manufacturing capacity from East Granby, Connecticut, enjoys product leadership and operational scale, with many draw towers offering sufficient volumes for very high ramp rates into new markets without the need for substantial capital investment. Our new custom fiber for this market is now in the prototype labs. Our optics centers in Fuzhou, China, and Vietnam provide multi-source, high-volume lens and other bulk optics components needed for the manufacture of laser pumps for the high-power fiber laser program. Components from these organizations are already integrated into our prototype units. Our competitiveness and economies of scale at all levels of the value chain will enable us to penetrate the cutting market.
We expect that this will drive even larger volumes, improve utilization, and contribute positively to our margins. In addition to our experience building and supplying these components at scale, we have the in-house knowledge and expertise to design and build fiber lasers and amplifiers. We also leverage our significant global presence in sales and service. This provides the necessary technical foundation, costing model, and infrastructure that we believe will enable a new, compelling, high-value fiber laser with leading price performance. As a large fraction of the cutting market is in China, it is important to have a manufacturing presence there. We are planning to establish our first such line within our datacom-scale Wuxi plant, near Shanghai. At this facility, we already have a mature, trained, and fiber-literate workforce, an established high-volume manufacturing facility, and full support infrastructure.
We also plan to further expand into new regions, such as India, where we have recently announced the formation of a tech center in response to growing interest and demand. While we are not ready to announce this new fiber laser quite yet, the development is well underway. Prototypes are in several labs working today. We believe it will not only enable a more profitable laser cutting business for our customers, but also put us in an even more competitive position in the market for welding. This is an attractive market for us. In other words, we believe that success with a low-cost platform in cutting will help us in welding, creating a virtuous cycle of winning in fiber lasers. It's quite exciting. In summary, we hope you take away from this talk the following key points: Lasers are increasingly used in precision manufacturing.
Coherent is growing and gaining share in welding applications for automotive. EVs are increasing the number of use cases. We created a dedicated business unit to add focus and speed up time to market. Coherent is planning to enter the laser cutting market. This was, in fact, one of the sales synergies envisioned from the merger of II-VI and Coherent Inc. We believe that success with a low-cost platform in cutting will help us in welding, creating a virtuous cycle of winning in fiber lasers. Our improved competitiveness and economies of scale for the larger volumes in cutting will contribute to healthy margins. Next, Chris Dorman will give you an overview of our business in the semiconductor capital equipment vertical.
Thank you, Martin. Hello, I'm Chris Dorman, Executive Vice President of Coherent's Lasers Business. I would like to take some time today to explore Coherent's semiconductor capital equipment vertical or semicap vertical in the industrial market. First, let's take a step back and look at the entire semiconductor industry. Based on a combination of industry forecasts and internal estimates, we believe that the semiconductor industry is on track to become a $1 trillion market by 2030, with a projected 10% CAGR, up from just over $500 billion in 2023. As Sanjai mentioned earlier, based on other industry forecasts and internal estimates, we believe that our semiconductor capital equipment vertical TAM amounts to approximately $4 billion in calendar 2023, and is expected to grow at a 7% CAGR over the 2023-2028 period.
Our solutions for the semicap market vertical span primarily industrial lasers along with materials. Key growth drivers in the semiconductor capital equipment vertical include technology trends and new product introductions. In this market, we've seen strong secular growth over the past several decades. In the 1980s, the semi-industry was dominated by the personal computer production, and the PC started its journey to the home. The growth of the internet in the 1990s was followed by the introduction of the smartphone in the mid-2000s, driving the insatiable thirst for silicon.... The cloud and data centers continued this growth through the 2010s and up to this day. Now we see ubiquitous silicon. This trend keeps mature node fabs humming along.
Looking ahead, AI and the voracious need for mobile and intelligent computing power at lower power consumptions and costs, drives investment in cutting-edge nodes, which in turn drives the demand for innovations in capital equipment. McKinsey projects that approximately 70% of the future market growth will originate primarily from three industries: automotive, computation and data storage, and wireless. Automotive is the most promising, with sales growth much higher than the industry average, driven by applications such as autonomous driving and e-mobility. McKinsey's analysis also shows that 5% growth in computation and data storage market will come from demand for servers to accommodate AI and cloud computing applications. In the meanwhile, smartphones will account for most of the growth in the wireless segment.
Augmenting the growth outlook for semiconductor capital equipment market, governments around the world have announced programs to incentivize approximately $200 billion of investments in chip manufacturing fabs. These are onshore investments in new fabs or the expansion of existing fabs. Driving these investments in recent years, in addition to market demand, are geopolitical conflicts that have led governments to evaluate the resiliency of supply chains critical to their economy. Over the same period, the shock of COVID-19 created strong imbalances in the semiconductor supply chains, which were severe enough to shut down manufacturing lines in the automotive industry. The result was a wave of announcements by governments worldwide of plans for reshoring key semiconductor industries. In the U.S., we have the CHIPS Act, in the E.U., we have the European CHIPS Act, and there are multiple other initiatives around the globe.
As previously noted, we estimate the total available market or TAM for semiconductor capital equipment to be over $4 billion in calendar year 2023, and to grow at the compound annual growth rate of 7% through 2028. The semicap market breaks out into what is called the front end of line, or FEOL, and back end of line, or BEOL. 85% of our TAM is from front end of line applications. front end of line comprises process steps up to and before wafers are diced into components. back end of line represents all the steps from wafer dicing to packaging. This slide illustrates many of the process steps where we provide innovative and differentiated materials, optics, and lasers.
Over the last five decades, the continuous advancement in semiconductor manufacturing through process node scaling, commonly known as Moore's Law, has delivered remarkable improvements in semiconductor performance and cost. The 3 nm process is today's most advanced semiconductor technology. Note that such advanced nodes are only part of the equation. Mature nodes, older and less advanced semiconductors, are both ubiquitous and essential in multiple products, including automobiles, computers, and the Internet of Things. As you would expect, technology is front end of line and back end of line. Therefore, in addition to the macro investment trends that I described earlier, there are also the technology trends influencing the market. In the next few slides, I will highlight some of the key technology trends and the role Coherent plays.
