VCSEL 2023

Table of contents 

Glossary 

Report objectives 

Scope of the report 

Methodologies and definitions 

About the authors 

Companies cited 

What we got right, what we got wrong  

Executive summary  

Context  

Market forecast  

• Breakdown by applications – Main applications
• Global VCSEL market volume forecast, by market segment
• Global VCSEL market volume forecast, by application

Market trends  

• Segmentation by wavelength
• Mobile and consumer segmentation
• Automotive and mobility segmentation

Market share and supply chain  

• Device players – Distribution by country
• Player distribution by position in the supply chain and business model
• 3D sensing: New opportunities in industrial and automotive applications

Technology trends  

• Visible VCSELs
• Infrared VCSELs

VCSEL technology   

• Technology in mobile and consumer applications
• Technology in automotive and mobility applications
• Technology in industrial applications
• Technology in Datacom applications

Technology, Process and Cost Report   

Conclusion   

About Yole Group   

Projected at $1.4B by 2028 with a 6% CAGR, the VCSEL market still relies on smartphone applications

The VCSEL market, driven by consumer applications, is forecast to reach $1.4B in 2028, growing from $978M in 2022 at a CAGR of 6%. In the past, the VCSEL market was driven by datacom applications, the first high-volume application for VCSELs. However, in November 2017, Apple released the iPhone X which implemented VCSELs for identification through face recognition. This was a game changer, and in 2018, the mobile and consumer market became the first market for VCSELs, reaching a value of $440M. Other smartphone makers initially followed the same trend but stopped using VCSELs a few years later in favor of under-screen fingerprint sensors. Apple remains one of the only players to implement VCSELs. Compared to 2018, the 2022 VCSEL market for mobile and consumer applications has grown by 80%, and VCSELs can now be found in tablets, AR/VR headsets, vacuum robots, and smart door locks.

VCSEL revenue for datacom applications is expected to reach $232M in 2028, featuring an 11% CAGR between 2022 and 2028. The need for high-bandwidth and low-latency communications is driving the growth of data centers. This is linked to the increasing need for bandwidth due to the use of the Internet for social networking and video streaming.

Other markets are booming: automotive applications use VCSELs in LiDARs, and industrial applications use VCSELs in smart payment modules, especially in China.

VCSEL Market: Duopoly Dominance - Two Players Rule the Light

Since 2017, the VCSEL ecosystem has changed drastically. At that time, there was an oligopoly, with Lumentum being the largest player while several other players had significant market share. The VCSEL ecosystem is now a duopoly. Coherent has 41% of the market and Lumentum 37%; the two are now the largest players, together comprising almost 80% of the global VCSEL market. So, what happened? Lumentum was the only supplier qualified by Apple during that time. Finisar was still in R&D and struggling to qualify products for Apple. Other players were involved with other smartphone makers or supplied tiny VCSELs for proximity sensors. Then, Coherent acquired Finisar. Lumentum lost market share to Coherent, and Sony has only recently been qualified as a VCSEL supplier for the rear LiDAR in Apple iPhones.

In parallel, the leaders also acquired other companies like Oclaro for $1.8B, Coherent for around $7B and several others to reinforce their positions in the optical communications market and to be vertically integrated from VCSEL device to transceiver module. Ams-Osram will have a card to play in automotive applications like LiDAR or in-cabin sensing due to Osram’s historical presence in this market. Trumpf is showing promising results in developing long-wavelength and higher-performance VCSELs. They will have a role to play in the main VCSEL markets: datacom and consumer. Broadcom is still a significant VCSEL player but is primarily involved in datacom applications.

VCSEL Advancements: Powering the Next Generation of Smartphones

In terms of technology, one of the main focuses has been the transition from 940 nm to 1,380 nm VCSELs to integrate sensors under the display. To achieve this, multiple manufacturing approaches are envisaged. The use of dilute nitrides, a shift from GaAs to InP material, and a hybrid approach based on the fusion of GaAs and InP materials. Each of these approaches requires significant R&D, but recently, Trumpf has shown promising results using the wafer fusion approach based on an InP-only active region.

