Vertical Cavity Surface Emitting Laser (VCSEL) Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Vertical Cavity Surface Emitting Laser (VCSEL) Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Vertical Cavity Surface Emitting Laser Market is expected to register a CAGR of over 18% over the forecast period from 2021 to 2026. VCSELs are critical components in multiple existing and future 3D sensor systems, using both structured light and time-of-flight (ToF) technologies. Applications range from 3D facial identification (front-facing) systems and world-facing cameras on mobile handsets to light detection and ranging (LiDAR) and in-cabin sensing for autonomous drive vehicles. VCSELs can also become a booming market for optical chip manufacturers. The world’s second-largest lighting company, Osram, is also building up a strong VCSEL portfolio along with its existing LED semiconductors portfolio.

Key Highlights

• The way in which VCSEL technology captures 3D environmental data has applications in gesture recognition, augmented reality, computer mice, robotics, and proximity sensors through to autonomous driving. Many of the VCSEL suppliers are actively developing world-facing time-of-flight (TOF) camera solutions.
• The growing trend in computer and television displays regarding higher resolution, thinner profiles, and larger size is also fueling the demand for VCSELs. An increasing number of data centers, mainly driven by the rising cloud computing and 5G wireless communications market, will also offer a massive opportunity to the studied market. To target these specific applications, many global vendors are also innovating products particular to these applications. For instance, US-based II-VI Inc. recently introduced 56 Gbps PAM4 VCSEL arrays for 200 and 400 Gigabit Ethernet short-reach transceivers.
• Automotive is another industry, which will offer massive opportunities for VCSEL suppliers.VCSELs are also witnessing adoption among diverse applications as lidar guidance for driverless vehicles, fiberoptic data transmission, and medical imaging. Even if they do not directly replace LED technology across the board, their laser light makes them useful in applications where ordinary LEDs are not. However, the VCSEL production process is more labor and material-intensive, which could be a significant restarting factor for the studied market during the forecast period.
• VCSEL can transfer data only up to a distance of 100meters and is considered an effective technology only for short-range applications, such as optical data communication, LAN, intra-system links, and ethernet. Hence, it does not allow data transmission over long distances. Besides, the limited-output optical power in these devices does not allow sensors to transmit data over long distances. Owing to such factors, the market growth is likely to be restrained during the forecast period.
• The COVID-19 pandemic impacts several markets in every segment of the economy, and smartphones are no exception. The smartphone industry, one of the significant adopters of VCSEL technology, has seen production disruptions and substantial changes in usage patterns, as social distancing impacts how much consumers use their phones and what they use them for. The coronavirus pandemic will severely affect the growth of 5G devices, beginning to gain traction in the global market. Delays in manufacturing and reduced demand will set back the development of affordable 5G phones, which incorporate VCSEL technology and do not encourage large-scale adoption of the technology.

Key Market TrendsConsumer Electronics is Expected to Hold a Significant Share

• The expanding smartphone market and increasing adoption of 3D sensing technology across various end-user industries are some of the major driving factors of the studied market. Over the past few years, VCSELs have become a key enabler in the widespread use of 3D sensing and imaging technologies. Data communications were the first industrial application that integrated VCSEL technology; 3D sensing modules are becoming an essential component in most advanced smartphones, where VCSELs are becoming a primary option for smartphone manufacturers.
• 3D sensing technology is expected to have high prominence due to the increasing adoption of this technology in surveillance systems and smartphones. The advanced features and increased accuracy offered by the technology are driving its demand; also, the technology is being increasingly incorporated for authentication and access control.
• The growth of 3D sensing was propelled with the introduction of the Face ID module in iPhones. Since then, there have been significant developments in 3D sensing. Slowly, there was a transition of 3D sensing from front-side face ID modules to the rear side for photography applications.
• The number of smartphones using 3D sensing modules has increased significantly over the years. In addition, the influence of AR applications has developed a need for 3D sensing modules that can cope with the futuristic uses of smartphones while delivering high-quality pictures.
• VCSEL chipmakers and suppliers of 3D sensors for face ID across the world are confident that the demand for these components will continue in smartphones in the foreseeable future. For instance, in October 2020, Win Semiconductors Corp., one of the pure-play gallium arsenide foundries, announced that it was expecting a 5% growth in revenue during that quarter, up from the previous quarter's NTD 6.57 billion (USD 227.29 million), based on the rising demand for wafers in premium smartphones. This Taoyuan-based chipmaker produces wafers used in VCSEL for Apple Inc's iPhone 12 series to unlock smartphones via facial identification and power amplifiers for the company's first 5G devices.

