Good morning, and welcome to the IPG Photonics second quarter 2021 conference call and webcast. Today's call is being recorded and webcast. At this time, I would like to turn the call over to Eugene Fedotoff, IPG's Director of Investor Relations for introductions. Please go ahead, sir. Thank you, Ken, and good morning, everyone. With us today is IPG Photonics Executive Chairman, Dr. Valentin Gapontsev, Chief Executive Officer, Dr. Eugene Scherbakov, and Senior Vice President and CFO, Timothy Mammen. Statements made during the course of this call that discuss management's or the company's intentions, expectations, or predictions of the future are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause the company's actual results to differ materially from those projected in such forward-looking statements. These risks and uncertainties include the impact of the COVID-19 pandemic on our business and those detailed in IPG Photonics Form 10-K for the period ended December 31st, 2020, and other reports on file with the Securities and Exchange Commission. Copies of these filings may be obtained by visiting the investor section on IPG's website or by contacting the company directly. You may also find copies on the SEC's website. Any forward-looking statements made on this call are the company's expectations or predictions as of today, August 3rd, 2021 only. The company assumes no obligation to publicly release any updates or revisions to any such statements. For additional details on our reported results, please refer to the earnings press release and the Excel-based financial data workbook posted on our investor relations website. We will post these prepared remarks on our website following the completion of this call. With that, I'll now turn the call over to Valentin. Good morning, everyone. We are pleased to report another good quarter for IPG. Our second quarter revenue was significantly above the same period last year and increased from strong results in the prior quarter, driven by improved macroeconomic conditions in most major geographies, growth in emerging products, as well as excellent execution by the IPG team. We saw higher-end market demand for our core material processing products, where our fiber lasers are replacing traditional CO2 and other lasers, and continued to pursue the opportunities in emerging markets. We remain focused on growing sales in applications that require innovative solutions, our expertise in fiber laser technology, and superior quality of product, such as advanced applications, electric vehicle battery production, medical, and microprocessing. Our technologies are transforming the way products are created, enabling production of smaller and more complex devices, improving the products we use every day, and bringing advanced manufacturing capabilities to electric vehicle and renewable energy industries, helping to address climate change and sustainability initiatives. Our investment in new products and the applications are paying dividends. In the second quarter, emerging product sales increased 47% year-over-year and accounted for 29% of sales, compared to 25% last year. We continue to focus on innovation at IPG and are working on tens of exciting new opportunities. I hope to share more details about these opportunities with you on our future calls. With that, I will turn the call over to Eugene Scherbakov. Thank you, Valentin, and good morning, everyone. During the quarter, we demonstrated excellent progress in our core material processing market across all major geographies, with accelerated growth in high power and ultra-high power lasers for cutting applications in the U.S. and Europe and strong growth in welding in China and Europe. We also delivered robust growth in emerging products and applications. Revenue from material processing applications increased 27% year-over-year and contributed 93% of total revenue in the quarter. Sales in welding applications grew significantly in the last several quarters due to increased sales of our AMB, Adjustable Mode Beam lasers, for general manufacturing purposes and electric vehicle battery welding applications. Battery manufacturers are facing challenges welding together different type of materials such kind of copper and aluminum. These materials are extremely thin, reflective, and need to be welded with high precision and reliability. Each battery model requires hundreds of welds. Our AMB lasers can address these challenges, offering superior speed and weld quality over competing solutions with broad range of beam tunability and spatterless welding. We also saw strong demand in marking and micro material processing application, such as solar cell manufacturing and 3D printing. Sales of our green pulsed lasers, which are used to improve solar efficiency, more than tripled compared to the prior year and becoming a more meaningful part of IPG's revenue. We are taking advantage of opportunity created by increasing focus on sustainability globally and expect future solar cell manufacturing capacity to grow, driving additional sales in our green lasers. We are also increasing the pulsed energy of the green lasers