According to Daily Telegraph, Coherent’s fab located in Newton Aycliffe, County Durham, Northern England, is facing potential sale or closure as Apple ceased a supply agreement. Currently, the plant is under review, which might turn out to be sold. Coherent has issued a last-time-buy notice to its customers.

The UK fab primarily manufactured III-V compound semiconductor RF microelectronics and optoelectronic devices for communications, aerospace and defense sectors. The collaboration between the plant and Apple involved Face ID feature in iPhones.

However, Apple had put an end to the related key product supply contract with Coherent in late fiscal 2023. In its latest financial report, Coherent noted a significant decline in sales of VCSEL products for 3D sensing in Apple’s iPhones, which had a remarkable impact on the company’s overall revenue.

It’s worth noting that Coherent’s fab laid off over 100 employees in April 2023, retaining around 250. Later, Coherent indicated in the last-time-buy notice that Apple’s termination of the supply agreement further placed the ongoing viability of the business in doubt. A strategic review is undertaken, with potential new technologies or a sale as options under consideration. It remains to be seen if the UK government will weigh in to broker a sale to an acceptable buyer.

• Apple’s Supply Chain Changes with the Evolution of VCSEL Technologies

Likewise, another optical and photonics device manufacturer, Lumentum, has fallen into a similar situation. Per foreign media reports in March 2024, Lumentum would dismiss 750 staffs, which accounts for 10% of its global workforce at the time.

Lumentum is a core supplier of VCSEL lasers for Apple’s iPhone 14 Pro series. However, Ming-Chi Kuo, renowned Apple analyst, revealed in early 2023 that Sony would replace Lumentum in design, and become the exclusive supplier of VCSEL products for the LiDAR scanner in the iPhone 15 Pro series. This variation implies a reduced market share for Lumentum in the VCSEL segment of iPhone.

Indeed, Apple has consistently updated its technologies in smartphones, resulting in corresponding structural and design adjustments and changes in its supplier lineup.

TrendForce’s latest research report, “2024 Infrared Sensing Application Market and Branding Strategies,” shows iPhone 15 Pro adopts Sony’s stacked structure technology, which integrates the VCSEL, driver IC, SPAD, and ISP (ASIC Chip) in a stacked structure. This approach significantly reduces system size while achieving high-speed response and high output power, providing better LiDAR scanning performance at the same power level, extending battery lifespan, and enhancing camera and augmented reality capabilities.

Furthermore, TrendForce’s survey reveals that Apple plans to introduce MetaLens technology in 2024 to reduce the size of emitting components, and to adopt under-display 3D sensing technology in 2027 to increase the display screen ratio. Under-display 3D sensing uses short-wave infrared VCSEL (SWIR VCSEL) to reduce interference from sunlight and ambient light and minimize the occurrence of white spots. Noticeably, 1,130nm VCSEL has achieved a PCE (Photoelectric Conversion Efficiency) of over 30%, and currently, ams OSRAM’s 1,130nm VCSEL can already deliver superior performance, enabling it to come out on top in the market.

Thereby, it is evident that the continuous evolution of Apple’s iPhone 3D sensing solutions has caused striking changes in the VCSEL ecosystem. With new manufacturers like Sony entering the supply chain, Coherent and Lumentum are suffering a gradual decline in their market shares.

• More Opportunities Emerge amid the Overwhelming Trend of AI

While consumer electronics remain a crucial market for VCSEL technology, the global AI wave is driving its increasing importance in data center, optical communication, and automotive LiDAR, which will position VCSEL as a vital support for implementing AI functionalities. For example, VCSEL is a perfect fit for short-distance optical interconnections in data center, underpinning the operation of cloud and edge computing infrastructure integral to AI computing.

Currently, photonics manufacturers are already gearing up to develop higher-performance VCSEL technology to meet potential demands in high-growth application areas such as AI, high-performance computing (HPC), networking, and automotive LiDAR. In this context, VCSEL market demand and market size are expected to enjoy ongoing growth, presenting more opportunities for related manufacturers and infusing new vigour into their business growth.

Read more

• [News] Apple COO Rumored to Make Secret Visit to TSMC, Booking Advanced Capacity for AI In-house Chips
• [News] Apple Unveiled M4 Chip for AI, Heralding a New Era of AI PC

(Photo credit: Apple)

A global supplier in materials, networking, and lasers, Coherent announced that DENSO  Corporation and Mitsubishi Electric Corporation have agreed to invest an aggregate $1 billion in its silicon carbide business (the “Business”). The transaction results from the strategic review process announced in May 2023 for the Business.

Under the terms of the transaction, DENSO and Mitsubishi Electric will each invest $500 million in exchange for a 12.5% non-controlling ownership interest in the Business, with Coherent owning the remaining 75%. Prior to the completion of the transaction, Coherent will separate and contribute the Business to a subsidiary. Coherent will control and operate the Business, which will continue to be led by Sohail Khan, Coherent’s Executive Vice President, New Ventures & Wide-Bandgap Electronics Technologies.

In connection with the transaction, the Business will enter into long-term supply arrangements with DENSO and Mitsubishi Electric that support their demand for 150 mm and 200 mm silicon carbide (“SiC”) substrates and epitaxial wafers.

