Feb. 6, 2018

LightCounting releases a research note based on presentations and discussions at the Consumer Electronics Show (CES) Las Vegas in January 2018

With the confluence of multiple major trends such as 5G, Big data, AI, IoT, AR/VR, Autonomous driving - all signs signal a positive investment cycle. Confidence is high for 2018 as the optical and semiconductor industry builds next-gen scalable platforms to intercept these trends.

The best place to see this industry optimism was at CES 2018 which attracted over 170,000 attendees and more than 3900 exhibitors onto a conference floor that spanned more than 2.75 million square feet – a record for the five decades of the show.

5G was a major topic of discussion at CES. It is tempting to think of 5G as just another step up in “feeds and speeds” in cellular evolution, but it is far more than that. Whereas 3G could be considered a step up in speed and bandwidth that enabled the Mobile Internet, and 4G a step up that enabled Mobile Content – 5G is a revolutionary step that not only increases the speed and bandwidth of mobile broadband, but also combines the power of Sensors & Actuators with high-speed Connectivity to take elements of mobility to different industries. 5G will interface with billions of IoT devices and kickstart new industries and businesses in Autonomous vehicles, Smart factories & Manufacturing, Smart cities, Digital healthcare, Augmented & Virtual reality and entertainment.

Ericsson CTO Erik Ekudden predicted that we would see 1 billion 5G subscriptions by 2020. He emphasized that mobile data is still growing at a rate higher than 50% per year, but it would be new industries such as Transportation, Remote Healthcare, and Manufacturing that would be transformed by 5G. According to Ericsson’s forecast, by 2026 5G enabled services will offer a $619 billion revenue opportunity for operators in ten specific industries, as illustrated in the graphic below:

LT_020618.png

In terms of deployment, Verizon CTO Hans Vestberg stated that with 5G you can instantiate different “slices” and Verizon’s initial focus is the slice that involves residential broadband using millimeter wave spectrum. The company has been conducting 5G trials and testbeds in eleven markets for the last one-and-a-half years, and has determined that the performance of millimeter wave has been far better than imagined with rates reaching 1Gbps at a range up to 600m.

Verizon now plans to be the first to market with 5G by deploying residential broadband in three to five cities including Sacramento, California in 2018. This will be followed by a broader rollout in 2019 with offerings in broadband data, video and voice.

Qualcomm President Cristiano Amon said that the signs are encouraging in terms of 5G market momentum. He reminded attendees that in addition to Verizon, ATT has previously announced they would have mobile 5G running in a dozen U.S. cities by the end of 2018. Qualcomm will be coming out with 5G New Radio-based non-standalone chips that will show up in 5G smartphones in early 2019. And ZTE has stated that they would sell 5G-enabled handsets by early 2019.

Once 5G arrives in the market, carriers and customers will transition quickly to it according to discussion at CES. Each new generation of cellular technology was adopted faster than its predecessor - 3G was quicker to take off than 2G, 4G was quicker to take off than 3G, and the rollout of 5G will be faster still.

Yes, it is the right time for the optical companies to invest. 5G will necessitate several major changes to the network’s architecture, which will have implications for optical companies. LightCounting takes a deep-dive look at optics for 5G in Next Generation Access Optics Report, published in November 2017.

To view the Research Note in its entirety, LightCounting Subscription clients can log on and download it here: www.LightCounting.com/login.cfm

3D Sensing for Self-Driving Cars Reaches the Peak of Inflated Expectations

LightCounting releases a new report addressing illumination in smartphones and automotive lidarIn 2019, the market for VCSEL (vertical cavity surface-emitting laser) illumination in smartphones will exceed $1.0 billion – now nearly triple the size of the market for communications VCSELs. That’s quite remarkable for a market that didn’t exist three years ago.3D sensing in smartphones felt like an overnight sensation, but the technology foundations were laid down years ago with Microsoft’s Kinect – a motion-sensing peripheral for gamers released in 2010 but discontinued in 2017 after lackluster sales. Lumentum supplied lasers to the Kinect almost a decade before the iPhone opportunity emerged; the company was ready to profit from the iPhone X opportunity when Apple decided to launch 3D sensing for facial recognition in September 2017.