to enable next-generation applications in solar, drilling, and copper welding for consumer electronics. Revenue from our other applications increased by 5% year-over-year. Medical sales showed a good growth both year-over-year and sequentially as a result of improved demand of our surgical lasers. Advanced application sales improved year-over-year, while telecom revenue declined compared to the same period in the prior year. Examine our performance by region. Our revenue in China increased 10% year-over-year in the second quarter, representing approximately 43% of our total sales. Year-over-year comparison for the region was more difficult as China sales rebounding from the pandemic earlier than other regions last year. We saw strong demand in welding application for our AMB and other high power lasers while demand in cutting softened at the end of the quarter. The sales of high power lasers increased only slightly compared to the second quarter last year. We continue to see solid demand in foil cutting and welding applications related to electric vehicle batteries and are also starting to see some demand for the LightWELD handheld welding system in China, which should provide a modest benefit to revenue in the second half. While China's market remains very price competitive, we have continued to be disciplined with our approach to pricing, given superior performance, quality, energy efficiency, and reliability of our lasers. There remains a significant part of the customer base that is very focused on the price alone. Sales to the rest of Asia increased 123% year-over-year, with strong growth in Korea and other countries offsetting lower revenue in Japan. We are seeing a strong demand for the outer welding and foil cutting solutions for EV batteries in Korea and encouraged by improved booking in Japan. In Europe, revenue increased 50% year-over-year as we saw an acceleration of demand from customers in the region and strong growth in cutting, welding, marking, and cleaning applications. Sales improved significantly in high power, ultra-high power AMB and QCW lasers. European cutting customers are moving into the ultra-high power lasers and are replacing CO2 lasers with fiber lasers to improve productivity. Bookings for the region remain positive, pointing to continued recovery. Revenue in North America increased 23% year-over-year. Growth was primarily driven by material processing and increased sales of high power lasers for cutting applications. Sales to automotive, both traditional, electrical and solar markets remained strong. We also saw solid improvement in micro material processing applications and strong growth in demand for LightWELD. Besides our normal direct sales model, we are leveraging the new third-party resales with numerous welding stores and new direct online sales platform for LightWELD in U.S. Laser system sales improved in the second quarter with both laser and non-laser system posting strong revenue growth. Booking remain high, and we expect to see additional improvement in system sales in the third quarter. We continue to benefit from our vertically integrated production model, which enable key technology advantages over the competition while minimizing the cost and supply chain disruptions. However, we did experience shortage on certain components during the quarter and saw increase in lead time that are impacting our and our customers' operations. We are also evaluating inflationary price pressures on our input cost and reevaluate prior quotations when they expire. Despite these headwinds, we were able to deliver the revenue growth to the midpoint of our guidance and gross margin growth to top our expectations for second quarter. IPG's has been technology leader in fiber laser more than 20 years, and none of our competitors have been able to match or approach the capability of our products. Research and development is our DNA, and we are continuing to focus on reducing the cost and improving the quality of our components and products. We are also committed to expanding the range of products and applications we address by pushing on research and development project we believe we can commercialize in the near term, which have significant market potential. We will continue to focus on opportunities where we can increase our value propositions to customers by delivering complete processing and technology solutions with our optical delivery and system capability. I want to thank our employers to their execution during the second quarter, and thank our shareholders for your continuing support. With that, I'll turn the call over to Tim to discuss financial highlights in the quarter and third quarter outlook. Thank you, Eugene, and good morning, everyone. Revenue in the second quarter was $372 million, which increased 25% year-over-year and 8% sequentially. Revenue from materials processing applications increased 27% year-over-year, and revenue from other applications increased 5%. Sales of high-power CW lasers increased 20% year-over-year and represented approximately 51% of total revenue. Sales of ultra-high power lasers at 6 kW or greater represented 51% of total