Last year, Apple introduced facial recognition for the first time with the iPhone X, setting a new trend in 3D sensing technology. This year, the company continues to push forward with face recognition features, and the industry is closely watching as major smartphone manufacturers are expected to follow suit. This growing demand is expected to significantly expand the market opportunities for 3D sensing applications. In this context, the GaAs supply chain is performing well, with the upstream epitaxial plant being newly established, while the foundry operations remain stable. Hongjieke plans to increase capital expenditures to further expand its capabilities in epitaxial growth and VCSEL (Vertical Cavity Surface Emitting Laser) production, which are essential components for 3D sensing.
This year, the company has estimated capital expenditure of around NT$7 billion, a substantial increase from last year’s RMB 4 billion. The funds will be primarily used for purchasing advanced equipment and building new production lines. These upgrades are expected to be fully operational by the second half of the year, helping to meet the rising customer demand. Last year, the gallium arsenide production capacity was approximately 29,000 units. Once the new equipment is in place, the monthly output is expected to increase by 7,000 to 8,000 units by the end of the year. The additional capacity will be allocated to producing RF components and 3D sensing parts.
Recently, there were rumors that Apple might introduce new suppliers for 3D sensing, raising concerns about potential instability. However, Wang Yuqi, the company’s general manager, emphasized that competition is always present, and the company remains confident in its leading position. So far, no changes in customer order volumes have been reported, and the shipment momentum in the second half of the year is still expected to be positive.
Hongjieke has been actively investing in VCSEL research and development, with applications spanning smartphones, laptops, automotive systems, and even medical devices. The results are anticipated to be more impressive this year. Last year, VCSEL-related revenue accounted for about 2% of the company's total sales. With the expansion of market applications, the company expects to increase production, thereby enhancing its overall performance.
In addition, the upstream GaAs epitaxial plant has been expanding to meet the increased demand for 3D sensing this year. In the first half of the year, six MOCVD machines were added to the production line. Depending on customer demand in the second half, further expansion of the MOCVD machines may be necessary, particularly to support the needs of customer Lumentum.
According to the latest estimates from IEK, the global 3D sensing market was valued at approximately $1.116 billion in 2016. It is projected to double to $2.662 billion by 2020, with a compound annual growth rate exceeding 20%. Smartphones are expected to be the primary application for 3D sensing in the future. Currently used in mobile devices, 3D sensing technology is also set to expand into other fields such as automotive, security monitoring, and the Internet of Things.
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