Moderator: John Dexheimer, LightWave Advisors
Panelists:
- Karl Heinz Gulden, Ph.D., II-VI Inc.
- Mary Hibbs-Brenner, Ph.D., Vixar/Osram
- Ali Torabi, Array Photonics
- Martin Vallo, Ph.D., Yole Développement
The final panel of the Lasers & Photonics Marketplace Seminar presented markets and trends for the vertical-cavity surface-emitting lasers (VCSELs), one of the fastest-growing segments in the photonics market. The session was planned and chaired by John Dexheimer, President of Lightwave Advisors. Dexheimer has advised on more than 100 completed company transactions in photonics and related fields, including the IPO of Uniphase.
Dexheimer invited a panel that presented a wide variety of perspectives. First was Karl Heinz Gulden from II-VI, which started as one of the major VCSEL players from a production capacity standpoint. Then, Mary Hibbs Brenner, from Vixar, which is now part of Osram, talked about the history and her path from a startup to a global brand. Next, Ali Torabi, Array Photonics, brought in the perspective of a developer of new materials for longer wavelengths. And finally, Martin Vallo, a market analyst from Yole Développement, provided background of the market and some estimates for future development.
Photonics is a very fragmented market where most players have little or no knowledge of trends or of even major players in adjacent fields. John Dexheimer proved that when he presented the supply chain for 3D sensing. He asked the audience, which of the two dozen companies in the list would be valued more than $20 billion at the stock exchange. The audience had no answer. The answer was Largan (Taiwan) and Sunny Optical (PR China), two producers of plastic lenses.
This answer points to a reason why this market is big and rapidly growing: In 2019, about 1.5 billion smartphones have been sold. Most of them included a camera from one of the few companies making camera modules with plastic lenses. With the advent of sensing capabilities in smartphones, the 3D sensing hardware market has grown to what Dexheimer estimates as a $14 billion volume in 2020. This includes a 9–10% share from VCSELs.
While VCSELs for consumer electronics certainly make up the biggest market share in VCSEL sales, there are other opportunities arising as well. Martin Vallo expected a CAGR of 31% per year until 2024 for the entire VCSEL market (see figure). In his numbers, consumer electronics will remain the largest segment, tripling from about $1 billion towards $3.4 billion revenue in 2024. Automotive would grow towards $30 million (remember, this is VCSEL, not total sensor or module revenue). Industrial applications are expected to grow from $97 million to $238 million. But after all, almost 90% of the revenue would come from the mobile and consumer market segment.
Gulden provided an overview of the market segments and applications from the perspective of one of the largest providers of compound semiconductors. In other words, with 24,000 employees at 69 locations worldwide, II-VI has a large cleanroom capacity to produce the sophisticated semiconductor chips needed for VCSELs. Their main concern is to increase the wafer size to increase the output. Over 25 years, they have transitioned from 2- to now 6-inch wafer diameters. This enables higher power from a single VCSEL since they use more emitters. Of course, higher volumes reduce cost per emitter.
Beside the volume increase, they see a number of additional trends:
- Integration: detectors, driver electronics and optical elements could be included on a chip or module level
- Volume: new applications will arise because of falling costs per emitter
- New material systems such as InP and GaN will extend the spectral range of VCSELs and also lead to new markets
Hibbs-Brenner from Vixar/Osram dove deeper into these possible applications. Osram Opto Semiconductors is the world's second largest manufacturer of optoelectronic semiconductors after Nichia. Just recently, its mother company Osram GmbH has been purchased by ams, another major player in the VCSEL market.
Vixar started as a fab-less VCSEL design company in 2005. After the acquisition by Osram in 2018, they had full access to their in-house capabilities with chip manufacturing and packaging. Hibbs-Brenner shared a number of lessons from her startup phase: Should you have a cheaper solution? Probably not. Having a big idea on an emerging market? Raise money and run fast!
For new market trends, she expanded the automotive market (interior vs. exterior applications). For lidar, more power, more integration, and smaller rise times are leading technical trends. In medical and healthcare markets, the question is whether to go for millions of disposable devices that rely on some tens of thousands of devices, probably with some higher-level assembly.
Ali Torabi, Array Photonics, added his view as a developer of new materials. New materials could either extend the spectral range of VCSELs to the infrared, namely 13XX nm for more eye safety. This would also reduce solar and atmospheric interference for lidar. Future developments could extend the technology even to VCSELs at 15XX nm.
In the final discussion, Dexheimer went back to the point that VCSELs are one of the few markets within photonics with a substantial growth potential. The main application remains within smartphones. The uptake of some Chinese companies will drive this beyond the proprietary technology of Apple.
So far, VCSELs have been applied mostly for face recognition on the frontside of smartphones. VCSELs on the rearside may assist photography or enable 3D capturing. It remains to be seen how much traction these applications will generate.
For the VCSEL manufacturers, it is also relevant to see how the different players along the value chain evolve. A big market that might attract, for instance, more engagement by LED makers. In particular, those with MOCVD reactors might be relevant. Besides IP restrictions, new players will be faced with the quality and volume considerations of the smartphone makers.
After all, the future looks bright for the VCSEL. While datacom was the first market, consumer electronics have given the market a real growth. New applications in automotive, healthcare, and industrial applications such as additive manufacturing will drive further growth. Falling emitter costs and new materials may even open up new, yet unknown applications.
