Recently, Apple is expected to make changes to the Face ID system of the upcoming iPhone version. As a result, the Apple side stopped the supply agreement of the relevant component manufacturers. As a result, Coherent's Newton Aycliffe plant in County Durham, UK, which is owned by global laser giant Coherent, is at risk of being sold or closed.
The factory was once known as "one of the UK's largest microchip factories", first built by Japan's Fujitsu, was opened by Queen Elizabeth in 1991, and eventually came under Coherent's banner after several changes of hands.
Coherent is a fab that produces optoelectronic devices such as GaAs, SiC and InP filters, including vertical cavity surface emitting lasers (VCSELs) that support Face ID, Memoji, Animoji, and Portrait Mode selfies.
Previously it is due to win Apple's order, Coherent in 2021 announced a large-scale expansion of this factory, its revenue also increased from 13.3 million pounds to 104.5 million pounds. Who ever thought that now this is a flash in the pan, the loss of "fruit chain" is equivalent to cut off the factory's "financial artery".
In fact, in the Coherent 2023 fiscal year fourth quarter (March 30, 2023 to June 30, 2023) financial results show that the factory as early as the end of the 2023 fiscal year will stop the supply of major customers, and this customer is obviously Apple. This also led to questions about the viability of the plant, and a strategic review was then conducted to consider the possible closure or sale of the plant.
Sources say that it was these reasons that led to the plant laying off 100 employees earlier in 2023, leaving only 257 employees to fulfill their remaining contracts.
The reason why Apple has to adjust Face ID, mainly because the huge notch or the current "dynamic island" can not cover the notch of the lack of aesthetic appearance.
In March this year, a Korean media broke the news, Samsung Display (Samsung Display) will develop a new OLED screen face lens technology for Apple, the technology is mainly the iPhone Face ID facial recognition module fully integrated in the screen below, to achieve a truly full-screen design. This design is considered to be the direction of Apple's next improvement to the "dynamic island".
It is understood that Samsung has been working with Canada's OTI Lumionics to develop under-screen lens technology "UPC", the technology can be used in OLED panels, allowing Face ID lens hidden behind the screen panel to achieve a full-screen design effect.
At this stage, Apple's decision in Coherent's Newton Aycliffe factory, can be described as an "earthquake", and Coherent is not the only thing that makes Coherent suffer.
On the contrary, Coherent's performance in 2023 was not ideal (Q3 and Q4 of FY2023, Q1 and Q2 of FY2024), with annual revenues of about $4.629 billion, and a net income loss of $4.04 billion.
And in the third quarter of fiscal 2024, Coherent realized revenue of $1.209 billion. Non-GAAP earnings per share were $0.53, operating cash flow was $117 million, and $58 million of outstanding debt was repaid.
VCSEL laser technology iteration, was affected not only Coherent, Lumentum is also one of them. According to foreign media reports, Lumentum will start on May 6 this year, layoffs 750 people, accounting for 10% of its global workforce.
And Lumentum, as a supplier of VCSEL lasers for Apple's cell phone, occupied 37% of the global VCSEL market in 2022, becoming the second largest player in addition to Coherent. However, in February 2023, Apple's well-known analyst Ming-Chi Kuo had sent a number of tweets breaking the news that Sony will replace Lumentum (design) as the exclusive supplier of VCSELs for the LiDAR (laser radar) scanner for Apple's iPhone 15 Pro series smartphone models.
Apparently, the continued evolution of Apple's iPhone in 3D sensing technology has greatly contributed to the deep changes in the VCSEL ecosystem. With the addition of Sony and other emerging manufacturers, the supply chain pattern has changed, and the market share of the two companies Coherent and Lumentum, which originally dominated the market, is gradually being weakened.
With the current wave of AI sweeping the world, VCSEL as an important support technology for the realization of AI functions, is still an indispensable part of its future development.
Not long ago Coherent also announced that it has made a major breakthrough in improving the bandwidth of its vertical cavity surface emitting lasers (VCSELs), paving the way for next-generation optical interconnections at 200 Gbps per channel, thus realizing an optical transceiver with a capacity of 1.6 Tbps.