These trends can be summarized as follows: First, shrinkage of integrated circuits is increasing the upfront investment in chip tape-out, which is driving more upstream laser-based inspection in the front end of line. Second, the latest and next generation semiconductor nodes are produced with extreme ultraviolet lithography, which depends on the high-performance ceramic materials and advanced CO2 laser optics, that in turn depend on novel materials. Third, smaller nodes also drive the demand for new laser technology and ceramic materials for chip-level processing and in packaging. And fourth, service is a key element of the customer relationship and our differentiation. Customers require suppliers who have the resources and scale to keep up with significant technology investments, and who will be around to service equipment during the decades that they will be on the manufacturing line.
Wafer inspection has become, and should continue to be, a significant driver of our semicap revenue growth. Underlying this statement is the fact that, first, wafer inspection is a significant driver of overall semicap market growth, and second, we are a leader in the semicap vertical, and third, lasers for wafer inspection account for a significant portion of our revenue in the semicap vertical within the industrial laser market. Coherent has a large installed base of lasers for inspection that support the most advanced processing nodes, including for deep ultraviolet and extreme ultraviolet lithography processes. We had record shipments of lasers for inspection in the first quarter of FY 2024 and have a strong pipeline of design wins in NRE. Economics is another reason driving the demand for wafer inspection tools. With each generation of smaller nodes, the tape-out cost grows significantly.
This is because the number of process steps increases as transistors become smaller. At nodes below 16 nm, semiconductor manufacturers continue to incorporate various new architectures, new materials, and complex masks. The challenges associated with these advanced technologies impose significant cost pressures on the semiconductor industry. For this reason, inspection for manufacturing defects is required after each wafer manufacturing step, which therefore drives demand for our lasers. The information collected is essential to improve yield, throughput, and eventually profitability. Ongoing decreases in process node sizes also drives the need for ongoing upgrades to the lasers critical to the wafer inspection, to higher performance lasers. Twenty years ago, when the node sizes were more than 22 nm, wafer inspection was conducted with pure green light at 532 nm.
As node sizes decreased, the wavelength of the light needed to inspect for defects decreased to be able to identify smaller defects. This drove the inspection industry to adopt ultraviolet lasers. We launched the Azure Laser in 2002 to address this specific need. Since then, node sizes have continued to decrease. Today, we are an order of magnitude smaller in node size, having gone from 22 nm to 3 nm, and the requirements for the laser sources in the heart of the inspection tools have become even more stringent. This is well aligned with our core competencies and value proposition as a sustainable source of competitive advantage. We align our laser roadmaps with tier one customers in the wafer fab equipment industry to ensure that the inspection elements of the semiconductor fabrication process stay in line with advancements in lithography.
Extreme ultraviolet lithography, or EUV, has become an additional driver in Coherent's growth outlook for our semicap vertical. As we have observed on previous occasions, our EUV lithography revenue scales approximately between 1%-2% of the price of the EUV end-user system. The cycle time to produce an EUV lithography system is on the order of 18 months, so we receive orders based on estimated forecasts for EUV systems approximately two years out. Our EUV lithography revenue stream has two primary components. While we do not manufacture the particular CO2 laser essential to EUV lithography, we are the largest supplier of laser optics for these systems. In addition, we supply the ceramic materials used in EUV lithography systems. EUV lithography became mainstream with 7 nm nodes.
It has since evolved to enable 5 nm nodes, and to the best of our knowledge, will continue to be on the technology roadmap for future 2 nm nodes and below. The high-power CO2 laser in the EUV lithography system is aimed at a stream of tin droplets produced at a rate of tens of thousands per second. The CO2 laser hits the tin droplets while in free fall, which generates extreme ultraviolet light that is then directed to the lithography mask. The CO2 laser in EUV lithography machines is very complex and requires hundreds of optical components, such as lenses and mirrors. We are the largest supplier of laser optics for these systems. In addition, what's not so well known is that CO2 laser systems for EUV lithography require large area polycrystalline diamond windows. Coherent is by far the largest supplier of these diamond windows for this application.
Our diamond growth reactors are based on our own proprietary designs and processes. EUV lithography's need for our differentiated ceramic materials also contributes to our semicon CapEx revenue opportunity. The extreme ultraviolet light generated by the interaction of the CO2 laser and the tin droplets is collected and guided through a complex set of optics. The stability of the structure supporting the optical system is critical and only possible with very special ceramics. Coherent manufactures such ceramics, which are based on a technology called reaction-bonded silicon carbide . These are not the single crystal silicon carbide used in power electronics. This is polycrystalline silicon carbide, a ceramic that undergoes a casting process to make large components that provide structural support for EUV optics and sensors. Back-end of line processing steps present an incremental revenue growth opportunity for Coherent.
As we have observed on previous occasions, currently, our back-end of line revenue remains moderated. However, we expect to see eventual improvement in back-end of line demand, driven by eventual macroeconomic improvement. This includes the market recovery for cell phones, computers, and other devices that are critical to driving demand for the semicap vertical. Meanwhile, we've been evolving our line of ultra-fast lasers for several back-end of line processing steps, such as wafer dicing and device debonding. We also offer a suite of lasers for many packaging applications, from drilling to cutting and marking. Back-end of line systems also require innovative materials to keep up with scaling and throughput on the manufacturing line. As the nodes become smaller, process steps on the back-end of line take more time. This is simply because there are more chips to dice, inspect, package, and test.
To mitigate this, back end of line semiconductor equipment manufacturers have increased the speed of their robotic equipment to the point that parameters like heat, conductivity, weight, and rigidity of the materials used in their systems have become increasingly critical. For these applications, back end of line equipment manufacturers have turned to Coherent's metal matrix composites , which have the strength of steel and the weight of aluminum. Once again, we work closely with customers to deliver differentiated lasers and materials that are unique for their application. This can only be achieved on the basis of long-term partnerships. In fact, we partner very closely with our customers to jointly develop long-term roadmaps. We then invest in the development of products that will intersect with these roadmaps. Our semicap service revenue makes an important contribution to Coherent. Our service revenue scales with the laser installed base and varies with utilization...
