Based on solid-state lighting reports including Edge Emitting Lasers: Market and Technology Trends, Optical Transceivers for Datacom & Telecom and InnoLight’s 400G QSFP-DD Optical Transceiver… performed by Yole and its partner System Plus Consulting, Martin Vallo, Technology and Market Analyst (Solid State Lighting) at Yole Développement (Yole) offers today a short analysis of this acquisition.
The first reason for this is that the two companies are not particularly similar. Lumentum is a vertically integrated telecom, datacom and 3D sensing laser diode manufacturer while Coherent specializes in laser systems and phototonics for microelectronics, precision manufacturing, instrumentation, and aerospace and defense markets.
The acquisition makes Lumentum the largest photonic and compound company at an exciting period in the industry. It will also extend its reach outside of the telecom, datacom and 3D sensing markets, as it adds Coherent’s tools for OLED and microLED displays using its excimer lasers, to its own product offering.
Recently, the $10 billion global laser and photonic market has seen a period of activity, with the acquisition of Electronic Scientific Industries (ESI) by MKS Instruments and the merger of II-VI and Finisar (both in 2018). These moves created the second and third largest companies respectively, in the industry.
Part of the reason for the activity in photonics is the role it plays in many areas which are currently attracting interest. These include communication equipment, in particular for 5G in wireless networking; new materials for next-generation consumer devices; energy storage (Coherent brings directed energy in defense applications and precision battery welding for the automotive market); advanced bioinstrumentation, including Coherent’s science instrumentation; advanced microelectronics, including Coherent’s advanced packaging and micromachines for 3D microstructures, and its wafer inspection; flat panel and OLED displays; and LiDAR for electric vehicles and autonomous vehicles.
The acquisition strengthens the laser offering for LiDAR, for assisted driving systems or autonomous vehicles. Lumentum offers 1550nm narrow line width DBR diode lasers, which are suitable for long range, frequency modulated continuous wave (FMCW) radar in LiDAR systems as well as high power 940nm VCSEL array laminators for short range LiDAR and in-cabin monitoring applications.
These diodes offer consistent reliability and can be produced in high volume at high quality and the manufacturing is scalable to meet a future increase in demand for ADAS and autonomous vehicles.
Lumentum is the also industry’s largest supplier of devices for 3D sensing, used in facial recognition systems in phones and other portable devices. It already works closely with Apple and the smartphone company is expected to migrate from LED technology to proprietary miniLED, and then microLED, technology in future smartphones and tablets. These displays for iPhones and iPads, whether manufactured in-house or externally will require specific laser tools. Will the Silicon Valley support Lumentum in its push for innovative LED technology? Recent rumors indicates that Apple got back with plans to develop a consumer-facing car. Reportedly, Apple is in negotiations with several car manufacturers with an aim to start production in 3 to 6 years. Future autonomous and electric vehicle made by Apple will for sure adopt multiple photonic devices for 3D sensing as well as laser systems for its manufacturing.
The acquisition of Coherent by Lumentum has happened ahead of an anticipated demand for OLED and microLED, both of which require excimer laser technology. As a major supplier of excimer lasers, Coherent was already a customer for Lumentum and the acquisition was met with mixed reactions on the stock markets. Following the acquisition announcement, Lumentum’s share price was initially down 10.8% – probably because it was paying more than half of the acquisition price with stock – while Coherent’s rose by 34.7%.
There is likely to be an explosion in demand for OLED and microLED products, which require excimer lasers and the popularity of OLED panels and microLEDs is undeniable, but when this explosive demand will manifest is less certain.
About the author
Martin Vallo, PhD serves as a Technology & Market Analyst specialized in solid-state lighting technologies, within the Photonics, Sensing & Display division at Yole Développement (Yole). With 9 years’ experience within semiconductor technology, Martin is involved today in the development of technology & market reports as well as the production of custom consulting projects at Yole.
Prior his mission at Yole, he worked at CEA (Grenoble, France), with a mission focused on the epitaxial growth of InGaN/GaN core-shell nanowire LEDs by MOCVD and their characterization for highly flexible photonic devices. Martin graduated from Academy of Sciences, Institute of Electrical Engineering (Slovakia) with an engineering degree in III-nitride semiconductors.
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