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World Leadership in High Power Fiber Lasers IPG Photonics Corporation The Fiber Laser Company (NASDAQ: IPGP) Investor Presentation September 2016 www. ipgphotonics .com Safe Harbor Statement The statements in this presentation that relate

SLIDE 1

World Leadership in High Power Fiber Lasers

www.ipgphotonics.com

IPG Photonics Corporation

The Fiber Laser Company™

(NASDAQ: IPGP)

Investor Presentation September 2016

SLIDE 2

Safe Harbor Statement

The statements in this presentation that relate to future plans, market forecasts, events or performance are forward-looking statements. These statements involve risks and uncertainties, including, risks associated with the strength or weakness of the business conditions in industries and geographic markets that IPG serves, particularly the effect of downturns in the markets IPG serves; uncertainties and adverse changes in the general economic conditions of markets; IPG's ability to penetrate new applications for fiber lasers and increase market share; the rate of acceptance and penetration of IPG's products; inability to manage risks associated with international customers and operations; foreign currency fluctuations; high levels

f 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.

SLIDE 3

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  Q2 2016 sales of $252.8 million; YOY growth of 8%  $1.25 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

SLIDE 4

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, 54.5% GM in Q2 2016)

 Broad geographies, end markets and applications

 Asia & Australia 51%, Europe 33%, North & South America 15%

The technology leader and most profitable company in the rapidly growing fiber laser market

SLIDE 5

$- $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 5

Rapidly Taking Share in Large, Existing Laser Markets

$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

SLIDE 6

Materials Processing – Diverse End Uses and Customers

Automotive General Manufacturing Heavy Industry Oil & Gas Shipbuilding Nuclear Construction Aerospace Shipbuilding Semi/ Electronics Displays Consumer

SLIDE 7

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

SLIDE 8

IR Laser Applications

Welding

Additive Manufacturing

Cladding Cutting Brazing Drilling Marking Surface Treatment

SLIDE 9

$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

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

SLIDE 10

Niche Welding Applications

Transitions in Welding – Medium and Long Term

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 FUTURE

CURRENT

SLIDE 11

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 $65.2 $259.6 $49.7 $6.1 $24.8

$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

SLIDE 12

17,600 20,900 21,200 24,800 32,800 3,400 4,800 7,100 9,900 14,200 200 200 500 500 1,000 2,100 4,100 5,000 10,000 15,000 20,000 25,000 30,000 35,000

2011 2012 2013 2014 2015 Units & KW of Power Sold

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.

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

SLIDE 13

Diode Production a Significant Advantage

 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.

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 % Change in Packaged Diode Cost Tested Chips Produced

Diode Production and Cost Trends

Tested Chip Production Cost/watt % decrease (base yr 2009) Annual cost decrease %

SLIDE 14

 Expand addressable market and enhance future growth opportunities by addressing new application and customer specific requirements

Recent & New Product Introductions

 Marking & Engraving  Cutting  Welding  Fine Processing  Additive Manufacturing  Brazing  Drilling  Welding of Alloys and Specialty Materials  Cladding & Deposition  Ablation  Display & Imaging

 3D-Cinema  Entertainment and Projection

 Micro-processing  Medical Devices  Bio-Medical  Sensing & LIDAR

CURRENT FUTURE

SLIDE 15

Coupler Shutter Multi-Channel

BEAM SWITCHES HIGH-POWER COLLIMATORS SCANNING HEADS CUTTING HEADS WELDING HEADS

Highest Power Handling > 100kW
Fast Switch Time < 50usec
Energy or Time Share Options
Highest Power Handling > 100kW
Plug and Play with all IPG Lasers

High-Power Welding Heads Advance Welding Modules

Highest Power Handling > 50kW
Modules for Advanced Welding:

Seam Tracking, Wobble, Dual Spot, etc.