high-power CW laser sales and increased 15% compared to the prior year. Medium power laser sales increased 70% on growth in cutting, welding, 3D printing, and semiconductor applications. QCW laser sales increased 13% year-over-year on higher demand from welding applications. Pulse laser sales increased 45% year-over-year, with strong growth in green pulsed lasers used in solar cell manufacturing and higher sales of our infrared lasers for marking and cleaning applications, as well as foil cutting applications in the electric vehicle batteries manufacturing process. System sales increased 19% year-over-year with improved sales for Genesis and ILT. Other product sales decreased 4% year-over-year. We estimate that supply chain constraints impacted our revenue by $7 million-$10 million in the quarter. Second quarter GAAP gross margin was 48.6%, an increase of 260 basis points year-over-year. Compared with the year ago period, the increase in gross margin was driven primarily by improved absorption of manufacturing expenses, partially offset by lower pricing and higher shipping costs as a percentage of sales. GAAP operating income was $92 million, and operating margin was 24.8%. Second quarter net income was $70 million or $1.29 per diluted share. The effective tax rate in the quarter was 24%. During the quarter, we recognized a foreign exchange loss of $3 million, primarily related to the appreciation of the Russian ruble and euro, partially offset by the appreciation of the Chinese yuan. The foreign exchange loss reduced EPS by $0.04. If exchange rates relative to the U.S. dollar had been the same as one year ago, we would have expected revenue to be $23 million lower and gross profit to be $13 million lower. We ended the quarter with cash equivalents, and short-term investments of $1.5 billion and total debt of $36 million. Strong operational execution resulted in cash provided by operations of $116 million during the quarter. Capital expenditures were $27 million in the second quarter, and we now expect capital expenditures to be between $130 million and $150 million for the full year. During the quarter, we repurchased 185,000 shares for $39 million. Commenting on outlook for the next quarter, second quarter book-to-bill remained above one. While we expect continued improvements in sales outside of China, sales in China are likely to moderate in the third quarter due to more difficult comparisons and softer demand in cutting applications. However, displacement of non-laser technologies, secular environmental trends, and investments we have made in emerging products mean that we continue to see growth opportunities in high-power cutting, foil cutting, and welding applications for electric vehicle battery productions, as well as opportunities in solar cell manufacturing, medical procedures, and advanced applications. We also see LightWELD sales gaining traction in multiple geographies in the second half of the year. For the third quarter of 2021, IPG expects revenue of $350 million-$380 million, which implies a 15% year-over-year growth at the midpoint, despite more difficult third quarter year-over-year comparisons, softness in the cutting market in China, and ongoing supply chain constraints. The company expects the third quarter tax rate to be approximately 25%, excluding any discrete items. IPG anticipates delivering earnings per diluted share in the range of $1.10-$1.40, with 53.5 million basic common shares outstanding and 54 million diluted common shares outstanding. I would like to remind you that financial guidance provided this quarter continues to be subject to greater risk and uncertainty given the COVID-19 pandemic. Its associated impacts to the global business environment, public health requirements, and government mandates. Please refer to the safe harbor passage of today's earnings press release for more details on risks and uncertainties associated with our forward-looking statements. With that, Valentin and Eugene will be happy to take your questions. Thank you. We'll now be conducting question-and-answer session. If you'd like to be placed in the queue, please press star one on your telephone keypad. Our confirmation tone will indicate once you are in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it maybe necessary to take phone off mute or pickup your handset before pressing star one. One moment please as we pause for questions. Our first question today is coming from James Ricchiuti from Needham & Company. Your line is now live. Hi. Good morning. The, Tim, I think I heard you say the impact that you saw from supply chain constraints in Q2, I think you said around $7 million-$10 million. That, is that, just to be clear, is that a direct impact to you, or is that what you're seeing from some of your what you've seen from some customers? It seems like a fairly modest number, that's why I'm asking. Yeah, it was a fairly modest number. I'd agree with that. It's a variety of things. It's both the impact internally on the ability to supply some product and also an impact from slightly lighter demand from some customers because they can't get components for some of their