IPG Photonics announces continued production at Russian operations

March 3, 2022
The company is "taking steps to minimize disruptions and implementing contingency plans in light of global sanctions."

IPG Photonics Corporation announced more information regarding its Russian operations in light of current events. IPG’s Russian facilities continue to operate and manufacture optical components and finished products for its operations in the US, Germany and China.

IPG has major production and R&D facilities as well as close to 2,000 employees located in Russia, they note. These facilities supply components that Germany and the US use in production and provide finished products to China and the US. In 2021, IPG’s Russian operations supplied approximately $100 million of finished product for the Chinese market. Historically, sales to Russian customers have been nominal, totaling $30 million in 2021, they add.

Sanctions will increase lead times and shipping costs for components and lasers to and from IPG's Russian operations. As part of contingency planning, IPG already has built several months of critical inventory in Russia to support sales. The company's Russian facility is currently able to ship optical and other components to IPG affiliates from Russia. In the event that sanctions or other developments resulting from the ongoing Russia-Ukraine war substantially limit IPG's ability to export optical or other components to or from Russia, the company's sales may be materially impacted.

IPG is executing on contingency plans that include increasing manufacturing capacity and inventories of critical components in Germany and the US, and qualifying third-party suppliers to reduce reliance on Russian operations. Management believes that the company can start to reduce the reliance on components sourced from Russia within a few months and substantially reduce the risk related to sourcing these components from Russia in six to nine months. Management continues to assess the impact of the announced sanctions and will monitor any new sanctions.