Highest Power Handling > 12kW
Advance Modules for Cutting

Manual & Motorized Cutting Heads Zoom Collimator Micro-Cutting Heads Integrated Marker High-Power Scanning Mid-Power Scanning

Integrated Solutions
Range of applications from low-

power marking to very high-power welding

Recent & New Product Introductions - Beam Delivery Products

 Expands total available market, simplifies customer supply chain & improves customer experience & results

SLIDE 16

Recent & New Product Introductions – Trifocal Laser Brazing

Laser Spot Laser Spot Laser Spot OBJECTIVES  Reliable brazing process  Increased brazing speed  High quality seam appearance  Multi-spot technology  Inline cleaning process ADVANTAGES  Cleaning and joining in one step  Reduction of manual cleaning effort, automated process  Improved reproducibility  Maximum joint strength  Increased brazing speed  Improved joint appearance: straight seam borders, smooth surface, no spatter, control of brazing temperature  Minimized heat effects on the assembly  Minimized cost

SLIDE 17

Future Opportunities in Micro-processing

Significant area of growth for ultra-fast pulsed lasers, and shorter wavelength lasers at the green and ultra-violet wavelengths

(US$ mm) Excimer/DUV $719 CO2/EUV $193 Semi/PC Board/Display $153 Solar/LED/Other $367 Other Applications 64% Addressable Market 36%

SLIDE 18

New Product Introductions: UV Fiber Lasers

Launch: Ready for introduction Market Opportunity*: >$110 million

Low Power UV Laser

$110 $110 $140 $140 2015 2019 (E)

Market Opportunity*

(US$ mm) *Source: IPG Estimates

Description: Laser marking module with 2-axis scanner integrated with IPG UV laser Applications/Markets: UV marking for white plastics and cabling; electronics, aerospace Advantages: IPG’s Complete UV Marking Module Provides Ease-

f-Integration, High Performance and Reliability to

Integrators and OEMs at a competitive cost point

SLIDE 19

Pico and femto pulses enable

microprocessing and medical applications

Key process areas are micro cutting,

scribing, 3D micro-milling, micro hole drilling and blind hole machining, laser lift-

ff, selective material removal and ultrafine

marking

Typical industries include production of

consumer and appliances, semiconductor industry, medical device manufacturing and medical procedures

Leverage IPG fiber laser technology into

the $130+M ultrafast laser market segment by developing compelling new lasers differentiated by performance, form factor and total cost of ownership

Ultrafast Lasers

Ultrafast lasers have short pulses of pico (10-12 s) to femtosecond (10-15 s) duration, pulse duration so short that little or no thermal damage occurs when laser interacts with materials.

SLIDE 20

New Product Introductions: Ultrafast Lasers

$620M >$1B $190M $190M $300M $300M 2015 2019 (E)

Market Opportunity*

Picosecond Femtosecond

*Source: Strategies Unlimited

Description: Air-cooled, rack-mountable chassis featuring remote head produces 500 femtosecond pulses at high repetition rates totaling >10 Watts average power Applications/Markets: Medical (Laser Eye Surgery), Scientific, Ultra-precise micromachining Advantages: Compact, affordable, reliable femtosecond laser Launch: Initial units available Strategy: IPG’s robust, affordable fiber lasers will enable femtosecond laser processing to enter the mainstream

Industrial Femtosecond IR Laser Industrial Picosecond IR Laser

Description: Air-cooled, rack-mountable chassis featuring remote head produces 50 µJ pulses at high repetition rate totaling >50 Watts average power Applications/Markets: Sapphire scribing (LED)/cutting (watch glass), high strength glass cutting (smartphone/tablet), thin film ablation (display/electronics) Advantages: Compact, affordable, reliable picosecond laser Launch: Ready for introduction Strategy: IPG will accelerate ultrafast market growth by providing robust, easy to integrate economical fiber lasers

SLIDE 21

Large Laser Systems Market Expands Addressable Market

38% 9% 2% 19% 10% 11% 10%

Macro and Micro Laser Systems 2015 - Approximately $9.6 Billion Forecast Average Growth Rate is 6% p.a.