Apple tried to use an InP-EEL-based proximity sensor in its iPhone 14 Pro versions, but the cost of the proximity sensor was more than ten times the cost of a GaAs-VCSEL-based proximity sensor, and the manufacturing and assembly of the module was more challenging. In the iPhone 15, Apple returned to proximity sensors based on GaAs VCSELs.

The transition from 6" to 8" manufacturing remains unrealized despite the potential of Germanium instead of GaAs as a substrate. Adoption of 8” relies on the emergence of an application that requires large volumes that cannot be met with 6” wafers, in addition to new equipment and possibly new substrates. Currently, there is no such application.

Other technological advances are related to a reduction of the VCSEL footprint while maintaining output power and/or adding new functionalities: Use of backside-emitting VCSELs to add micro-optics on top of the VCSEL, Use of polarization multiplexing with two grating orientations, for example, to combine a flood illuminator and a dot projector on the same device.

Accelink, Aixtron, Alight, ams-Osram, Anadigics, Apple, Arima Lasers Corporation, Asus, Audi, AWSC, Beam Express, Bosch, Broadcom, Buick, Cadillac,  Canon, Changelight, Coherent, Continental, Device Innovation, Egismos Technology Corporation, Emcore, Epistar, EpiWorks, Excelitas, Finetech, Foxconn, Fuji Xerox, Fujitsu, Geely, Genesis, Global Communication Semiconductor, Google, Hamamatsu, Hesai, Heptagon, Himax, HLJ, Hokuyo, Honeywell, Honor, HTC, Huawei, Human Horizon, Infineon, Infinera, Inneos, Intel, IntelliEPI, IQE, Koito, Landmark Opto, Lasermate, Lasertel, Laytec, LeddarTech, Lenovo, LG, Li Auto, Lotus, Lumentum, Luminar, Lumotive, LuxNet, Magneti Marelli, Mantis Vision, Masimo, Namuga, Oclaro, Oculus, OmniVision, OnePlus, Oppo, Optek Technology, Optical Society of America, Optovue, Optowell, Opsys Technology, Orbbec, Ouster, Oxford Instruments, Palomar Technologies, Picolight, QSI, Rasirc, Realsense, Riber, Ricoh, Robosense, Samsung, Sanan, Santec Corporation, SCAT, Seiko Epson, Seminex, Shiraz University, Sick, SinoSemic, SoftKinetic, Sony Corporation, SosLab, Stanley, STMicroelectronics, Sumitomo Chemicals, Sunny Optical Technology, Suoer, Taiyo Nippon Sanso, Tetravue, Texas Advanced Optoelectronic Solutions, Thorlabs, TrueLight Corporation, TRUMPF, Tyson Technology, Ultra Communication, US Lasers Inc., Ushio, Veeco, Vertically Integrated Systems, Vertilas, Vertilite, Viavi, Vivo, Vixar, VPEC, Wavetek, Win Semiconductor, Xiaomi, Zephyr Photonics, ZF, and more.

Key Features 

• 2021-2028 forecast VCSELs (Munits, $M)
• 2021-2033 forecast for light sources in automotive LiDARs.
• Market trends in mobile and consumer, automotive and mobility, datacom, industrial, and medical.
• Insights on new technologies for infrared VCSELs: long-wavelength VCSELs, polarized optics, backside emitting VCSELs.

What’s new?

• Correction of the VCSEL market for datacom application
• Deep insight into infrared VCSEL technologies

Product Objectives

• Provide market data on the various VCSEL applications
  • Volume and revenue by application and market segment
  • Average selling price (ASP) and expected developments
  • Ranking of the top five VCSEL manufacturers
• Deliver an in-depth understanding of the VCSEL business value chain, players and trends:
  • Global list of VCSEL manufacturers
  • Supply chain information for mobile and automotive applications
  • Supply chain analysis
  • Analysis of VCSEL drivers
• Give insights on manufacturing and associated challenges
  • What is a VCSEL?
  • Analysis of the visible-light and NIR VCSEL industries
  • Insights on technology improvements: backside emitting, long wavelength, polarization multiplexing