This diversifies our revenue and enables us to maintain a steady level of investment in new technology, which in turn strengthens our relationship with our customers. The service component of the semicap laser inspection business is just as important to our customers, because they need assurance that their significant semicap investments won't be stranded for lack of parts or servicing. This customer intimacy gives us long-term visibility in terms of technology evolution. These are partner relationships that last for 20 years or more. Speaking to ongoing secular strength in our semicap vertical, in fiscal year 2023, despite a cyclical downturn year, our semicap revenues attained a new record level on the back of 11% year-over-year growth.
Driving this performance, our strength in front end of line, which accounts for the bulk of our semicap revenue, more than offset the softness in back end of line. In fiscal year 2024, we expect to reach a new record revenue level on the back of strong global semiconductor recovery and investments. In addition to ongoing strength in front end of line, we expect the back end of line business to bottom in the current fiscal second quarter, as production cuts have worked their way through the supply chain. Coherent is well positioned to capitalize on the growth in 2024 both front end of line and back end of line products, and we remain extremely optimistic about the outlook for the semicap business. Next, Kai Schmidt will give you an overview of our business in the display capital equipment vertical.
Thanks, Chris. Hello, everyone. I'm Kai Schmidt, Senior Vice President and General Manager of the Excimer Business Unit in Göttingen, Germany. We have, for more than 50 years, been developing and producing special types of gas lasers called excimer lasers, which we have also recently extended to a solid-state offering, too. What do displays, carbon-free energy generation, semiconductor manufacturing, and ophthalmology have in common? They all benefit from the unique technical properties of excimer lasers, namely the laser's short wavelengths in the ultraviolet range of the spectrum and the high pulse energy. Excimer lasers require regular maintenance, including refurbishing and replacement of parts. Therefore, every excimer laser installed is the source of a service revenue stream for many years. In this talk, I will give you an overview of the market verticals we are serving.
We think about these markets as those that are mature, those that are emerging, and others that are further out beyond the horizon. We enjoy a strong market position in the mature markets. We are getting a strong pull for our new products to serve the emerging markets, and we are already in a strong position to enable future markets that have high growth potential. I want to start with an overview of the growth outlook for our Excimer Laser business. All opportunities combined, we expect to outperform the growth rates mentioned on the previous slide. In fact, we expect our Excimer business revenue to grow by approximately 70% over the next five years compared to the current levels. While the short-term outlook for our business is mixed, the long-term outlook over three to five years remains positive.
The short-term outlook is affected by the general economic downturn, especially the low number of smartphones sold. We expect this to be offset by new fab investments into new Generation 8 display fabs, which have already been announced and are required to enable OLED technology in IT displays. Excimer lasers, in combination with line beam systems, have enabled OLED smartphones. They will continue to play a strong role in OLED adoption into IT displays. MicroLED-based TVs are expected to gain market shares three to five y ears from now. With our mass transfer technology for MicroLED, we are supporting this new technology, and we expect a significant increase in revenue over a five-year period, following the first commercial shipments in 2025. In the short term, we see a growing demand for our lasers required for pulsed laser deposition.
In this application, we foresee a constant growth over the coming years in the field of renewable energy. Excimer lasers are the perfect choice for manufacturing superconducting tapes for future fusion reactors. The growth is expected to greatly accelerate once the first fusion reactor, based on magnetic confinement, has demonstrated net energy generation. The medical market is expected to grow moderately due to the aging population requiring eyesight correction. Meanwhile, our incremental business growth is expected to come from a new large customer in the U.S. that clearly positions us as a market leader. In the semiconductor area, we are developing lasers for the next generation of inspection tools, which are expected to materialize five to eight years from now. With this business opportunity, we are entering a new application for excimer lasers.
I will introduce you to all of the mentioned technologies and products in the coming slides. Let's start with a mature market for laser annealing of OLED displays, where we already have a large installed base of our VYPER line of excimer lasers. The terminology laser annealing describes a process step in display manufacturing for smartphones and tablets. Every current smartphone display produced today has been processed using an excimer laser. Excimer laser annealing is a necessary process in creating transistors that control the individual pixels of a display. Annealing enhances certain key transistor properties by orders of magnitude. The excimer laser beam is shaped into a long and thin line of ultraviolet light for this process step. This is done in an optical system called a line beam.
Coherent's innovation on laser synchronization and beam guiding enabled the development of a suite of line beam systems that can cover every glass generation up to Generation 10. This development not only enabled but significantly contributed to the success of OLED technology in smartphones. With this technology, based on our VYPER excimer lasers and line beam systems, Coherent, together with the integrators in Korea and Japan, have defined a de facto process of record for the annealing step. The term process of record is used to refer to a process that is proven and locked in. The process of record is based on the strength of the excimer laser, the wavelengths, and the high pulse energy. OLED displays are nearly perfect displays. They show really black and have a high dynamic range.
Today, approximately 50% of all smartphone displays produced, or 500 million per year, are already based on OLED technology. Still, their adoption continues to increase. OLED technology is now beginning to be adopted in displays for tablets and notebooks. Next, I will discuss how this new demand for OLEDs in larger consumer devices is driving new requirements. Coherent has a very close relationship and insight with all major display manufacturers for OLED displays. Based on their feedback, as well as market analysts like DSCC, we expect the market for OLED-based displays for tablets and notebooks, or IT displays, to grow at a CAGR of 40% over the next few years. The transition is taking place while the overall IT display market remains flat. The size of each IT display is multiple times the size of a typical smartphone display.
Although the total demand for IT displays will be significantly smaller than for smartphone displays, the total demand by area will be. We believe it will become approximately as large as for smartphones. So, because our line beam business scales by display area, we foresee new investments in display fabs, while the rising demand of OLED technology for IT devices. In fact, such investments have been announced by major display manufacturers in China and Korea. These fabs will use larger glass size, Generation 8, to benefit from the economies of scale and to manufacture IT displays at a competitive cost. Coherent has developed a new version of the line beam, the LineBeam 1300-G8, which is powered by our new laser, which we call PYTHON. PYTHON is not a gas laser.
It's based on solid-state technology and uses several inventions, which have been only possible due to the experience and vertical integration at Coherent. PYTHON, in combination with the proven line beam technology, enables the same annealing process as established with VYPER, which, as I mentioned, is the current process of record. The benefit to our customer of this laser technology is a significant increase in uptime and reduction of total cost of ownership. This, combined with a larger glass size, Generation 8, leads to a 50% overall cost reduction per annealing, per annealed display. This speaks to our technology leadership, customer intimacy, and operational excellence. So far, we talked about the maturing market of OLED screens for smartphones and the super exciting and emerging markets of OLED screens for IT devices.