Cutting Welding & Brazing Other High Power Micro-processing Excluding DUV & EUV Fine Cutting, Welding & Drilling Marking Other Low Power

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

*Excludes DUV and EUV systems for lithography

Welding, Other High Power and Micro-Processing are expected to be the fastest growing areas

SLIDE 22

Systems

 New system platforms offering specific laser and beam delivery tailored to specific applications  Small format cutting system, multi purpose welding system and micromachining systems

Small format cutting machine Standard platform system for welding, cutting & drilling Micromachining systems with micron accuracy

SLIDE 23

Recent & New Product Introductions - Other Macro-Systems

Pipe Cutting Laser cladding cells 5D Cutting Welding cells for thick section Aluminum & Titanium alloys 2D Cutting Hybrid Welding systems for thick section metal alloys

SLIDE 24

Other Applications Provide Potential Additional Longer Term Growth Opportunities

____________________ Source: Strategies Unlimited, IPGP estimate of potentially addressable market.

Fiber participation is relatively low in these other applications. Longer term opportunity will depend

n successful product development and market acceptance of fiber laser products.

2015 2020

(US$ mm)

$192 $161 $67 $455 $372 $628

Displays & Light Shows Sensors, LIDAR & Inspection Mid-IR Spectroscopy R&D Defense Medical

$569 $236 $108 $594 $524 $1,042

SLIDE 25

Laser Luminaire Project

 Major players in cinema industry have embarked on upgrading cinema image quality and overall moviegoers experience  Emerging transition of cinema projectors from Xenon Bulb to laser luminaires presents IPG with an opportunity to enter market with ~$200M annualized revenue potential  Unique $/W merit figure for IPG high power fiber lasers matches the projected “top down” laser adoption scenario  IPG high power lasers platform and Red and Green laser technologies enable leveraging IPG platform commonality to minimize IPG initial investments required to enter this market  Significant interest from leaders in cinema projectors and high end movie theater operators

SLIDE 26 Xe Bulb & Film

Cinema Image Quality: Current Status & Trends

Brightness in 3D Dynamic Range Color Gamut Resolution

Xenon Bulb Limitations Laser Advantages >4X Brighter 3D image (in 35mm format) Up to 100k:1 dynamic range vs. current 2k:1 Wider color gamut (life-like colors) High resolution (same for Xenon bulb and laser)

SLIDE 27

Cinema Market Opportunity: Up to $2.4B Over 8-10 Years

Segment Screen Count TAM over 8-10 years Ultra-Premium IMAX, Dolby, etc. Mostly 3D 2,000 $200M- $400M Very Large Screens 2D and 3D 5,000 $250M- $450M Large Screens 10,000 $300M- $600M Medium Screens 38,000 $425M- $950M 55,000* screens $1.2B to $2.4B**

Very Large Screens 2D and 3D Large Screens Primarily 2D, some 3D capable

Medium Screens, Mostly 2D

3D Ultra Premium

Projected Top-Down Laser Luminaire Market Adoption

Laser Strength Segments

Fiber Lasers or diodes

* Remaining 85.000 (+/-) screens WW are small size **Revenue opportunity is exclusive of service

SLIDE 28

 IPG Medical develops and manufactures lasers and laser-based medical systems:  FDA registered manufacturer (2016)  ISO 13485 (2016)  Main advantages:  High efficacy and safety of treatment due to optimum wavelengths and power parameters  Compact and ultrareliable package  Low cost of equipment and service  Dentistry:  New super pulse lasers for existing and new dental applications in collaboration with one

f the leaders in the market

 Urology:  New super pulse fiber laser for endoscopic fragmentation of urethral, ureteral, bladder and renal calculi, fragmentation of kidney calculi and surgery of benign prostatic hyperplasia