Figure: 3D depth-sensing meets the Gartner Hype Cycle

3D Sensing

Source: Gartner with edits by LightCounting

If all technologies follow the Gartner Hype Cycle, shown in the Figure above, then 3D sensing in smartphones is now moving up the slope of enlightenment. Android brands raced to add 3D sensing to their flagship phones in 2018 – the Xiaomi Mi8 Explorer and Oppo Find X phones were first – although these only sold in single digit million quantities. Huawei also brought out new phones with 3D sensing, but the ongoing U.S. export ban on the Chinese company must be hurting the company’s traction outside China. Apple continues to dominate the market as all new iPhones released by Apple since 2017 have included 3D sensing on the front of the phone. Apple is expected to introduce 3D sensing for ‘world-facing’ applications in 2020, which adds another laser chip to every phone.

Last year illumination for lidars were not included in our market forecast since LightCounting considered it unlikely that lidar would penetrate the consumer market to any great extent over the forecast period. All indicators now point to a market for lidar illumination ramping up in 2022 and beyond. Optical components firms are now shipping prototypes and samples of VCSELs, edge emitters and coherent lasers to customers developing next-generation lidar systems – many of them building on their expertise in illumination for optical communications and smartphones.

As was the case with smartphones, the foundations for lidar technology were laid down much earlier – in this case with the DARPA Challenge 2007, where the winning vehicle used a 64-laser lidar system from Velodyne Acoustics (now Velodyne Lidar). Lidar is considered by the majority of the industry to be an essential part of the sensor suite required for autonomous driving, helping the vehicle to navigate through the environment and detect obstacles in its path. The first commercial deployments have begun. In Germany, lidar on the Audi A8 enables the car to drive itself for limited periods under specific conditions. In Phoenix, Arizona, you can hail a ride in a Waymo robotaxi.

Investor enthusiasm for lidar is undeniable with nearly half a billion dollars invested in lidar start-ups in 2019 according to our analysis of publicly available investment data. Notable deals include $60 million for U.S. company Ouster in March, Israel’s Innoviz Technologies Series C round of $132 million in the same month, and $100 million for U.S.-based Luminar Technologies in July. Interestingly, these examples illustrate the variety of lidar approaches: each company is building a different type of lidar based on a different wavelength: 850nm for Ouster, 905nm for Innoviz and 1550nm in the case of Luminar. There’s an open technology battle and they can’t all be winners.

The automotive lidar market seems to be close to the peak of ‘inflated expectations’. It’s easy to understand why. The automotive industry is enormous, with nearly 100 million vehicles (including trucks) produced annually. Players like Baidu, GM Cruise and Waymo are backed by deep corporate pockets, and new entrants like Aurora and Pony.ai are attracting hundreds of millions in investment. Intel’s $15.3 billion purchase of Mobileye in 2017 was also directed at autonomous driving. Sensor company AMS is in a $4.8 billion battle to acquire German semiconductor lighting firm Osram with its eye firmly on lidar.

However, signs indicate that the descent into the trough of disillusionment could have already begun. Waymo has yet to roll out its robotaxi services more widely – and this summer admitted that its vehicles needed more testing in the rain. GM Cruise has delayed launch of commercial services for self-driving cars beyond 2019 and is reluctant to commit to a new timescale, with its CEO Dan Ammann observing that safety is paramount; automotive is not an industry where you can “move fast and break things” he said. A casualty of the slow pace was optical phased array lidar developer Oryx Vision, which closed its doors in August and started to hand money back to investors.

While lidar is being deployed commercially today, prices are not conducive to mass production, and there are open questions around regulation, safety, ethics and consumer acceptance. Do local laws prohibit self-driving cars? Will they really be safer than humans? Who is responsible for a crash? LightCounting remains skeptical about the pace of adoption of autonomous vehicles, but will be watching the market closely and with optimism.

More information on the report is available at: https://www.lightcounting.com/Sensing.cfm.


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