Piper Jaffray's one-time analyst Gene Munster who was with the firm since 1995 left to begin a venture capital fund called Loup Ventures that is going to be focused on augmented reality, virtual reality, artificial intelligence, and robotics, which are some of the hottest areas in tech. Munster was a pro Apple analyst. Today Munster posted a research report titled "Massive VCSEL Laser Order Confirms Apple Continues To Bet Big on Augmented Reality." Below are most of the highlights from his report.
Following encouraging comments from Apple's leading VCESL laser supplier, Lumentum (LITE), on their FQ4 conference call this morning, we have become incrementally more upbeat on Apple's next iPhone launch, and specifically the number of phones that will have advanced 3D sensing capabilities enabling augmented reality applications. We believe Lumentum is one of two to three company's supplying Apple with VCSEL laser diodes, which is a key technology that adds advanced 3D sensing capabilities. Given Lumentum's comments around $200m in bookings for the rest of CY17 (up from $5m in FQ4), as well as demand trends throughout 2018, we have become incrementally upbeat on the impact Apple's next iPhone launch will have on the company and on the augmented reality industry. In total, we expect 55m 3D sensing enabled iPhone's in 2017, going to 160m in 2018.
Loup Ventures: Lumentum's Conference Call Highlights
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.
We also want to highlight Lumentum acknowledged they are working with multiple customers, but one customer (aka Apple) is accounting for most of the demand. We believe Lumentum and others supplying VCSEL lasers are supply constraint and shipping everything they can manufacture. We believe Apple has secured a high percentage of all VCSEL lasers created, which we view as a large competitive advantage and will make Apple a leading AR player in the smartphone space.
Munster went on to say that the company believes Apple's next iPhone launch remains on track to be released in September and that they anticipate the company will ship 133M units in the 2H of CY17.
Munster's Three Key Takeaways
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, is evidence that Apple continues to bet big on AR.
Aside from Lumentum's conference call, you could check out the nitty-gritty details of Lumentum's fourth quarter and full year 2017 results here.
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