Apple: Munster sees ‘massive’ 3D sensor buy — updated

Lumentum, Apple’s leading supplier of Vertical-cavity surface-emitting laser (VCSEL) components, created a bit of a stir Wednesday morning.

From a note to subscribers by Loop Ventures’ Gene Munster:

Massive VCSEL Laser Order Confirms Apple Continues to Bet Big on Augmented Reality

In the June-qtr, Lumentum recorded $5M in 3D sensing revenue, but more impressively they received over $200M in bookings in the quarter, which they believe will all be shipped by CY17. We believe the majority, if not they entire order, is all being shipped to Apple.

We believe these comments further confirms 3D sensing (and in-turn AR applications) will be a focus feature in the next iPhone. In addition, Lumentum highlighted they have increased VCSEL laser capacity by 25 – 30% from what they anticipated only one quarter ago.  Given the uptick in Management’s demand forecast, we believe advanced 3D sensing capabilities will be integrated in more iPhones that what most were previously expecting…

Following, these positive data points, we have three key takeaways regarding the upcoming iPhone launch. 1) The next iPhone launch remains on track to be released in September. 2) Advanced 3D sensing technologies are likely going to be integrated in more phones that previously anticipated. 3) This coupled with the release of Apple’s ARkit in June at WWDC, Apple continues to bet big on AR.

UPDATE: Tavis McCourt from Raymond James has also weighed in:

Our Thoughts: As it relates to Apple, all this tells us is the wheels are clearly in motion for the iPhone OLED builds. We still expect supply to be somewhat limited as we don’t believe optical componentry was ever likely to be a gating factor to overall production, but confirmatory data points should continue to improve investor sentiment around the iPhone OLED launch and its potential supply risk

2 Comments

  1. Fred Stein said:

    Opinions:

    AR capability will be in the phones for AR Apps that will be developed over time. In two years AR App developers will have a TAM of well over 200 M AR capable iPhones. AR tends to have more platform dependancies. AR Apps developed with Arkit for iPhones will not easily be ported to the Android ecosystem. Even with Android AR SDKs, fragmentation will create more headaches.

    Yes AR is overhyped. Mobile payments and SmartWatches are overhyped and are still small. But 10 years into the plain old App biz, AppSore crushes Play. AR, extends Apple’s advantage. Apps is the fastest growing part of Services which is on track to double every 3 or 4 years. We may see Apple announce a $100B Services biz in 6 or 7 years.

    1
    August 9, 2017
    • Stephen Young said:

      @Fred- Good point. I would add the impact to GM the App Store will have. Currently Robert Chira of Guggenheim estimates Services biz GM @ ~60%. With the App Store GM higher than the other parts of Services and growing faster the bottom line impact will be bigger than the top. So that could mean $70B+ gross profit from the services biz in the next 6-7 years.

      1
      August 10, 2017

Leave a Reply