Next-generation iPhone ToF suppliers confirmed, LG/Sharp are the winners

The commercialization of 5G is advancing rapidly, bringing new vitality to the dormant smartphone market. As terminal manufacturers are diving into the exploration of 5G application scenarios, the supply chain is about to usher in a new performance turning point.

Among them, AI photography is one of the applications that the world's first-tier terminal brands continue to explore. In the 5G era, this application has also become a major focus of the industry chain to coordinate mobile phone brands to achieve upgrades. In addition, Apple, one of the industry giants, has repeatedly stated that AR will become a development direction for future smartphones.

It is worth noting that the upgrades of the two application scenarios mentioned above are inseparable from the support of 3D vision technology. At the same time, the news that Apple will adopt 3D ToF on the new generation of iPhones has once again heated up the discussion on this topic in the industry.

LG and Sharp share the new iPhone ToF module orders

A few days ago, Barclays analysts released a report after meeting with Apple supply chain manufacturers in Asia, which showed that both the Pro and Max versions of Apple's new generation of iPhone series to be released in 2020 will be equipped with rear 3D cameras (ToF).

In fact, there have been rumors that the new generation of iPhones will adopt ToF. The reporter also confirmed with the supply chain that Apple will indeed add a ToF lens to the rear camera of the new product, while the front face recognition camera will still use 3D structured light technology.

According to insiders, Apple plans to equip two versions of the next-generation iPhone series with four rear cameras, including an AF lens, a wide-angle lens, an ultra-wide-angle lens and a 3D ToF lens.

It is worth mentioning that after entering the iPhone camera supply chain, OFILM has successfully won the order for the rear camera of the new generation of iPhone after two years of accumulation. However, the 3D ToF module used in the new iPhone is still provided by Sharp (Foxconn) and LG, while the VCSEL laser used in ToF is designed by Apple and outsourced to Win Semiconductors.

However, the increase in demand may not significantly boost suppliers' performance.

It can be imagined that, apart from the application itself, one of the main reasons why Apple chose the 3D ToF camera is that ToF is more cost-effective than 3D structured light.

The reporter learned from the market that the average price of a 3D structured light module is almost over 20 US dollars, while the unit price of a ToF module is basically maintained at around 10 US dollars, and there is a multiple price difference between the two. From the perspective of terminal manufacturers, reducing the cost of a mobile phone by 10 US dollars is of great benefit to overall cost control.

In recent years, as iPhone sales have been frustrated, Apple has had to improve its performance by cutting prices, which means that the company will become more stringent in controlling prices in the supply chain. It is reported that Apple has specified the material procurement for the new generation of iPhones, and the assembly plants only need to quote the assembly price based on basic information.

Tianfeng Securities previously calculated that from 2008 to 2018, the revenue of many Apple suppliers in the domestic A-share market increased year by year, but the gross profit margin decreased year by year. The operating income of major suppliers in the Apple industry chain increased from 625 million yuan to 19.603 billion yuan, with a CAGR of 41.13%; the gross profit margin decreased from 31.65% to 20.22%, with a CAGR of -4.38%. Competition continued to intensify, and more assembly business was undertaken at the same time.

Demand may explode in the second half of next year

In addition, apart from the cost-effectiveness advantage, one of the shortcomings of ToF that has been criticized before is that its recognition accuracy within a short distance is slightly inferior to that of structured light.

In response to this issue, the reporter learned through interviews with the current major domestic ToF module manufacturers that although TOF's short-distance accuracy is not as good as structured light, its long-distance accuracy is good. In addition to meeting the needs of rear camera application scenarios, the current ToF face unlocking accuracy for the front camera can also meet the needs.

There are also reports that in addition to the iPhone, Apple will also extend the use of 3D ToF technology to other product lines. The reason is that compared with ordinary camera technology, ToF can transform the screen from a simple 2D image to a more spatial 3D image. Through the combination of the ToF module and the rear lens, ToF can more specifically meet the safety and experience requirements of specific application scenarios.

Therefore, an insider revealed that Apple plans to release a new iPad Pro equipped with a 3D sensing rear camera in 2020. If ToF is adopted in multiple product lines of Apple, domestic suppliers will have a greater chance of getting orders.

Industry insiders believe that although ToF has a relatively small base in the entire camera market and its share is not high; but with the adoption of the iPhone and the promotion of first-tier terminal brands such as Huawei, OPPO, vivo, and Samsung, the industry is quite optimistic about the market prospects of ToF and predicts that there will be significant growth in the second half of next year.

Although the influence of iPhone on product innovation has obviously declined in the past two years, it is undeniable that Apple is still better than most terminal brands in this regard. Now that the ToF camp has the support of iPhone, the chances of achieving large-scale popularization next year will be further increased, but it may also be accompanied by a reduction in product costs and prices.