systems and therefore delaying shipment of their systems, and then they don't want to take the lasers at the same timeframe they did it. The other thing is that it is across most geographies, so it's not just in one specific location. China was impacted a bit, but also North America and even Europe as well. Do you anticipate that being a little worse this quarter? No. It's probably gonna be on a similar level. In Q3, it's a combination of that as well as some of the softness in the China cutting market that are really impacting guidance. It's not that that is specifically driving the guidance number down, more significantly. Yeah. Here's my follow-up question. It's just with respect to North America, you showed strong year-over-year growth, and clearly, you know, that's an easier comparison relative to the pandemic last year. On a sequential basis, I'm just curious, the decline there 10% or so sequentially, are you seeing any signs of the U.S., the North American market, either slowing down or potentially being impacted by some of these external factors that we're all hearing about? No, not specifically. I think with North America, it was more timing of revenue. We had a very strong start to the year in Q1. We still had some backlog. For example, I think one of those 100 kW lasers was recognized as revenue in the first quarter, so that was a bit of a benefit. Slightly slower quarter in Q2. I will say that overall North American backlog continues to be very strong. The guidance number we have would I should comment on it sequentially, I think it will be basically flat, again, continuing to show growth on a year-over-year basis. The backlog in North America remains pretty robust, even though Q2 performance was a little bit lighter. Got it. Thank you. I'll jump back in the queue. Thank you. Next question today is coming from Nikolay Todorov from Longbow Research. Your line is now live. Thank you. I wonder, I want to double-click on the China demand, particularly in cutting. If we go back a quarter ago, I think you were talking about macro indicators showing signs of weakness, but I think your data points were strong. We're talking about strong trade agreements that are tied usually to high demand for ultra-high power lasers. If I look at the high power sales and breaking down between ultra-high power and below 6 kW, we can see that ultra-high power lasers grew very incrementally on a sequential basis, also on a year-over-year basis, while below 6 kW lasers grew, I think, 24% or 25% year-over-year and about 10%-15% sequentially. That implies that China sales should have been strong. I just wanna double-click and see the reasons, if you can give us more around, the softness in China cutting. China sales in the second quarter were strong both on a sequential and even on a year-over-year basis. Okay. The growth on a year-over-year basis was a bit lower than some other geographies, but don't forget that China had recovered already a significant round of revenue in the second quarter of 2020, so the comparison there is a bit more difficult. I wouldn't say I was not concerned about performance in China in Q2. In fact, you know, bookings as well were strong. The issue is that I think a couple of companies even that have announced in the last couple of days have pointed out to a weaker macro environment in China and even the government being concerned about a potential bit more of a slowdown. Yes, we'd highlighted that on some of the PMI data that had initially come out, I think, in April. There is a bit of a concern that China is a bit weaker than expected, and that's clearly driving some of our expectations in addition to the supply chain constraints in the third quarter. I mean, bookings are good, but we expect those orders to be delivered over a slightly longer time than necessarily would have been if the demand environment had remained resilient or stronger. It's still pretty resilient, just stronger. Okay. If I can click on the supply chain dynamics, I think we heard that there were some challenges with delivering chillers that were causing some lead times extension. Maybe can you give us what components are impacting your lead times? When do you expect those to get resolved, and what are you doing to address that? Yes, in reality, there was some delay with some components. It's not critical components. It's, first of all, what also mentioned that the price for some materials also increased dramatically, for example, for copper welding and also for components based on these materials. For our production, it's not dramatical. I think we will deliver in time, not only chillers but also other products during this quarter. Okay, last quick one. Germany sales were down sequentially. I think European sales overall are very strong. What is the reason why Germany sales are kind of diverging from the rest of Europe? I think you have to go and look at the data on that which customer was specifically there. We tend to focus on total European sales rather than just the individual countries there. As you point out, total European sales continue to perform pretty strongly. I'd have to look at which customer