Apple’s next generation of iPhone is expected to kick off a wave of smartphones with augmented-reality capabilities, boosting suppliers that make depth-sensing cameras and components.
Rosenblatt Securities analyst Jun Zhang on Monday identified several component suppliers likely to benefit from the trend, include Lumentum and Viavi Solutions, both of which he rates as buy, according to a new report from Barron’s.
“Many tier-1 Chinese (smartphone makers) might adopt 3D sensing within a year after Apple launches (the iPhone 8) using 3D sensing,” Zhang said in a note to clients.
“In our view, 3D sensing might evolve into two groups: 1) a front camera for facial recognition, and 2) a rear camera for 3D scanning. We believe online shopping, facial recognition, and gaming will likely be three key 3D-sensing applications.”
The analyst also states “Apple has booked capacity of 150 million optical filter units from Viavi in 2018.”
Lumentum’s optical scanning product is likely to be popular with Apple rivals, such as Samsung and LG, he said, while Viavi Solutions should maintain its leading position in optical filters over the next two years.
“We are positive on Viavi as we believe the business is not heavily exposed to the volatility of the optical market and remains a 3D-sensing market leader, which we believe has not been fully reflected in the stock price,” Zhang said.
Apple has booked capacity of 150 million optical filter units from Viavi Solutions in 2018 in addition to many Chinese smartphone makers that have picked the company as their sole optical filter supplier, he said.