Now, we will move to another exciting new display technology on the horizon, one which is based on MicroLEDs. As Sanjai mentioned earlier, large format TVs based on MicroLEDs offer performance comparable to the best OLED TVs on the market, but they have substantially higher levels of brightness, and that is the key differentiator that consumer wants. Because of their brightness, we believe that MicroLED will be adopted in mass production for high-end TVs and ultra-large wall displays in the next three to five years. We expect that these high-end TVs will be greater than 60 inches in size and will support at least 4K resolution. MicroLEDs are tiny LEDs with sizes today in the range of 10 μm-50 μm and a clear roadmap to 5 μm.
Handling and manipulating such small objects with high precision can only be done with lasers, and in fact, owing to the properties of light, lasers with a wavelength in the deep ultraviolet wavelength range. So in addition to laser annealing, we invented another new process called laser transfer, which operates in a deep ultraviolet. With all our capabilities to design very high-precision optical systems, Coherent enabled what is called the laser-induced forward transfer process for these tiny MicroLEDs. This new process enables the transfer of MicroLEDs from the wafer to the final display with incredible precision and speed. In fact, our laser transfer process is two orders of magnitude faster than any other existing technology. Based on our very conservative estimate of the percentage of premium TVs that will adopt MicroLED technology, our cumulative business opportunity over the next 10 years could reach $1 billion.
This business opportunity is in addition to lasers for annealing, because MicroLED displays require similar high-performance transistor as all the display do. I have been talking quite a lot about displays because it's a large and growing market, well-suited for our differentiated capabilities. At Coherent, an element of our strategy is to invest in technology platforms that address multiple end markets and can drive better than industry average returns over the cycle, based on standardization and reuse. A prominent example of such a platform, the excimer laser, enables key applications in multiple markets, some current and many emerging. I show here three other applications for our excimer lasers: refractive surgery, semiconductor inspection, and diamond marking. All applications, as different as they might be, have in common that they need very short wavelengths UV light for the process.
For these applications, we offer argon fluoride lasers, which emit at 193 nm. This wavelength is very difficult to achieve cost-effective by other laser technologies. In ophthalmology, the short wavelengths enables the precise ablation of a very shallow part of the cornea to permanently correct vision. Coherent has a solid market share across all major OEMs for LASIK devices. We believe that we will further expand our market share over the coming three to five years in the U.S., based on our current engagement with a major U.S.-based LASIK company. In semiconductor inspection, the same UV wavelength reveals defects on the production lines of computer processors and memory chips. This application is expected to grow with the increasing demand for semiconductor chips.
In diamond marking, which is for us a niche market, the short UV wavelengths enable the very precise ablation of a tiny fraction of the hardest material on Earth. One application is marking diamond gems with unique identifiers. Now, we are switching gears again and coming to an application that also leverages the short wavelengths and the high pulse energy of excimer lasers. The process is called pulsed laser deposition, or PLD. This process creates layers of materials with a level of quality and composition control that cannot be achieved with other methods. There are two prominent applications. PLD is used to produce high-temperature superconducting tape. This tape enables the manufacture of magnets for compact nuclear fusion reactors. For this application, our 308 nm LEAP laser is the perfect source.
It meets the requirement of tape manufacturers in terms of cost and throughput. Already, the first magnetic confinement nuclear fusion reactor, announced by a company in the U.S. called Commonwealth Fusion Systems, requires 10,000 km of this superconducting tape. Every future fusion power plant using a magnet confined tokamak reactor design is estimated to require 20,000 km of superconducting tape. This demand translates into a future business volume for our LEAP lasers in the double-digit million dollar per year range. Another application, scaling midterm, also in the double-digit million-dollar range per year, is the manufacturing of piezoelectric filters for 5G, 6G antenna for mobile devices. For this application, a different material combination is used, requiring an even shorter wavelength at 248 nm, which can be generated by our krypton fluoride LEAP laser.
The advantages of the filters manufactured by PLD are, again, the high-quality structure and the low material waste in comparison to other processes. These are examples of the interesting intersections that we are exploring between legacy Coherent, a laser systems company, and legacy II-VI, a materials components company. I have given you the highlights and the application of our excimer lasers and optical systems in various applications and industries. All gas lasers have one thing in common: they require regular maintenance, since the gas discharge always creates tiny amount of debris, which eventually require the replacement of gas discharge tubes and windows. We provide this maintenance, which is performed by our strong worldwide service organization. We offer customer support on-site, 24/7, for maintenance, fast troubleshooting, and assistance with any issue. The need for regular maintenance provides a revenue stream for Coherent that gradually increases over time.
The service business amounts today to more than 50% of the business Excimer Laser Business Unit. this ratio is expected to rise over time as new gas lasers are shipped and installed. This service business can be seen as the backbone of the Excimer business, supporting investments into new applications like MicroLED, as well as providing revenue stability in industry downturns. I hope I was able to explain what displays, carbon-free energy generation, semiconductor manufacturing, and ophthalmology have in common. Those markets are the basis for the future growth of the Excimer business, thanks to the unique properties of our lasers. Thank you, and now back to you, Paul.
This concludes our presentations. We will now begin our Q&A session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please hold one moment while we compile the roster.
Liz, Liz, before we go to questions, I just want to remind investors who are on the call that if you would like to ask a question, please feel free to send your questions to me at paul.silverstein@coherent.com. I will ask your questions in addition to whatever questions analysts want to ask on the call. Thank you.
The first question is from Samik Chatterjee with JP Morgan.
For Samik. Thanks for the question and the presentation. Really appreciate all the color you guys are providing with these market overviews. So I guess just the first question from me, you know, at the time of the acquisition or at the time of the Coherent acquisition, and then today in Sanjai's and Martin's prepared remarks, there was this discussion around the re-entry into the fiber laser cutting opportunity, just given the synergies between the... or the cost synergies between the two companies. You know, some of them included eliminating margin stacking, which is in-house components like pump lasers, leveraging a six-inch platform versus peers on legacy platforms, and just, like, overall scale, given you guys are both feeding into both internal and external consumption.