was the change between Q1 and Q2. From other side, Germany, demonstrated very high enough, orders for ultra high power lasers, is getting 20 kW and more for the first time. Got it. Okay. Sounds good, guys. Thank you. Good luck. Thanks. Thank you. Thank you. Next question today is coming from Tom Diffely from D.A. Davidson. Your line is now live. Yes, good morning. Maybe one more question on China. You talked in your prepared remarks and said that your pricing pressure remains. I'm curious if that has moved up into the high power region yet or most of the pricing pressures are still at the low power. Some of the competitors are introducing product at higher power levels and trying to get into that ultra-high power market, so, you know, 12 kW lasers even. Certainly the only way they can compete is on pricing. What we call the low end of the market, not just on power, but really on pricing, is moving up into higher power levels and impacting or reducing pricing there. Our strategy, though, is really, as we articulated, to continue to deliver behind the value proposition of IPG's product and not get drawn into what would be a Pyrrhic victory on pricing in terms of trying to compete at that low end of the market, which is just, it's not focused on any kind of reliability or quality of devices used. I think so far our strategy has borne out pretty well with fairly robust China sales, but good profitability on those. We're pleased with the way that gross margin and even total operating margin has continued to track in the second quarter, Tom. Okay. You know, a year or so ago, you talked about using your strong cost structure to maybe get more aggressive in the marketplace. It sounds like you've been a little bit more disciplined then over the last year than I thought you may have been after some of those comments. Have you used pricing at all from your side, or is it just in response to what you're seeing from the competitors? No, we've introduced some of the low, lower cost rack-mounted lasers that's enabled us to reduce the selling price of those and make them a bit more competitive whilst maintaining margins on that. We're not using pricing as our strategy within the China market. It really would be a bit of a Pyrrhic victory in terms of, you know, gaining significant amount of share, but at a significantly lower average price per watt, and then having to devote even more resources to building product that would have a lower profitability on it. We're focused on the high end of the market and also outside of cutting, very strong growth in some of the welding applications for EV, the foil cutting applications for EV, even some mid power laser growth for some of the additive applications in China. Surprisingly, some of the pulse lasers, even at lower power levels for marking applications where the quality of our product is recognized, have actually held up quite well. You know, there's a number of different areas we're focused on trying to drive that value at the highest level possible. Okay, that sounds great. Just one final housekeeping question. What's in your category of emerging products right now? Anything really introduced in the last 3+ years. It includes things like high power pulse lasers, the AMB green ultrafast, UV, some of the systems applications, accessories, beam switches, cutting and welding heads, scanners, some of the telecom products, advanced applications as well. Also integrated systems and subsystems based of our laser strength components. Okay, great. Thank you. Thank you. Next question today is coming from Michael Feniger from Bank of America. Your line is now live. Michael, please press star one. Michael, can't hear you. If you'd like to speak to, I believe he jumped on the queue. If you want to re-queue, please press star one on your telephone keypad. Our next question is coming from Piyush Mishra from Berenberg. Your line is now live. Thanks guys. Good morning. Maybe first of all, on the electric vehicle, if you could just talk about how's that market evolving in North America, and perhaps maybe your most current estimate as to what percentage of your sales are now going to EVs. EV market, of course, is growing very fast. We see, first of all, for battery welding and cutting applications, different materials and production of components and some components for e-vehicles. Also you see the new tendency, especially in Europe. They start to produce and start to develop the new body in white for future e-vehicles. Because up to now they're using the standard, and now based on the new technologies and new approaches, and based also on laser welding and cutting using for such kind of production. They start to produce the new models based on the such kind of approach. This market grows dramatically, and we see also our opportunity to participate in this by using the not only our lasers or our components or a subsystem, but also we have some proposal to produce a full production system from battery, for example, production or some other components for EV vehicles. Not, just a production system, production line, like full production line. It's correct. Got it. Currently