Glossary and definitions 2

Table of contents 3

Report objectives 6

Scope of the report 7

Report methodology 8

About the authors 9

Companies cited in this report 10

What we got right, what we got wrong 11

3 page summary 12

Executive summary 16

Context 39

• Scope of the report

• History of VCSELs
• Overview of 3D sensing solutions
• 3D sensing adoption in automotive

Market forecast 48

• Comparison with previous VCSEL forecasts
• Key element impacting the VCSEL market
• Breakdown by applications – Main applications
• Global VCSEL market volume forecast in Munits, by market segment
• Global VCSEL market revenue forecast in $M, by market segment
• Global VCSEL market volume forecast in Munits, by application
• Global VCSEL market revenue forecast in $M, by application
• Focus on datacom – VCSEL market volume forecast in Munits
• Focus on datacom – VCSEL market revenue forecast in $M
• Global VCSEL market share evolution – 2017 to 2020

Market trends 67

• Segmentation by wavelength
• VCSEL applications

Market shares and supply chain 86

• 2020 revenue of main players
• Mobile and consumer market share changes – 2017 to 2020

Technology trends 107

• VCSEL structure along the IR spectrum
• Main challenges of long-wavelength VCSELs
• VCSEL manufacturing – Typical process flow
• VCSEL driver
• Mobile and consumer applications
• Automotive and mobility applications
• Industrial applications
• Telecom and infrastructure applications

Outlook 224

Yole Group of companies’ presentation 228

MOBILE AND AUTOMOTIVE APPLICATIONS WILL BENEFIT FROM TECHNOLOGY EVOLUTION

VCSEL technology is continuously evolving. It has already occurred in the past with the transition from 850nm-based VCSELs for datacom applications to 940nm-based VCSEL arrays for 3D sensing applications. A few years ago, smartphones embedded a notch in the front display to implement the selfie camera and the face recognition module. These elements take up space and are unsightly. The goal is to hide these elements under the display. To enable this, a transition in the wavelength used for 3D sensing would be necessary for the light to penetrate the display. It appears that OLED displays are transparent to short wavelength infrared (SWIR) light, around 1300 to 1400 nm. The shift from 940nm to such SWIR wavelengths will deeply impact the components and the supply chain. For 940nm, VCSELs are made from 6” GaAs wafers. SWIR VCSELs should be based on InP, which is much more difficult to process, and manufacturing is currently done on 2” and/or 3” wafers.

The impact is not limited to the light source but also to the receiver, where silicon-based Single Photon Avalanche Detectors (SPADs) are used in the Near Infrared (NIR) region. Silicon can no longer be used in the SWIR region. SPADs will have to have to be based on InGaAs material or using quantum dots. In both cases, the technology is still emerging, manufacturing yields are low, and availability of components is limited. This will lead to higher component costs for both the emitter and the receiver. Only Apple, whose smartphones have Average Selling Prices (ASPs) higher than $1,000, can afford such a technology change.

Smartphones are not the only application where technology is evolving. Automotive applications, and LiDAR in particular, will benefit from recent developments. Multijunction technology represents the next leap forward for the VCSEL industry. The multi-junction VCSEL offers many significant benefits to users. Multi-junction VCSELs, in a back-side emitting configuration, would have several advantages over their conventional sibling. Eliminating wire bonds would improve the VCSEL performance and allow the use of micro lenses to have more compact packages.
This report gives insights into manufacturing yields of VCSELs with details on each manufacturing step. It presents the technology evolution of VCSELs with long wavelength and multi-junction VCSELs.

1. A MARKET LED BY TWO GIANTS

At the beginning of the 3D sensing era, one player, Lumentum, took more than 40% of the market in 2017, thanks to its strong involvement in Apple’s supply chain. The remaining main players were II-VI, ams, Finisar, and Trumpf. Since then, II-VI acquired Finisar and is now strongly involved in Apple’s supply chain as well. In 2020, Lumentum and II-VI took almost 80% of the VCSEL market. II-VI grew faster than the VCSEL market and had similar revenues to Lumentum in 2020.