Can you just provide us an update where we are relative to the integration or the materialization of those, as well as any I might have missed, and which are still kind of ahead of you guys in terms of achieving? And then I guess, second part of this question is: as we think of progress on market share capture, you know, how are you thinking about that in the current backdrop? Is it more of a function of product introduction at, you know, at the attractive pricing you guys can do as a combined entity? Or should we think this is really more tied to an improvement in macro, and that'll be the big driver there? Thanks.
I'll ask Martin to respond to that.
Well, I see two questions there. Thanks very much, first of all, for considering that. I'm really impressed with the detail that you gathered. The first part of that question is the technologies that we brought, as well as the manufacturing scale, is really very, very valuable because legacy Coherent had some of the pieces and legacy II-VI had others. So you did talk about the fiber, the pumps, the components. The IP was not necessarily important in the past, but it is very much so now, particularly in the ARM laser, where we have attributes well protected in many countries of the world. So the answer to the first part is, there's a lot of technology, and we have the benefit of manufacturing at scale.
The first manufacturing plant that we plan to go in is in Wuxi, and that's a datacom plant. So that's a tremendous value to us because you don't have to teach somebody how to ramp up quickly. The second part of your question was, how are we gonna enter into the market? When you're zero, entry is a lot easier than if we were huge, 'cause this is truly a re-entry. So most of the market dynamics don't really matter for the first few years. We're rapidly getting through the NPI process now so that the rollout will happen. It's planned actually for next summer, and there is so much market share to gain that we really won't consider the macro environment because the market is so large and available to us for some time.
Got it. No, I appreciate the response, Martin. And then, second question, and this will be my last. Just relative to the display business, can you just discuss the implications from the transition from VYPER to PYTHON specifically? Should we expect the new system to be largely deployed in upcoming greenfield fabs, or could the benefits of the new technology drive a replacement of existing systems in brownfield fabs? And then, any implications on the ASPs for the new system, as well as the services opportunity, given the technology change in the platform? Thanks for the question, guys.
Shall I? Okay, okay. Thanks for the question. So, the first question was regarding, do we expect there is a replacement of existing VYPER-based installation with our new technology, PYTHON laser? So I think we don't think that this is going to happen. So you have to understand, replacement means investment into a nearly complete new system. So you have to exchange the laser, you have to exchange the complete optical system. The only thing which remains is the mechanics. So... and this is the least part of the bill of material. So it is basically, in essence, a new system investment. And if you see how long those display fabs are operated, 10 and more years, we don't expect to see replacements in a, yeah, in a large number.
So maybe here or there, a little bit, but, not in a large number. That means we see the PYTHON technology together with our LineBeam 1300-G8, really as a solution for new fabs, especially for Generation 8 fabs, which come with the promise, so to say, to get at least for the annealing step, to get operating costs at about 50% of a comparable VYPER system. And that's our contribution to enable the adoption of all the technology into IT displays, meaning notebook, tablet displays. So those displays are, as I said in the video, they are larger in size, so roundabout 4x larger in size and area.
But nobody wants to pay four times the cost of a smartphone display if he buys an iPad or another tablet. So, there has to be a cost reduction in the manufacturing of those IT displays, and we are providing our part to that. And if I remember correctly, the last question was: What does PYTHON mean for our service revenue? And I think I refer to my first statement regarding the discussion about possible upgrades of existing fabs, that this is very unlikely.
That means for the service revenue, the service revenue with our VYPER excimer lasers is still there, and it will continue, and it will follow the fab utilization, as it is, as it has been, and as it will be. And the PYTHON service revenue will add to that. So, yeah, that's how you should see this.
Kai, before we go on to the next question, I just want to pick up on the question. And just, I want to make sure that the investment community understands, and we understand. When we talk about these Gen 8 fabs, what does that do to our market opportunity in display? What's the impact?
So, the market opportunity we see in total, if you think about IT displays, as I said, about four times the area. So if you do the math, the total opportunity can be as big as the installed base, which we have for smartphones.
Okay. As you just said, we don't believe it takes away from our services because those deployed systems, the systems already out in the field, they're not going away.
Yes.
On a displacement, PYTHON doesn't displace those systems-
Exactly.
It augments.
Yeah.
Okay.
Exactly.
Well, if we could go to the next question. Thank you.
Our next question will come from the line of Ruben Roy with Stifel.
Thank you, very much, and thanks, everyone, for the presentations. I had a couple of questions for Martin, one being a follow-up from the first question around the cutting market and re-entry. I just wanted to make sure I understood, you know, sort of the dynamics in China, given that I believe that you have been selling components to some of these cutting vendors in China previously. So, can you just walk me through, you know, kind of what the strategy for China specifically is, the China cutting market?
Are you gonna continue to... It sounds like you're gonna continue to sell components to, you know, the Raycuses and Maxphotonics of the world, but also, you know, compete with systems there. You know, if you could give me some detail on China cutting specifically, that'd be great. Thank you.
Thanks for that question. We do sell a very significant breadth of product into all of the fiber laser manufacturers today, in China and elsewhere in the world. And we do recognize that we will be cannibalizing on some of those sales. Our China strategy involves a lot of our next generation. We are gonna have to be a little bit better in multiple areas, and so we expect that we'll have performance advantages, and we expect that we should have cost parity. So being a Western supplier right now gives them those companies in China also the advantage of an easier export, because then they leverage our service organization. So not only do they get experience for local sales, but they also benefit, and their equipment can go overseas.
So we see that as a very consequential advantage, and because we're already seeing that with the competitors going worldwide now, it's very hard for them to leave the confines of China and Southeast Asia because of that service organization.
Okay. Thanks. Got it. That's very helpful.
Go ahead, Sanjai.
Hey, Ruben, this is Sanjai. Hi. I just wanted to add-
Hey, Sanjai.
Hi, how are you doing? I, I just wanted to add that, this is not any different from other markets, for example, in communications, where we sell at multiple levels of the value chain. I mean, ultimately, our customers are looking for, at that level, the best product, and, and, and they will continue to do so. That's, that's our belief. Thank you.