New Platforms for Laser Medicine Based on IPG’s Fiber, Hybrid Fiber Laser and Diode Sources

SLIDE 29

IPG’s Defensible Laser Position

Strong IP Portfolio Vertical Integrated Business Model Manufacturing Scale

SLIDE 30

Global Sales and Production Capabilities

____________________ Please note: IPG has 4 offices in China and 2 offices in Japan. Map excludes all rep offices

Sales & Support R&D, Mfg., Sales & Service HQ, R&D, Mfg. Sales & Service

10 Application Centers worldwide

50 100 150 200 2011 2012 2013 2014 2015 2016

Sales and Marketing Headcount

SLIDE 31

Three Distribution Channels

OEMs/Integrators Direct Sales Representatives

End User End User End User End User End User End User End User End User Factory 1 Factory 2 Factory 3 End User OEM Large Manuf. OEM Integrator

Representatives Direct Sales Direct Sales Direct Sales

Leveraged Sales Model Maximizes Market Reach

SLIDE 32

Unique Technology Driving Market Adoption

Fiber Laser

Laser Output Fiber Bragg Gratings Active Fibers Couplers Diodes

Modular Scalable Efficient Compact Proprietary Design and Components High Power Fiber Laser Assembly

Scalable kilowatt laser modules

SLIDE 33

Vertical Integration Drives Significant Benefits

33 33

SLIDE 34

Fab Operations Semiconductor Wafer Growth Diode Processing, Chip Mounting & Burn-In Laser diode Packaging Up to 120-watts of power Optical Preform Silica based glass MCVD method Dope with rare earth ions Fiber Draw Draw towers Fiber Block Modules Up to 2000 Watts Final Assembly Coupling Final burn in Shipment Components Bragg Gratings Isolators Couplers

Deep in technology Deep in experience

Vertical Integration

34 Optical Delivery Systems: Welding & Cutting Heads, Scanners, process fibers

SLIDE 35

World Leadership in High Power Fiber Lasers

www.ipgphotonics.com

Financial Overview

SLIDE 36

Investment Highlights

 Highly diversified revenue stream and business model  Customers, powers, geographies, applications  Vertically integrated model driving gross margin  High return on R&D and SG&A drives strong operating margins  Strategically focused and efficient R&D that creates value  Track record of profitability and financial discipline  Strong return on invested capital (excluding cash)  43% in 2015

Financial Highlights

SLIDE 37

Sales and Gross Margin Growth

____________________ (1) Gross margin includes stock-based compensation of $2.2mm, $3.2mm, $4.2mm, $5.3mm, $2.5mm and $3.0mm for 2012, 2013, 2014, 2015, YTD 2015 and YTD 2016, respectively.

$562.5 .5 $648.0 .0 $769.8 .8 $901.3 .3 $434.1 .1 $460.0 .0 54.2% 52.5% 54.1% 54.6% 54.5% 54.8% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 2012 2013 2014 2015 YTD 2015 YTD 2016

Gross Margin(1) (%) Sales ($ mm)

Revenue ($mm) Gross Margin

SLIDE 38

Operating Leverage Improvement

$562.5 .5 $648.0 .0 $769.8 .8 $901.3 .3 $434.1 .1 $4 $460 60.0 $208.9 .9 $218.1 .1 $283.8 .8 $342.0 .0 $169.5 .5 $165.0 .0 37.1% 33.7% 36.9% 38.0% 39.0% 35.9% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 2012 2013 2014 2015 YTD 2015 YTD 2016 Operating Margin(1) (%) Sales & Operating Income(1) ($mm)

Revenue ($mm) Operating Income ($mm) Operating Margin

____________________ (1) Operating income includes stock-based compensation of $8.6mm, $11.7mm, $15.2mm, $19.0mm, $8.9mm and $10.4mm for 2012, 2013, 2014, 2015,YTD 2015 and YTD 2016, respectively. (2) Operating margin includes FX gains/(losses) of $2.6mm, $5.6mm and ($3.4mm) for 2015, YTD 2015 and YTD 2016, respectively.