it's what? Maybe all these different sales combined to about, what, 5% of your total revenue? Give or take? No. Previously we'd said in a weak quarter it would be 5%, in a strong quarter it would be 10%. In Q2, it's actually well above 10% of total sales in the second quarter, so continuing to grow strongly. If you looked at, like, capacity rollouts on, you know, battery investments, that would potentially go, you know, meaningfully higher. I think, you know, if you looked at, like, total capacity investments, it could get to, like, 20% of quarterly revenue over time. Got it. Interesting. Maybe just a quick one. Is there a way to think of your year-over-year sales growth in terms of how much was volumes versus pricing? Most of it would have been volume because, you know, average selling price per kilowatt across the, you know, if you looked at it on a global basis, was pretty stable. It was down very moderately on a year-over-year basis. Great. Thanks, guys. That's all I had. Thank you. Next question is coming from Joe Wittine from Edgewater Research. Your line is now live. Hey, good morning. I wanted to ask on the China cutting competition. I know somebody already asked on this, really just wanted clarification on whether the prepared remarks, you know, from Dr. Scherbakov had intended to signal there was more competition than your expectations 90 days ago, or am I reading too far in? You see, in principle, we don't have any competitors because our product is the best in the world, and we are producing the best, not only laser, but also other components. From this point of view, again, we already mentioned in our presentation that up to now, more than 20 years, nobody could produce a product with parameters or performance better than IPG laser did. From this point of view, there's no competition. Of course, there exists some competition from, first of all, in China and with Chinese production. For this, some people using combination word like acceptable quality. Maybe acceptable quality for China, but not acceptable quality for us. Our goal to produce best in the quality product. For this product, we can give guarantee, engine guarantee not only three years, like now. We can in principle guarantee up to five and seven years. This is our goal. From this point of view, again, nobody can compete with us up to now. I can add also, not only in China. China is dummy product. China is absolutely a low-quality product up to now. Nobody from the best American and European company not able. Many of them tried, including military, biggest guys that tried to compete with us. Nobody was able to compete with us, not in quality, not in pricing. Up to now, 20 years, typically any new product need one, two years now to copy and to provide something, this similar product. Now we create unique situation. 20 year, nobody, not in the east, not in the west, able to compete IPG product in quality and also in price, cost and so on. We only one leaders here. Yeah. I mean, I don't think any of that's debatable. You know, your quality's proven out over decades in the channel. You know, is the market shifting more towards, you know, price focus, a price-first focus right now? Because this is the point in the cycle where you wouldn't necessarily expect it. Again, am I reading too far into just the second quarter trend, second and third, perhaps? Also a few that I have to add. In China, a very special situation today. This Chinese government, now all the politics made in house, not by, they push their company, regular customers, not to buy outside of China. It's government politics. They use all method, financial means, any other, to stop them to buy outside. Only made in China. It's quite much worse quality and so on, but made in China. You could not compete with this. Sorry, for regular customer, mass customer, it's Chinese policy. It's not only China. Many other country now, especially after the trade regulation were destroyed last year. There are many company now start to make such policy also, not only the East. Even America claim now made in U.S. now. Looking for any advantage to make, to buy only U.S.-made product. What in 20, 30 years ago situation, now they return to this situation which was 20, 30 years ago, when even laser from Germany was very difficult to sell in U.S. due to many regulation which create big obstacle to Europe to sell high quality product to U.S. Now the situation return to this 20 years ago, in beginning of this century. G reat- What you can make? It helps with the new policy of government and destroy relations, trade relations regulation between, worldwide regulation which were created during the last 20 years. Now they destroy. Great. Maybe just one follow-up just on that very topic. I'm curious on your take on, you know, Raycus being put on the U.S. blacklist. I don't think there's a bunch of Raycus units ending up in the U.S., so probably not much of an immediate direct impact on your business. Wondering if you may have any other nuanced views there. Thank you. We're not entirely sure how that's gonna impact them. You know, on the global stage and in terms of U.S. sales, it clearly