Got it. Thank you. If I could do a quick follow-up again for Martin. You know, just kind of switching over to EV and thinking about our laser-
Oh, you've gotten silent on us.
Our laser for a few years now.
Oh, laser.
Hey, Ruben.
How are you thinking about the competitive landscape in EV, and I guess, you know, the next step would be, you know, in terms of milestones, any more-
Ruben, we can't hear you.
Thanks, Ruben. You actually cut out, but I think you started by asking a little bit about the ARM laser and its key milestones. And one of the big deals for them was actually historically, they kept going with the development of that technology, even when Coherent exited. And they now have a very mature, very high-performance laser that is rapidly displacing every competitor in the incumbents. I can't name names, but tier one automotive manufacturers are selecting that laser as their source and their platform.
So from a milestone of the technology perspective, we do have that privilege of being able to start with a really compelling product. What we will do, of course, with the new product technology, is reduce the cost of that platform. So that's a migration path that will occur after the launch in China. I didn't catch the last part of your question, but I thought that was the first part. If you could repeat the last part?
Yeah, and I apologize about that. But the last part was just in terms of milestones investors should be looking forward to in terms of, you know, kind of how you're thinking about market share, you know, market share opportunity over the next three years or so.
That, that's a really fair question and a good question. And the nice thing, of course, with starting with small, is it's inconsequential as you ramp. I think we're gonna start looking at market share questions probably in 18-24 months, because at that point in time, we will be ramping our volumes very significantly, and our competitors will see us enter the market quite aggressively. So at that point, within about 18 or 24 months, we'll be rapidly measuring and converting our decisions based on the market share acceptance.
Makes sense. Thank you, Martin.
Martin, before we go on to the next question, if we think about market penetration as a function of breadth and depth, you mentioned that we have a growing roster of automotive companies that are lining up for our ARM system. Are we also seeing depth of adoption?
Well, thanks, Paul. I'm excited about that as well, because we went in there into the automotives and the EV market, going after batteries, because no one else can weld batteries, especially can- cap at the precision level we can. And in fact, that electrical market is growing pretty dramatically. But in the last, oh, I'd say half a year to a year, Body-in-White have aggressively pursued us and, most recently, seats and seat frames. And the reason for that, of course, is spatter- free, and the fact that it ultimately substantially reduces their cost, and believe it or not, the carbon footprint. Because if there's no rework afterwards, the total energy consumption, carbon displacement drops dramatically, and suddenly the environmental aspect has become very, very important.
The last part of that is, the price of these lasers is now so low that it's the energy consumption that dominates the equation. So carbon footprint becomes an efficiency game, and it's very exciting. And so the cutting laser technology that we're bringing out will use the lowest amount of total energy to cut the parts from all of our competitors. And again, that dramatically impacts the Europeans first, the Western, the US, but even all of the Asians now are really watching that from an environmental perspective. So yeah, so we have the vertical as well as a huge step.
Before we go on, just in case not everybody on the call knows what Body-in-White is, and they may think it's a company, why don't you go ahead and explain that?
Thanks again, Paul. Body-in-White are those parts of the car that the customer will eventually touch, see, and feel. So they, they are the most consumer-sensitive parts and the most visible and important to get to look and feel very nice. And nice is a qualitative word, but they're typically the roofline and places where you might touch.
Right. Let's go on to the next question. Thank you, Ruben.
Our next question will come from the line of Sidney Ho with Deutsche Bank.
Great, can you hear me okay?
Yep. Yep.
Great. Thanks. Thanks, thanks, guys, for the presentation. Super informative. I have a couple of questions. Maybe I have missed this. Can you give us a sense of what the revenue split between, within the industrial business, between all the subsegments? And do you expect that mix to change over the next, call it, three to five years?
Hi, Sidney, this is Sanjai. We did not break out industry, the revenues by vertical. We only reported semiconductor capital equipment revenues in one of Chris's slides. So, but in-
Okay
...but in terms of the areas we are excited about, we certainly, Chris mentioned all the excitement around semicon. That market is still strong and as lasers are increasingly used in the semiconductor processes, that represents a really great opportunity for us. And then in display, we are seeing with Gen 8 and MicroLED, we are really excited about those activities. Precision manufacturing, it's really all about a lot about fiber lasers and our re-entry into that market. Even a small fraction of that market is, you know, many hundreds of millions of dollars. So that's exciting.
Got it. That's, that's helpful. Maybe, maybe on semicap, you talk about expecting the TAM to grow at a, I think, 7% CAGR, and that's clearly driven by the growth in semiconductor and wafer fab equipment markets. But obviously, there is, and we'll continue to have cyclicality in WFE spending. But importantly, do you expect your semicap revenue to be able to outgrow that market and, that TAM forecast? Maybe asked differently, do you have exposure to certain process steps or certain customers or device types, memory versus logic, front-end versus back-end, that will help you outgrow the market? And on the flip side, do you think export restrictions to China could impede some of the growth versus the TAM? And then I'll follow up.
Chris, you want to-
That's a great, that's great, some great questions, embedded there in terms of the performance of the semi market. Some of the market elements I'm most excited by, and that we're seeing continual growth despite the cycle that we're in at the moment, are on the front end, which is remaining strong, and specifically in semiconductor wafer inspection. The long-term trends in the market, and the short-term trends in the market are both positive. Node sizes get smaller, and the amount of inspection during the semiconductor manufacturing process increases. So let's just dig into the dynamics of this specific area of the market that will help get, you know, unpack the continued growth despite the cycle that we're in, in semi at the moment.
There are two main elements to the semiconductor wafer inspection business with lasers. The new sales and the service elements. New sales are driven by smaller nodes, by fab builds, by the government investments that we're seeing in the semiconductor industry, in part triggered by the shock that we received during COVID, and that even impacted the automotive industry in terms of lack of silicon, which drives new sales both for legacy nodes and the smaller nodes that we're seeing that are driven by, for example, markets like AI. But underpinning that business is the service business. So if I could just give you a quick explanation of the ratio of the service.
Currently, it's around about 40% of the semiconductor wafer inspection laser business is service-based. And that lasts for 20 years. So you have a design win in the semiconductor wafer inspection space, and then the service revenue continues for 20 years thereon. The service component of the revenue is actually much more significant than the actual initial sale. And that basically buffers you from some of the cycles in the semiconductor industry. And it's a good margin business.