The industry seems to have consolidated with recent acquisition of Philips Photonics by Trumpf and Osram by ams. Several small acquisitions may continue to happen to target new applications for VCSELs. One of them was the acquisition of Trilumina by Lumentum to target the automotive market.
The acquisition of Osram by ams was the opportunity to merge two players with different expertise. Osram was one of the leaders in different solid state light sources, strongly involved in the automotive industry. ams is a strong player with solid experience and know-how in sensors. The merging of the two companies, merging sensing and illumination expertise, is strategic as these domains will be key in the future.

A few years ago, some LED players wanted to enter the VCSEL industry to manufacture devices with higher margins. But as of Q3-2021, the only LED manufacturers having VCSELs in their portfolio are the ones that acquired VCSEL companies. VCSEL manufacturing is much more complex than LED manufacturing. The best VCSEL manufacturers’ manufacturing yields are 66% in 2021. New entrants are still lagging far behind.

The report estimates the global market share of VCSEL manufacturers with a focus on mobile and consumer markets. The report also compares growth of main players with the growth of the VCSEL market.

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3. MOBILE 3D SENSING REVENUE DOMINATES BUT AUTOMOTIVE AND INDUSTRIAL REVENUES ARE EXPECTED TO TAKE-OFF

4. The global VCSEL market is expected to increase from $1.2B in 2021 to $2.4B in 2026 at compound annual growth rate (CAGR) of 13.6%. This market is dominated by the mobile and consumer market, which will grow from $797M in 2021 to $1.7B in 2026 at a CAGR of 16.4%. In this market, revenues linked to smartphones are expected to remain stable in 2021 and 2022. This is explained by the decreasing adoption of 3D sensing modules by Android players. In 2021, only Apple is implementing VCSELs and developing AR applications. This will create a relatively flat market for two years. Growth could be back after that with Android players.Data communications is the second biggest market, expected to generate revenue of $430M in 2021 and expected to reach $566M in 2026 at a CAGR of 5.6%. The automotive market is quite small in 2021 with revenue of $1.1M, but is expected to reach $57M in 2026 at a CAGR of 122% with applications in LiDAR and driver monitoring. Industrial applications are expected to generate revenue of $16M in 2021 that could reach $21M in 2026 at a CAGR of 6.3%. Industrial revenue could take-off at mid-term with the emergence of applications using 3D LiDARs. These applications will be related to smart infrastructure and logistics.This report presents a comprehensive overview of the main VCSEL applications, including an indepth analysis of 3D sensing in the consumer and automotive landscapes as well as datacom and industrial applications.
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Accelink, Aixtron, Alight, ams, Anadigics, Apple, Avago, AWSC, Beam Express, Bosch, Broadcom, Canon, Changelight, Device Innovation, Egismos Technology Corporation, Emcore, Epistar, EpiWorks, Finetech, Finisar, FLIR, Foxconn, Fuji Xerox, Fujitsu, Global Communication Semiconductor, Google, Hamamatsu, Heptagon, Himax, HLJ, Honeywell, Honor, Huawei, Ibeo, II-VI, Infineon, Intel, IntelliEPI, IQE, JDSU, Landmark Opto, Lasermate, Lasertel, Laytec, LeddarTech, Lenovo, LG, Lumentum, LuxNet, Mantis Vision, Masimo, Namuga, Oclaro, OmniVision, Oppo, Optowell, Orbbec, Osram, Oxford Instruments, Picolight, POET Technologies, Primesense, QSI, RayCan, Realsense, Riber, Ricoh, Samsung, Sanan, Santec Corporation, SCAT, Seiko Epson, Seminex, SensL, Shiraz University, Sick, SinoSemic, SoftKinetic, Sony Corporation, Stanley, STMicroelectronics, Sumitomo Chemicals, Sunny Optical Technology, Thorlabs, TriLumina, TrueLight Corporation, Trumpf, Tyson Technology, Ulm Photonics, Ultra Communication, US Lasers Inc., Ushio, Veeco, Vertically Integrated Systems, Vertilas, Vertilite, Vixar, VPEC, Win Semiconductor, Xiaomi, and more.