does, and then we know that they are, and believe, don't know for certain, that they're buying some components from U.S. suppliers. I mean, I think we'll watch what they say in terms of what their impact on any critical components that they have, and then how that may impact them going forward. It's obviously not a positive development for them at all. Great. Thanks, Tim. Okay, next question is coming from Michael Feniger from Bank of America. Your line is now live. Hey, guys. Yeah, thanks for taking my questions. Apologies, I had some issues. If this was asked, I apologize. Tim, what is, what's baked into Q3 on the gross margin range? Can you kind of help us there? Yeah, I mean, very similar to Q2 in the range of 47%-49%. OpEx, I think last quarter guided like $83 million-$85 million. We're more in that sort of $85 million-$86 million range for Q3 as well. Okay. Great, Tim. Look, there's much investor worry on China right now. You guys face the tough comps. You mentioned the slowing in cutting. Tim, can you just help us understand, you know, the degree? Like in 2019, obviously your China revenue was down 25% sequentially. In other years, China's down a more moderate 5% sequentially. Just help us understand, you know, where the market right now is getting very worried. We're thinking of, you know, 2018, 2019. Where are we in that? The 2018, 2019 type drop off, is this a similar type of slowdown that we saw previously where a more moderate sequential decline? Just help us as the stock out right now is showing a lot of worry on this in Q3, Q4. No, it's not a very. At this point in time, it's not a similar comparison to 2018 or 2019, where you saw that very steep contraction and drop off. We're seeing some weakness in the cutting market, but there's still a lot of strength and demand coming from a lot of the other applications where we have inherent advantages and which markets continue to grow both in China and outside. I'm not gonna give a specific number on what is baked into guidance, but it's nowhere near that 25%. It's much lower than that impact on Q3 sequentially compared to Q2. It is a down quarter expected in China, but nowhere near like that level. Okay. You could not expect the cutting market will grow the next 50 years. Each application has saturation, has peak, and also then going down. Cutting market exists 15 years, huge, typically much more than many other. Now trend, cutting market has saturation and will go even units down. Why? Because trend to high power cutting lasers. 1 20 kW cutting system with 20 kW laser replace five, even 10 mid-power cutting system. Five or 10, one, only one system, new system. Much higher efficiency, much higher speed and so on. As a result, it's a market going to high power, but 20 kW units will saturate, it will go down. This is trend. Nobody can destroy and to change this trend. Cutting to talk about, we develop new application. Even cutting, we develop new application. Even foil, for example, before for EV. Before it's now we control maybe 80% of that. Very, very high. Foil market, 80% is fast-growing, temporarily is growing. It's cutting. We develop now this new process for cutting. It's a very thick metal. We want to remember only seven years, five, seven years ago, the best expert, technical expert said, "Oh, fiber laser only for few millimeters. Our CO2 never will replace it with even 5 mm." Now we develop process system, we develop machine even, which cutting to two, 20 mm is steel much faster and much higher quality than plasma cutting. Never before plasma cutting they use laser for 20 mm or 25 mm, 30 mm. Now we have such process. We have the demo units in exhibition. In one the new exhibition we will demonstrate new machine with fantastic speed and quality. All experts who saw this machine prototype was never, d id not believe when we make in the sample, they did not believe me without any correction now. This but such as now, one such machine we replace it with new application of cutting instead of plasma cutting, also very serious market. We develop this process, introduce market. New application. We get application for with green kilowatt, green lasers, for example, also for cutting hardy metals, very high reflection metals, and for micro cutting for medical analysis. It's also very interesting new market. All time we develop new and new process, not commodity like China. China maybe that's like single time generic the same. It's a, it's not high-tech product. It's not high-tech product. It's commodity product. We're not like to go to commodity with very low margin where for the, w e high-tech company, unique high-tech company. Thanks. Thank you for that. With all that was just said, you know, about cutting, you just said about saturation and cutting growth in new applications and your view on China, just, you know, helping to level set for everybody when we think of 2022, if global GDP is at 5% next year, and what you're talking about with new applications versus cutting, like how do we normally should be thinking about the puts and takes for next year if your backdrop is what you're playing out right now and you're thinking GDP