Last year, Apple introduced face recognition with the iPhone X, marking a breakthrough in 3D sensing technology and setting a new trend. This year, the company continues to integrate facial recognition into its devices, signaling a broader industry shift. Analysts predict that major smartphone manufacturers will follow suit, significantly expanding the market for 3D sensing applications. The GaAs supply chain is currently performing well, with the upstream epitaxial plant operating smoothly, and foundry operations remaining stable. Hongjieke plans to increase capital expenditures, focusing on expanding its epitaxial production and VCSEL (vertical cavity surface emitting laser) capabilities—key components for 3D sensing.
This year, the company has allocated approximately NT$7 billion for capital spending, a substantial rise from last year’s RMB 4 billion. Most of this investment is directed toward purchasing advanced equipment and building new production lines. These upgrades are expected to be fully operational by the second half of the year, helping meet growing customer demand. Last year, the gallium arsenide production capacity was around 29,000 units. With the new equipment in place, the monthly output is expected to increase by 7,000 to 8,000 units by year-end. The additional capacity will be used for both RF components and 3D sensing parts.
Recently, rumors circulated that Apple may bring in new 3D sensing suppliers, raising concerns about stability. However, Wang Yuqi, the company's general manager, emphasized that competition is constant and that Hongjieke remains a leader in the field, with no fear of challenges. So far, there have been no reported changes in customer order volumes, and the shipment outlook for the second half of the year remains positive.
Hongjieke has been actively investing in VCSEL research and development, with applications spanning smartphones, laptops, automotive systems, and medical devices. The company expects more impressive results this year. In 2022, VCSEL revenue accounted for roughly 2% of total sales. As market demand grows, the company plans to scale up production, which should enhance overall performance.
In response to the rising demand for 3D sensing, Hongjieke’s upstream GaAs epitaxial plant has already added six MOCVD machines in the first half of the year. Depending on customer needs, further expansion of MOCVD capacity is planned for the second half, particularly to meet the requirements of customer Lumentum.
According to the latest estimates from IEK, the global 3D sensing market was valued at around $1.116 billion in 2016. By 2020, it is projected to double to $2.662 billion, with a compound annual growth rate exceeding 20%. Smartphones will continue to be the primary application for 3D sensing, but the technology is also expected to expand into other fields such as automotive, security monitoring, and the Internet of Things.
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