World Leadership in High Power Fiber Lasers

www.ipgphotonics.com

IPG Photonics Corporation The Fiber Laser Company™

(NASDAQ: IPGP)

19th Annual Needham Growth Conference

January 10, 2017

Safe Harbor Statement

2

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

IPG Overview

 Global leader in industrial fiber lasers

 FY 2015 sales of $901 million; YOY growth of 17%

 $4.53 diluted EPS; up 20% YOY

 Q3 2016 sales of $266.0 million; YOY growth of 9%

 $1.29 diluted EPS; up 9% YOY

 Growing acceptance of fiber lasers replacing traditional lasers

 Products are sold to OEMs, systems integrators and end

users for use in many industries

 Global operations with over 3,700 employees

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Investment Highlights

 Expanding $4.8 billion opportunity for all lasers  Approximate average annual growth rate of 6%

 Recognized leader in the rapidly growing fiber laser market  Estimated 12% CAGR from 2015 to 2020

 Significant competitive advantages  First mover advantage

 Performance, product range and reliability

 Lowest cost (vertically integrated model)

 Strong IP position

 Vertical integration and direct sales model drives industry-leading

margins (54.6% GM in FY 2015, 54.4% GM in Q3 2016)

 Broad geographies, end markets and applications  Asia & Australia 51%, Europe 33%, North & South America 15%

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The technology leader and most profitable

company in the rapidly growing fiber laser market

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

All Lasers Fiber Lasers All Lasers Fiber Lasers

2015 2020

Forecast

Materials Processing Advanced Applications Medical

Rapidly Taking Share in Large, Existing Laser Markets

5

$4,800

$1,480

$6,751

$2,600

____________________

Source: Laser Focus World, Industrial Laser Solutions, Strategies Unlimited, Optech Consulting and IPGP estimates.

(000)

Fiber 31%

2015 - Share of Total Laser Market

Fiber 39%

2020 - Share of Total Laser Market

Materials Processing – Diverse End Uses and Customers

6

Automotive

General Manufacturing

Heavy Industry

Oil & Gas

Shipbuilding

Nuclear

Construction

Aerospace

Shipbuilding

Semi/

Electronics

Displays

Consumer

IPG’s Core Existing Applications

$1,453

$1,867

$569 $662

$385 $431 $520

$718 $644

$1,323

$278 $352

$219 $333

$144 $183

2015 2020 2015 2020 2015 2020 2015 2020

High Power Marking Fine Processing Micro Processing

All Lasers Fiber Lasers

Materials Processing Laser Market

____________________

Source: Laser Focus World, Industrial Laser Solutions, Strategies Unlimited, Optech Consulting and IPGP estimates.

Opportunity for Continued Fiber Laser

Market Share Gain is Significant (US$ mm)

(Excludes lithography)

New Applications

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IR Laser Applications

Welding

Additive ManufacturingCladding

Cutting Brazing Drilling

Marking Surface Treatment

8

$462

$967

$182 $356

$591

$364

$219

$180

0%

10%

20%

30%

40%

50%

60%

70%

80%

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

2015 2020 2015 2020

Cutting Welding & Other High Power

Fiber Lasers All Other Lasers Fiber Market Share

Fiber Laser Penetration of High Power Applications

9

7% 9%

17%

40%

27%

Welding Applications

Power Train

Tube Welding

Car Body Scanner Welding Car Body Seam Welding / Brazing Other

81%

3% 16%

Cutting Applications

Flat Sheet Cutting

Tube Cutting

3D Cutting

(US$ mm)

Welding

Opportunity -

potentially

much more

significant

Niche Welding Applications

Transitions in Welding – Medium and Long Term

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High Strength Steel

Aluminum

Titanium

Alloys

Thick Materials

Automotive

Aerospace Construction

Heavy Equipment

Railways

Shipbuilding

Transportation & Storage

Decreasing cost of laser welding, new laser welding technologies, know-how,

software & algorithms

In many instances strength of the laser weld > welded material

Diverse Materials Diverse Industries Limited Materials

Aircraft

Autos

Bridges

Buildings

Pipelines

Rails

Railcars

Ships

Storage Tanks

Trucks

Diverse Products

FUTURECURRENT

A Diverse Mix with Year-over-Year Growth

$135.3

$344.1

$53.8

$13.3 $21.5

$131.6

$426.1

$81.0

$13.2

$34.9

$124.8

$499.6

$99.5

$13.8

$56.5

$99.7

$412.6

$74.7

$9.1

$36.5

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

$550

Pulsed High-Power Medium-Power Low-Power QCW

($US mm)

IPG Sales by Product Lines

2013 2014 2015 YTD 2016

11

17,600

20,900 21,200

24,800

32,800

3,400

4,800

7,100

9,900

14,200

200 500 1,000

2,100

4,100

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2011 2012 2013 2014 2015

U n

it s

& K

W o

f P

o w

e r

S o

ld

Total Units Sold*

Kilowatts of High Power and Medium Power Lasers

Kilowatts of QCW Lasers

Acceptance Drives High-Power Growth

____________________ *Units excludes telecom components and component PLDs.

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2011 – 2015 Total Units Sold CAGR: 17%

2011 – 2015 KW Power Sold (Medium and HP) CAGR: 43%

2011 – 2015 KW Power Sold (QCW) CAGR: 113%

KW

KW

KW

KW

KW

KW

KW

KW

KW

KW

Diode Production a Significant Advantage

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 High volume production levels of pump diodes, proprietary processes

and use of unique chip and package designs allows IPG to increase

yields, lower component costs and assure high quality

____________________

Source: IPGP estimates.

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2009 2010 2011 2012 2013 2014 2015

% C

h an

ge in

P ac

ka ge

d D

io d

e C

o st

Te st

e d

C h

ip s

P ro

d u

ce d

Diode Production and Cost Trends

Tested Chip Production Cost/watt % decrease (base y