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From being worth $450M last year, Yole Développement is expecting the IR light source market to reach $1.5B in five years, representing a 19% compound annual growth rate. This is one of many new findings from Yole’s new report, “IR LEDS and Lasers - Technology, Applications and Industry Trends”, released this week.

 2017 to 2027 IR light source market forecast Yole 2017

Source: IR LEDS and Lasers - Technology, Applications and Industry Trends, April 2017, Yole Développement

Why such growth? The introduction of 3D imaging for facial recognition and augmented reality in mobile phones is one of the key driving forces. Hundreds of millions of units are being produced this year for Huawei, Apple and Samsung, to name just the three leaders. From nearly zero 18 months ago, this market alone will be worth $400M in 2022. In addition, proximity sensors, motion sensors, autofocus modules, surveillance cameras and machine vision together are also expected to form a market worth more than $840M in 2022. Together with the 3D imaging applications this represents more than 80% of the IR light source market for 2022. Four of the main applications – 3D imaging, proximity sensors, motion sensors and autofocus modules – are directly connected to consumer applications in general but specifically to mobile phone applications. Choices are being made by Apple at the moment, and by Samsung for its S8, and by Huawei for its next generation flagship phone to follow on from what it chose in its P9 and P10. Their decisions will shape this industry for remarkable growth.

And this is just the beginning! Between 2022 and 2027, Yole forecasts that new applications like LIDAR for autonomous vehicles, gas sensors for air quality monitoring, horticultural lighting, blood pressure sensors, blood glucose sensors and beyond will push the boundaries of the IR light source market to an astonishing $3.8B business. We are talking of a market expanding 9x in the next decade – just incredible. In the LIDAR business alone, the investments in technology development over the last three years have been very significant and will continue for the next five years. The first products implemented in cars for the average person are set to reach the street as soon as 2019.

So now the race is on for IR light source manufacturers to get access to these huge business opportunities. Most of the applications will use VCSEL devices, from small numbers of pixels for proximity sensors to quite large arrays for 3D imaging by 2022, with less than half using LEDs. Osram, Vishay, Everlight, Epistar, Sanan, and Nichia are competing in order to get the lion’s share of the smaller LED market. And new developments will be mandatory to fulfill the requirements of emerging and new applications such as higher power output, longer wavelength, multi-wavelength devices, and increased illumination range. But the industry is only starting, and LED manufacturers should be able to capitalize on knowledge developed in visible LED manufacturing. For VCSELs, the industry is just emerging but is likely to grow rapidly due to strong market pull. The new Yole report provides a complete analysis of the competitive landscape in IR light sources including technology aspects, from the point of view of the light source manufacturers but also from the application and end market perspective.

But the more interesting thing is that it’s not just a matter of technology and product development, or having manufacturing infrastructure to achieve the right production scale. It is also a matter of business model. The mobile phone 3D imaging opportunity is also attracting companies with different models. ams, for example, has in one year acquired Heptagon, which brings its different 3D imaging technologies and its light management platform with lenses, modules and optics, and Princeton Optronics, a leader in VCSELs. ams is already a strong leader in proximity sensors and all-in-one devices. But these two acquisitions enable ams to offer an integrated solution, which is quite unique in the industry. Now ams integrates all these elements in a complete optimized solution, which helps save its customers money by limiting the stacking of margins. All the results will now be in the implementation of this integration strategy.

3DToFcameraopportunities Yole

Source: IR LEDS and Lasers - Technology, Applications and Industry Trends, April 2017, Yole Développement

Is the integrated business model the winning one? Only the time will tell. Multiple companies have been able to add value along the supply chain, from the IR light source players we have already named, to lens and optics vendors like Largan and Himax, camera module makers like LG Innotek and Sharp, and also image sensor and detector manufacturers like STMicroelectronics and Sony. Alliances and collaborations are now spreading across the industry to provide access to applications and market segments.

What will happen now? There will be winners and losers. But if you look at all the more than 35 applications for IR light sources identified and analyzed in Yole’s new report “IR LED and laser technology and application trends” there is room for a good number of IR light source manufacturers because no one technology or device suits all applications. From LIDAR to 3D imaging and proximity sensing, the IR light source’s specifications vary widely, as does the price, from a few cents to multiple tens of dollars for higher power applications.

So the sun is shining on IR light source manufacturers, providing a new business opportunity able to increase volumes and margins beyond those available in general lighting applications. IR and UV light sources are two niche applications that, in getting larger, are driving growth of LED and laser diode manufacturers.

Source: www.yole.fr 

 

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