US Laser Maker nLIGHT Loses $17 Million in Shipments as China Optics Stalls

nLIGHT, the high-power laser manufacturer headquartered in Camas, Washington, told investors on August 6, 2026 that delays in obtaining optical components from Chinese suppliers will push roughly $17 million of product revenue out of its third quarter. The warning came alongside second quarter results released after the close of Nasdaq trading and discussed on an investor webcast at 17:00 Eastern Time the same day. All times in this article are Eastern Time.

The quarter itself was the strongest in the company history. Revenue reached $82.6 million, up 33.8% from $61.7 million a year earlier, and product revenue set a record at $59.4 million, a 45% increase. Gross margin improved to 31.1% from 29.9%. Adjusted EBITDA nearly doubled to $10.7 million and the net loss narrowed to $1.3 million from $3.6 million. Aerospace and defense generated $57.3 million of the total, with microfabrication at $13.3 million and industrial at $12.0 million.

The problem sits entirely in the outlook. nLIGHT guided third quarter revenue to a range of $63 million to $73 million, split at the midpoint between about $43 million of product revenue and $25 million of advanced development revenue. That range deliberately excludes around $17 million of shipments the company had expected to deliver between July and September but now expects to hand over in later quarters. Gross margin is guided to 24% to 30% and adjusted EBITDA to $1 million to $7 million, a sharp step down from the second quarter as lower volumes weigh on fixed cost absorption.

Chairman and chief executive Scott Keeney linked the delays to tighter Chinese scrutiny of goods that carry both civilian and military uses. The parts involved are common optics rather than specialised components, but China has built an outsized position in that part of the supply base. Management said the shortfall lands mainly on commercial products and that defense programs remain on track, while acknowledging indirect exposure because some commercial items are built into defense hardware. The company also flagged that fourth quarter timing is still uncertain.

The market reaction was severe. Shares closed at $75.44 on August 6 and fell about 15% in after hours trading. The slide deepened the following session, with the stock down 23.8% at $57.51 by 15:07 on August 7 and finishing near $56. The move wiped out roughly $1.1 billion of market value, about 63 times the deferred revenue, which suggests investors are pricing in a prolonged disruption rather than a one quarter timing issue. Sell side coverage held firm. Needham cut its estimates for the second half of 2026 and for 2027 but kept a buy rating and a $90 target, and William Blair and Stifel reiterated buy ratings on August 7.

The disruption fits a pattern that has been building through 2026. Since March 2026 Chinese customs has required a separate export licence for every order of laser products listed on the country dual use control list, while laser sources outside that list need a third party laboratory test report and a written declaration for each shipment. The 2026 edition of the Chinese dual use items and technology catalogue added roughly 70 controlled entries compared with the 2025 version. Enforcement has hardened in parallel. In June 2026 the chairman of a large Chinese precision optics company was placed under compulsory measures by the Shanghai customs anti smuggling bureau over exported lenses containing germanium that were allegedly declared as ordinary optical glass. A second wave of rare earth export controls covering holmium, erbium, thulium, europium and ytterbium, all of which feed into lasers and advanced optics, is scheduled to take effect on November 10, 2026.

The wider optics trade dispute is escalating at the same time. In early August 2026 reports emerged that the US Federal Communications Commission is drafting a ban on imports of Chinese made optical modules and related data centre components. Chinese suppliers account for roughly 60% of global datacom optical component revenue, and analysts have warned that Beijing could answer any import ban by restricting lenses, isolators and other passive parts where Chinese capacity is hardest to replace. Companies such as nLIGHT sit in the middle of that exchange, dependent on Chinese optics for commercial lines even as their defense work moves further into US government priority programs.

nLIGHT has set out several mitigation steps. The company says it has been reducing its exposure by shifting manufacturing out of China, working through existing supplier relationships, qualifying new sources outside the country and redesigning products where a change of specification would open up alternative sourcing. Management put the likely resolution window anywhere between a few months and several quarters, which is why the deferred revenue has not been assigned to a specific period.

The balance sheet gives the company room to absorb the delay. nLIGHT ended June 2026 with $295.8 million in cash and $34.7 million in marketable securities, a total of $330.4 million, and no drawn balance on its credit line after repaying $20 million during the first half. A public offering completed earlier in the year brought in $192.2 million net of underwriting discounts. Operating cash flow for the first six months reached $30.4 million against an outflow of $1.4 million a year earlier.

Defense demand remains the offsetting story. In July 2026 nLIGHT was selected for a Joint Laser Weapon System agreement supporting the US Department of War cruise missile defense architecture, with an initial award of $44 million and a program ceiling of up to $627 million covering follow on development, integration and potential production. Initial prototypes are rated at about 150 kW, with later versions scaled toward the 300 kW to 500 kW range. Management expects the program to start contributing revenue in the third quarter of 2026 and to ramp significantly in 2027. Work on a 1 MW coherent beam combined laser under the second phase of the High Energy Laser Scaling Initiative is still targeted for delivery late in 2026, and the company added 50,000 square feet of manufacturing and office space in Longmont, Colorado in January 2026 to expand high energy laser output.

As of August 10, 2026 the disruption remains unresolved and no supplier qualification timeline has been made public. Backlog and customer demand are described as intact, so the deferred shipments are expected to convert rather than disappear. The next scheduled opportunities for an update are investor conferences hosted by Needham on August 18 and by Jefferies later in the third quarter, with the third quarter results due in the autumn. For buyers of industrial and microfabrication lasers, the practical consequence is longer lead times through the second half of 2026 and a supply base that is being rebuilt around non Chinese optics.