Asia Pacific is Expected to Witness Rapid Growth

• Asia Pacific is one of the essential markets for VCSEL technology. The region is dominating the semiconductor manufacturing, smartphone manufacturing, and consumer electronics manufacturing market. The region serves as home to many of the global smartphone companies. Organic electronic production in the emerging economies in the region is also surging VCSEL demand in the region. Countries like India, Vietnam, and Thailand, among others, are witnessing the increasing number of smartphones and other consumer electronics manufacturers setting up their manufacturing plants in the region.
• According to World’s Top Exports, the fastest-growing cellphone exporters since 2015 include India, Vietnam, Hong Kong, and the Czech Republic. Specifically, India increased by 1,836%, and Vietnam increased by 41.5%. Also, Vietnam exported 13.3% of the global mobile phone exports while India accounted for 1.2% in 2019. The growth in manufacturing and supply of mobile phones drives the demand for VCSEL emitters used in mobile devices in Asia-Pacific.
• To serve the demand for optical high-definition multimedia interface (HDMI) cables in consumer electronics, the datacom VCSELs would help push television and computer displays toward higher resolution, larger size, and thinner profiles. The technology enables high-speed data cables that connect screens to remotely located driver electronics. Thus, driving players to invest in the market.
• Moreover, smartphones, tablets, and AI-assisted electronics are also experiencing high adoption in the region. This is expected to propel the development of the studied market in the region. According to the Consumer Technology Association (CTA), the retail revenue from consumer electronics/technology sales in the United States stood at USD 392 billion and is expected to reach USD 461 billion by 2021. Canada is also one of the prominent producers of consumer electronics across the globe.

Competitive Landscape

The Vertical Cavity Surface Emitting Laser market is highly competitive. It consists of significant individual players such as II‐VI Incorporated, Lumentum Operations LLC, Philips Photonics​ (TRUMPF Group), Hamamatsu Photonics K.K, etc., which is a moderately fragmented market. The companies in the market are increasing their market presence by introducing new products or by entering into strategic mergers and acquisitions.

• January 2021 - Teledyne Technologies Incorporated and FLIR Systems Inc. jointly announced today that they have entered into a definitive agreement under which Teledyne will acquire FLIR in a cash and stock transaction valued at approximately USD 8.0 billion.
• January 2021 - as introduced first AEC-Q102- and ISO 26262-compliant VCSEL flood illuminator. The company has announced the pre-release of the TARA2000-AUT family of vertical-cavity surface-emitting laser (VCSEL) flood illuminators for automotive applications, which are claimed to be the first to be qualified to the AEC-Q102 automotive quality standard and the ISO 26262 functional safety standard. TARA2000-AUT products are suitable for new optical in-cabin sensing (ICS) systems based on two-dimensional near-infrared (2D NIR) imaging or three-dimensional (3D) time-of-flight (ToF) sensing, which support the next generation of assisted and autonomous driving technologies in vehicles.
• March 2021- Lumentum Operations LLC announced the launch of new high-power and high-efficiency five and six junctions vertical-cavity surface-emitting laser (VCSEL) arrays for advanced consumer, automotive LiDAR, and other 3D sensing applications.

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