So those various elements of continued strength in legacy nodes, expansion in the cutting-edge nodes, strong underpinning of service business, which lasts 20 years, and partnering with all of the tier one wafer inspection companies basically give prevailing winds that have produced growth through this cycle, and those dynamics, that vector will continue in the long term.
I would just going to add to that. You know, 2023 was a down year for the semi devices in general, but you know, we grew that segment, that market vertical pretty well, and we are projecting growth again in fiscal 2024. So we've kind of factored some of the cyclicality of the semi market. For example, I think the prediction is 2028 will be a down year. But that's sort of the five-year kind of a cycle that people talk about. So hopefully that helps.
Okay. Yeah, that's super helpful. Maybe one quick one on, maybe the last one. Maybe switching gears over to the display side on MicroLED. You talk about the technology still being three to five years away for large screen TVs, and you also talk about the long-term TAM only assumes a small penetration rate for MicroLED. Can you talk about what you are seeing from the order perspective or maybe design activities in determining the timing and the size of this opportunity? I mean, how does that compare to some of the third-party forecasts of the in the marketplace? Do you think they are too optimistic, maybe too low? Any color would be great. Thanks.
Okay, thanks for the question. Let me try to answer this. So, today, we do have, let's say, a smaller business in the MicroLED field. We see, so you see, certainly as well, there are MicroLED TVs available, but they are, let's say, pretty expensive, so they are more than $100,000 per piece. So nothing which I would count as a consumer device yet. So... And I think what needs to happen is, that the cost for the MicroLED need to come down to become competitive. So the cost is in the wafer process, and the more MicroLED you can put on the wafer, the more competitive will be the final display. So what does it mean? It means the MicroLED has to shrink.
Today, micro TVs with MicroLEDs, they're using, let's say, 40 μm to 20 μm large MicroLEDs, and the clear target needs to be to go to become somewhere near 5 μm in size. So with that, we assume that we will be able, as I said in the video as well, we will be able to gain a small portion of the premium TVs in a couple of years. Why in a couple of years? Because in the moment, those MicroLEDs are simply not available. So we see that the technology roadmap is in that direction, but, yeah, they are not yet there. So-...
Don't nail me down, whether it's in three years or in 3.5 or four years, but we believe that that's about the range in time when this is going to happen. We are preparing ourself for that with the development of our UV transfer system. It's not only the laser and optical and the complete machine, we're doing, we are also investing into the process, into the understanding how this transfer really works. What catching material you need to use, and what other specifics you need to have to make a real good transfer from the wafer or from a temporary carrier towards the display.
Thanks, Kai.
Thank you very much.
Our next question will come from the line of Ananda Baruah with Loop Capital.
Hey, yeah, good morning, guys. Thanks a lot for the questions. Really appreciate it. Thanks for taking the time to do this today. This is great. Two quick ones, if I could. The first one, I had to jump off for about 10 minutes, so if you answered this, just let me know, and I can get it from the transcript. But the first one is, would be interested in understanding the degree to which you're able to leverage Coherent materials, you know, across the portfolio that you talked about today. And, I guess any, you know, to the degree that you are, any competitive advantage in particular areas that you're afforded by doing that. And then I have a quick follow-up. Thanks.
Sorry, Ananda. Hi, Ananda. It's Sanjai.
Hey, Sanjai.
So the question is around. Yeah, hi, how are you? The question is around how Coherent materials are being used?
That's correct.
Coherent, legacy Coherent materials, legacy II-VI.
Yeah, materials legacy.
A lot of the- Are you talking about the-
Yeah
... specifically about the segment or?
homegrown materials, the company's homegrown materials.
Okay.
Yeah.
So, Martin, maybe you want to take it? Yeah.
Yeah. I'll take at least the first part of that.
Yeah.
That is, that was the big reason why we could do the re-entry. We have probably the top specialty fiber company in the world. We have probably the top pump diode group in the world. That's the, the old Zurich fab. That's an unmatched chip right now. It's a 65 W chip. There's no one else out there that's close. And the list actually goes on quite a long ways, down to even Fuzhou and Vietnam, where we actually make the lenses for the fast and slow axis collimators. So that is a very key reason.
The fact that we have the technology, the fact that the legacy companies kept staying at the technological edge, means that whatever we enter in now will be at the front of the technological side, of the game. So, to answer your first question, it's a huge leverage of the legacy businesses, and that's the biggest advantage we have.
Oh, great.
The second part of your question was the competitive advantage. The competitive advantage comes with scale, and I think Sanjai spoke to that just a few moments ago. That's one of the reasons we serve all of our competition as well, 'cause that scale advantage and the fact that we can actually go into a datacom facility, where we have thousands of trained employees capable of building the technology. That's the second part of it, and it is also as big or perhaps in some cases, a bigger advantage.
Yeah, that's super helpful context, both of those. Thanks for that. And then the quick follow-up is: like, blue lasers versus red lasers is, you know, to what degree, if at all, is that relevant in your go-forward conversation, with regards to what you, you, you presented today, spoke to today? And, and I guess, just your thoughts around blue and, blue and red lasers going forward, to the extent that it has any relevancy. Thanks.
Well, Paul, I think I'm going to grab that. This is Martin. The reason for that is, that's why we led with copper welding. Because up until the ARM laser came out, you could not consider doing copper welding with IR lasers or red lasers. And that was the whole genesis of the blue and green lasers, because copper absorbs blue and green light better than infrared does. However, the moment you open that keyhole, it's the plasma that absorbs the blue and green light, and it causes a huge amount of sputtering and a great deal of difficulty. So in every case with the batteries where we've competed with usually existing blue and green lasers, they have been displaced.
That's the magic of the ARM right now, using that ring laser, and the ring on the outside preheats it and takes the copper or the bright metals to an absorbing temperature before the tiny little, very low energy beam actually does the welding in the middle. That's the spectacular advantage of ARM, and that is where we're racing right now into the market.
Yeah, it's great context. I appreciate it. Cool. Thanks, guys. Thanks a lot.
Thank you, Ananda. Liz?
