Lumentum: Reorganizations Toward 3D Sensing Paradigm

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A recent, unpublicized, corporate-wide reorganization by Lumentum Holdings might look like an admission of the company’s inability and/or unwillingness to efficiently run its internal factories and fabs, according to a new report just published by us. Our most recent intelligence gathering points to layoffs across the company, albeit not massive in nature. The principal goal is for Lumentum to reduce its costs, including the possibility of consolidating its fabs. Given the great success the supplier has achieved with its 3D sensing business through its virtual vertical integration efforts, the supplier will slowly strive to transition its other businesses toward a greater amount of outsourcing. It will result in a tough balancing act in that ownership of assets can be extremely valuable. We further state that supporters of Lumentum can still take solace in that the vendor does not make unilateral, major changes overnight. Optics is as tough as ever as a business and problems need to be faced as well as met with difficult decisions.

Our latest market brief, Risk of Lumentum Applying 3D Sensing Business Model Across Firm, provides worldwide projections for the VCSEL chip market for all applications, including data communications. The study also gives a very in-depth analysis of Apple’s negotiating tactics, support requirements, as well as the quality of its 3DS VCSEL team. In addition, important questions are answered including the following 25 items:

  1. In what ways will Lumentum defend its position against II-VI in the 3DS space?
  2. To what extent has II-VI been able to recover in the datacom VCSEL sector since Finisar’s abandonment?
  3. What is the current status of the II-VI Sherman plant?
  4. How significant has been the loss of top VCSEL/3DS engineers at II-VI?
  5. What might be Lumentum’s biggest strengths that are hardly discussed in the industry?
  6. What is our assessment of Apple’s internal VCSEL team?
  7. Why has Broadcom been able to dominate the datacom VCSEL bare die business and what are the threats to its position?
  8. Where should observers concentrate their attention when its comes to both Sony and STMicroelectronics?
  9. What have been IQE’s two biggest challenges?
  10. Why did Sumitomo Electric decide to stop its development efforts?
  11. How could OSRAM joining up with ams help the latter in making further penetration into the 3DS market?
  12. How seriously should one take NVDIA’s move into the VCSEL space?
  13. Why do we believe that Skyworks Solutions is well-positioned?
  14. What is TRUMPF Photonics Components’ biggest advantage?
  15. What is our latest take on long-wavelength VCSELs from suppliers such as Bandwidth10, VI Systems and Vertilas?
  16. Why will VCSEL+MMF increasingly become a tougher sell at traditionally large buyers, such as Google and Alibaba, including in moving more to other technologies?
  17. What is the entire rationale for Microsoft avoiding VCSELs as part of an infrastructure play?
  18. Why is Microsoft more like IBM than the other big three US hyperscalers?
  19. Why will a bigger move toward time of flight result in somewhat of a positive shakeup in the 3DS VCSEL business?
  20. Why are we moderately bullish about the long-term prospects of 3DS in robotics?
  21. Why do we have a relatively high CAGR for datacom VCSELs in terms of units?
  22. What will be the impact of SWDM on the marketplace?
  23. Why is it highly unlikely that there will be no shift to larger than 6″ VCSEL wafers for an indefinite period of time?
  24. What percentage of the marketplace is made up of apps, excluding smartphones and datacom?
  25. Why might a consumer robot from Apple taking advantage of the company being far out on the learning curve with VCSEL technology not necessarily be around the corner?

To learn more about our most recent market intelligence brief, please click here.