(2) (2) (2)

SLIDE 39

Strong Cash and Liquidity Position

 Long-term CapEx target <10% of revenue  Investments in product and manufacturing technology development,

capacity expansion and sales and service infrastructure

($ in thousands)

As of December 31, 2015 As of June 30, 2016

Cash and cash equivalents $582,532 $587,286 Short-term investments $106,584 $126,794 Total assets $1,453,429 $1,629,307 Revolving line-of-credit facilities

Long-term debt, including current portion

$19,667 $42,417 Stockholders' equity $1,259,528 $1,422,989

SLIDE 40

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, 54.5% GM in Q2 2016)

 Broad geographies, end markets and applications

 Asia & Australia 51%, Europe 33%, North & South America 15%

The technology leader and most profitable company in the rapidly growing fiber laser market

SLIDE 41

World Leadership in High Power Fiber Lasers

www.ipgphotonics.com

Appendix

SLIDE 42

Comparison: Cutting with Fiber & CO2 Lasers

0.5 mm GALVANIZED 1 mm STAINLESS STEEL 2 mm ZINC COATED 3 mm STEEL 5 mm COPPER 5 mm STAINLESS STEEL 18 mm STEEL

3 kW Fiber 4 kW CO2

+150% +130% +110% +50%

Faster Cutting Speed

 Fiber’s higher absorption and excellent beam quality enable:  Faster cutting speed with less power  Processing of a wider variety of materials

____________________ Source: Salvagnini

3kW Fiber 4kW CO2 Energy Consumables Cutting Gas Maintenance Compressed Air Laser Gas

 Improved productivity and significantly less energy consumption = lower cost per part

Lower Processing Costs

SLIDE 43

Additive Manufacturing (3D Printing)

 Selective Laser Melting or Sintering (SLM/SLS) of metals and metallic alloys are the fastest growth segments in additive manufacturing (AM) industry

 Previous growth in this market has come from plastics whereas metal processes are starting to gain significant traction

 Fiber lasers are a critical component of SLS/SLM additive manufacturing equipment with IPG having achieved strong market position for metal processes  New cost-effective IPG high power green lasers address shortcomings of current processes (surface roughness, parts tolerances) critical for aerospace and other industries  Move towards higher powers – up to 10-kilowatts – will drive market size

Airbus A-380 3D printed pneumatic manifold 43

Total Plastics & Metals

$0 $2 $4 $6 $8 $10 $12 2013 2015 2017 2019 2020

3D Printer Forecast

($ in billions)

CAGR: ~23%

Source: Wohler’s Report

SLIDE 44

Source: AirforceTimes

 Ablates paint from the surface  Vacuum removes 99.9% of residue  Does not require chemicals which produce toxic sludge or plastic beads  Manual paint stripping requires:  F-16 4 people  16 to 18 people for a C-130 

Dept. of Defense current paint stripping costs > $800

million per year (2015 Air Force LCMC)  Many applications outside of aerospace:  Cleaning of molds, casts, tanks, pipes & other surfaces  New generation of Nano-Second Pulsed laser with average power up to 4 kilowatt  Pulsed product limits thermal damage to cleaned surface

Laser Ablation for Paint Stripping and Cleaning

Sources: *Potential alternative report for the portable handheld laser small area supplemental coating removal system, prepared for USAF by SAIC, Feb. 2001 ** Penn State Applied Research laboratory, Automated Rotor Blade Stripping System (ARBSS) study for the USN, 2005

Environmental Benefits:

5 10 Media Blast* Solvent* Laser Ablation** Solid waste (lb.) generated Per 1 lb. on paint stripped Paint Stripping Method

Plus 165 lbs of Liquid Waste