might be in the 5%? Can you just help us frame some of the moving pieces there to think about? Thank you. I'm not gonna get drawn on like guidance for 2022 at this point in time. If global GDP remains strong, the underlying materials processing markets, particularly some of the growth coming from other areas and, you know, welding's been a standout performer, not just on EV, but in other areas. Recovery and additive, ablative processes for cleaning, the foil cutting applications, and even the other cutting applications, generally that market will grow at a significant premium to global GDP, sometimes as much as twice that amount. Then you have expected growth from some of our newer and emerging products to be added to that like medical, for example, ultra-fast microprocessing applications, the systems business and accessories and other areas. You know, that still gets us towards our double-digit growth rate that we are targeting and continuing to target for the medium term for the company. Thank you. Thank you. Next question today is coming from Mark Miller from The Benchmark Company, operator line. Thank you for the question. The strong growth in green lasers, besides solar, what else was the driver there in terms of the growth in the green laser sales? Primarily at the moment, the green is being driven by solar applications that actually improve the efficiency of the solar cells by 200 basis points, which is extremely, it's actually quite an extremely high increase in total efficiency. There are other green applications we're working on in things like microprocessing and semiconductor valves, and just referenced now development of much higher power green lasers for cutting and even welding of reflective materials. But those need you to get to kilowatt scale green power. Do you have any estimates in terms of the supply constraints, when they might ease? Would it be later this year, do you feel? I mean, our insight into this is the same as everybody else's insight. It's relatively uncertain. A lot of it's around the electronic component supply chain and processors and CPUs and things like that. It's probably gonna take a few months for this to really fully alleviate or potentially a bit longer, but we don't have any specific. Don't forget now inflation growing very fast. The way more and more company will make even Western company, which now even delay delivery, shipment product because waiting when the price will grow to provide higher price. All the planning to increase price for their product. The inflation is very fast. Nobody can predict what will be a price through three, four months, maybe even 50% more, even sometimes even 200%-300% more. Now, the many electronic components we have now happened. With such kind of components, the price was more than three times, up to 10 times. Of course, it's not the big, not the big component, but it demonstrates also the tendency of this market. Trend. Trend. Thank you. Thank you. Our next question today is a follow-up from James Ricchiuti from Needham & Company. Your line is now live. Tim, I want to also go back to the growth you're seeing in emerging. I wonder if you could just comment a little bit more specifically about the biggest components to the growth in that area. The biggest components of the growth in Q2 were the very high power pulse lasers for foil cutting, AMB, green, some of the accessories, I think as well. Medical. Medical, was it? Yeah, medical as well. Okay. Four or five areas. Just with respect to OpEx, you gave some color for Q3. Your overall OpEx was up a decent amount sequentially. How much of that is just the layering back of some of the temporary expense savings you saw coming back into the business in Q2? Or are there some renewed investments that are coming in? Some of it is just the layering back expenses. The other thing is that relative to the budget that was put together, our performance is above that. Total variable comp is a bit higher than. Not a bit higher, it's significantly higher than it was a year ago. That will probably moderate over time. We're continuing to invest, for example, on, you know, R&D to ensure that we're getting more emerging products and applications to the market that are the future growth of the company. We're not pulling back on things like, you know, R&D at this point in time. The other area on G&A which it requires some investment is, you know, the whole cybersecurity thing where you need to continue to invest on the IT infrastructure there. The cost of having a more significant cyber event on us, it's a challenge faced by every organization. You've got to invest in that to make sure that you harden your security and protect yourself as much as possible. Thank you. We've reached the end of our question and answer session. I'll now turn the floor back over to Eugene for any further closing comments. Thank you for joining us this morning and your continued interest in IPG. We look forward to speaking with you over the coming weeks, and we'll participate in a number of virtual investor events this quarter. Have a great day, everyone. Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.