Our next question will come from the line of Jim Ricchiuti with Needham & Company.
Hi, thank you. A question on the display market. You mentioned that you've been taking orders in this market for the newer Gen 8 fabs. Is this a mixture of orders for both the existing annealing tool and the new tool? And wonder if you can give some sense as to whether you're seeing faster traction or more interest with the newer tool in China, or is that something you're anticipating once you begin to scale the product?
Yeah, thanks for the question, Jim. So if we say we are starting to take orders, it's for our new product, LB 1300 Generation 8, together with twin VYPERS. That's exactly for that. And we certainly have seen this also in the press, that in China, a big Chinese display maker has announced that they will build a factory in Chengdu, in China that was just recently, and the groundbreaking is around the corner. And we expect that we will see further orders from this direction to come in. But I'd like to remind you, we are not the direct business partner of the display makers, so our orders come from what we call integrators.
So the complete annealing machine consists of laser optics, an annealing chamber, and the complete control of the entire production system. And we are delivering laser and optics to what we call integrators. And, as you probably know, integrators are in Japan and Korea, they are the two big ones.
Yes, and the biggest for you is the Korean integrator? Is that fair to say, or is
Well, historically, there has been a split between the integrators. So if you talk about integrators, then you have to also add another Korean integrator, which is specific for one display maker. But to answer your question: so it has always been a split between the two integrators. So there were times when the Japanese integrator had a larger share, then there were times where the Korean integrator had a larger share, especially when one Korean company invested significantly into the display manufacturing of all their display for smartphones. So it's really a mix, and I think both have good systems, good offers, especially also for Gen 8.
Okay, what's the timeline that you expect? You alluded to the fact that you think, at least by area, the IT opportunity could be as big as smartphones. As you talk to people in the market, your customers, and survey the market, what's your timeline in terms of timeframe as to when that might happen?
So we see that a capacity in terms of kilosheets per month of 45 kilosheets per month has been announced by display makers. And that would account for approximately 25%-30% of the market size. And that should happen within the next, let's say, two years. So everything above that is in the moment speculation. So we don't know how quickly the adoption of all the technology into IT displays or notebook and tablets really will continue. In the end, we all have it in our hands. If we buy more tablets with all the display, more notebooks with all the display, it will go faster.
A question for you, Martin, just on the re-entry into the fiber laser market. Do you anticipate the early success in this area coming from the China cutting market, which of course is the bulk of the market, or from outside China?
Well, thanks, Jim. I think that that is still a really dynamic question, because not only is the, you know, the Chinese market is by far the biggest, and they are still intrigued by the Western lasers. So I expect that we'll have good traction in there as soon as we roll it out. But what is surprising me right now is what's coming at us from the Western suppliers that have also heard of this technology and are asking us if we would be willing to participate with them. So while I would have said it's China all the way, a few months ago, it'll probably be a relatively balanced market entry.
Got it. One final question for me. Just if I go back to slide nine, you know, you gave us the TAM and talked about the $15 billion that represents the markets that you highlighted today, and thank you for doing this, by the way. You said you're gonna do something down the road in aerospace and defense. We certainly look forward to that. But what is the bulk of that, the remaining available market in that TAM? Can you give us a sense of what that represents and how interesting a market it might be for you to pursue further down the road?
Yeah. Hi, Jim, this is Sanjai. The delta is really aerospace and defense.
Okay. Okay.
So-
Thank you. Perfect. Thanks very much.
Thank you, Jim. Liz?
Our next question will come from the line of Tom O'Malley with Barclays.
Hey, good afternoon, guys. Thanks for taking the question. I'm getting a little feedback on my line here, so I apologize if you're hearing that. But I just, I wanted to get a feeling for the total business. So you're giving some really good guidance, kind of talking about the semicap business and how that's a new record in fiscal year 2024. You're looking at the display business, and you're showing a couple charts, really showing growth in that business through fiscal 2024, 2025 and 2026. You know, and then you're kind of giving some growth drivers on the EV side, on the precision end. But I guess what I'm trying to understand is, with all of these positives, is that business still able to grow in calendar year 2024?
Obviously, total revenue you brought down, but I'm trying to, you know, circle a square here. You're talking pretty positively about all three of those. Is, is that the end market that maybe outperforms all others into fiscal year 2024? Just, I'm just going based off what you put in the slide deck. Thank you very much.
Hi, John, this is Sanjai. So we're not providing guidance by market vertical or, you know, in, in, in term for as far as from a guidance perspective. But what we're indicating is that there are some really big growth trends in display and semicap and in fiber lasers, and we believe that's going to generate revenue growth for us in the second half of fiscal 2024 and in the go forward years.
Got it. And then I just had a follow-up on the fiber laser market. If I remember correctly, you know, that market had gotten highly competitive, particularly at the lower power levels. Can you talk about what the competitive dynamic there is today? And, you know, are you confident that moving into that area won't bring back a lot of the China competition, and furthermore, some of the tougher gross margin business that previously you guys had not competed for? Thank you.
Well, thanks for that question. There's actually multiple parts or multiple answers there. One of the things that we found most recently is the IP advantage that we've picked up around the ARM laser. Now that gives you a little bit of a monopoly, and you can fight it out a little bit more on that one. So that's a really nice situation as you enter into a market. However, there will always be competition, and there always has.
You can see there have been two Chinese players that have really popped up onto the scene, and two Western players are backing down there. They're holding legacy position. So we see the market itself as has been dynamic. It's a brand-new market. It's less than 10 years old, and it's already changing, and we can expect that it will continue to change, and we want to be that change agent.
Thank you.
This concludes the Q&A session. I will now turn it back over to Paul Silverstein for concluding remarks.
Thank you, Liz. I'd like to thank Sanjai, Martin, Kai, and Chris, as well as the investors and the analysts this morning for taking the time to join us. Once again, today's presentations and Q&A session will be available in the Investor Relations section of Coherent's website for 12 months. Should you have any follow-up questions on our industrial market or any other aspect of our business, please feel free to contact me once again, paul.silverstein@coherent.com. We look forward to continuing our discussion with many of you and seeing you on our next Markets Day, which we will announce at a later date. Thank you. Goodbye.
This concludes today's conference call. Thank you for participating. You may now disconnect.