Increased Smartphone and Automotive Integration Boosts Global VCSEL Market

Posted Jul 11, 2019 by Yole Development

The global VCSEL market, according to market analyst Yole Development, should surpass US $3.7 billion by 2024, growing at a 31% CAGR between 2018 and 2024. The consumer market segment largely contributes to these impressive figures with a market value of US $3.4 billion by 2024. Behind the smartphone applications, the automotive sector with emerging 3D sensing functionalities is also playing a key role. Yole announced a 185% CAGR between 2018 and 2024 as well.

Today, up to three VCSEL dies can be integrated in a smartphone. 3D recognition with the flood illuminator, the dot projector and the proximity sensor, all are based on VCSEL laser components. Already integrated in flagship smartphones, these functions will quickly find a home in all smartphones, causing a sharp increase in VCSEL demand.

Yole Group of Companies, including Yole and System Plus Consulting, have released two relevant reports focused on VCSEL technologies and its applications: VCSELs – Market and Technology Trends and VCSEL in Smartphone – Comparison, performed respectively by Yole and System Plus Consulting. This time again, both companies combined their market and technical expertise and revealed their vision of the VCSEL industry, technology status, players’ positioning and strategy of each of them, highlighting the direct link between each VCSEL type and its applications. Yole and System Plus collaborated to get a better and accurate understanding of the market evolution and technical issues. Since the previous edition, Yole Group of Companies took into account the market evolution, especially the drastic decrease of VCSELs' ASP.

According to Yole, in 2017, the total VCSEL cost per smartphone was estimated at US $4 – US $5. In 2018, this dropped to US $2 – US $3, evidence of a strong price decrease. There are several explanations for this: higher volumes leading to a lower cost; more VCSEL manufacturers qualified by smartphone manufacturers, leading to lower margins; and higher manufacturing yields leading to increased “good” VCSELs per wafer. In the future, a smartphone should embed VCSELs for proximity sensing and front and rear 3D sensing, with a total VCSEL cost around $2.

In November 2017, Apple released the iPhone X with a new feature called FaceID, which detects and recognizes the smartphone’s owner and unlocks the phone, thanks to three VCSELs working together. With this ground-breaking implementation of VCSEL for front 3D imaging, Apple set the proverbial “cat among the pigeons” in the smartphone world, and consequently in the VCSEL industry.

Following the iPhone X’s release, several smartphone manufacturers announced that their next flagship would embed a similar feature. Front 3D imaging was implemented as a first step, and more recently smartphone manufacturers have released new products with a rear 3D sensing module, using the ToF principle. Mobile and consumer VCSEL applications are showing an impressive growth between 2018 and 2024 with a 35% CAGR during this period. Other applications are also expected to implement VCSELs in the mid to long-term in different market segments: mobile & consumer, automotive & transportation, and industrial. In LiDAR, VCSELs are expected to compete with EEL , especially for middle and short-range LiDAR.

Use of VCSELs for long-range detection is still challenging due to VCSEL’s limited-output optical power compared to EELs, explains Yole. Also, cost is still prohibitive. But due to their ability to easily be built in arrays, VCSELs are a good opportunity for reducing LiDAR cost and reaching the targets set by OEMs. In the long-term, the VCSEL market for LiDAR could generate revenue of around US $800 million by 2032.

After Apple, Xiaomi and Oppo released their flagship phones with a 3D sensing feature, and even more recently the two market leaders, Huawei and Samsung, began implementing VCSELs. On the technology side, structured light, which was used for facial recognition for the first time on high-end smartphones, implies the use of two different VCSELs: one flood illuminator and one dot projector. Therefore, using these two light sources adds a tangible cost to the 3D sensing module. Meanwhile, a face recognition module using the ToF principle was implemented by LG in early 2019. This leads to using only one VCSEL, a flood illuminator, and therefore a reduced cost of the 3D sensing module compared to modules using the structured light principle. 

The VCSEL comparative review, conducted by System Plus Consulting, is unique and provides insights into the structures, technology, and design choices related to these components, which are at the center of innovative functions for smartphones. Analysts have analyzed and compared four dot projectors, four flood illuminators, and two ToF systems, extracted the VCSEL dies, and performed a full physical analysis. The report proposes a technical & economic comparison of 10 VCSEL dies integrated by the major smartphone manufacturers: Apple, Xiaomi, Huawei, Oppo, and Lenovo in their flagship smartphones, and by Intel in its RealSense product suite.