“We are excited to expand our strategic relationships with DENSO and Mitsubishi Electric to capitalize on the significant demand for silicon carbide,” said Dr. Vincent D. Mattera, Jr., Chair and CEO, Coherent. “After a thorough review of strategic alternatives for our Silicon Carbide business, we determined that the creation of a separate subsidiary and the strategic investments from DENSO and Mitsubishi Electric, two leaders in SiC power devices and modules, is the best path forward to maximize shareholder value and position the Business for long-term growth. The investments from our strategic partners will be used to accelerate our capacity expansion plans and help sustain our leadership position, while ensuring the development of a robust and scalable supply for the rapidly growing market for SiC-based power electronics, largely driven by the explosive growth of the global electric vehicle market.”

“We are very pleased to establish a strategic relationship with Coherent, which has a world-class track record in SiC wafer manufacturing. Through this investment, we will secure a stable procurement of SiC wafers, which are critical for BEVs, and contribute to the realization of a carbon-neutral society by promoting the widespread adoption of BEVs,” said Shinnosuke Hayashi, President & COO, Representative Member of the Board at DENSO.

Dr. Masayoshi Takemi, Executive Officer, Group President, Semiconductor & Device of Mitsubishi Electric, said: “Demand for SiC power semiconductors is expected to grow exponentially as the global market for electric vehicles increases in line with the transition to a decarbonized world. To capitalize on this trend, we have decided to expand our SiC power semiconductor production capacity, including by constructing a 200 mm wafer plant in the Shisui area of Kumamoto Prefecture. We are delighted to strengthen our partnership with Coherent by investing in this new SiC company, which will provide us with a stable supply of high-quality SiC substrates essential for our increased supply capacity.”

Explore More

• Why Are Japanese Companies Targeting Coherent in the SiC Field?
• Under the Hood: How is SiC Reshaping the Automotive Supply Chain?
• The M&A battle for SiC: Who’s the Top Acquirers?

(Photo credit: Coherent)

In recent developments, an industry source revealed that Coherent, a leading chip material supplier in the U.S. automotive industry, has piqued the interest of four major Japanese corporate groups with regards to its silicon carbide (SiC) business, with a transaction amount potentially reaching $5 billion.

The four Japanese companies involved are DENSO, Hitachi, Mitsubishi Electric, and Sumitomo Electric, and discussions have been underway regarding the acquisition of minority stakes in Coherent’s SiC business.

Coherent had previously stated its intention to invest $1 billion over the next decade to expand the production of SiC wafers. Compared to traditional silicon chips, SiC wafers contribute to improved electric vehicle range. If this investment materializes, it would significantly ease the financial burden on the company. However, no concrete agreements have been reached at this stage.

Data indicates that Coherent is one of the few companies globally with complete and vertically integrated SiC manufacturing capabilities. It can produce SiC wafers and epitaxy materials, extending all the way to power devices. Furthermore, Coherent’s SiC materials are known for their exceptional quality, making it nearly the only supplier capable of transitioning from the current standard wafer diameter of 150 millimeters to 200 millimeters successfully. The production of larger diameter wafers can substantially reduce device costs. Additionally, Coherent’s SiC power devices demonstrate excellent heat resistance and conductivity.

Competition and Collaboration in the Japanese SiC Industry

According to TrendForce’s latest analysis, as collaborations between companies like Infineon and ON Semiconductor with automotive and energy sector stakeholders become more apparent, the overall SiC power device market is projected to reach $2.28 billion in 2023, growing at an annual rate of 41.4%.

Meanwhile, buoyed by robust demand in downstream application markets, TrendForce anticipates that the SiC power device market could reach $5.33 billion by 2026, with its primary applications continuing to center around electric vehicles and renewable energy.

In recent years, the new energy vehicle industry has been thriving, and Si power devices have gradually fallen short of meeting the demands of new energy vehicles. SiC, as its alternative, has shown remarkable performance in applications, making it highly sought after in the market. The SiC power device market still has considerable room for growth, prompting both automotive and SiC companies to invest in SiC power device production or enhancements.

Japan, being a leader in semiconductor power device manufacturing and production, has numerous companies actively expanding to broaden their market reach.

On October 4th last year, Nikkan reported that Hitachi Power Semiconductor Device would invest several billion yen, aiming to triple its SiC power semiconductor production capacity by fiscal year 2026.

On July 12th this year, ROHM announced its acquisition of the former Solar Frontier factory in Kunitomi, Miyazaki, to expand its SiC power semiconductor production capacity. The acquisition is set to conclude in October 2023 and is planned to become the company’s main factory, primarily producing SiC power semiconductors. It is expected to increase its silicon carbide capacity to 35 times that of the fiscal year 2021 by 2030.

With these competitive and cooperative scenarios unfolding, it’s evident that neither automotive nor SiC companies are holding back in their pursuit of SiC power device production or improvements.

In July this year, Renesas Electronics signed a 10-year agreement and paid $2 billion in advance to Wolfspeed for the supply of 150mm bare and epitaxial SiC wafers. Renesas Electronics also reached an agreement with Mitsubishi Electric, with Mitsubishi investing 260 billion yen in technology and expansion, including the construction of a new SiC factory in Japan.

As a technological leader in producing SiC substrates, epitaxy, and power devices, Coherent is not to be overlooked by these major corporations.

On May 26th this year, Coherent and Mitsubishi Electric announced that they had signed a MOU and reached a project collaboration agreement to jointly scale up the mass production of SiC power electronic products on a 200mm technology platform.

Mitsubishi Electric announced that it would invest approximately 260 billion yen over a five-year period ending in March 2026, with approximately 100 billion yen dedicated to constructing a new SiC power device factory based on a 200mm technology platform and strengthening related production facilities. According to the MOU, Coherent will develop 200mm n-type 4H SiC substrates for Mitsubishi Electric’s future SiC power devices to be produced at the new factory.

In the future, Mitsubishi Electric aims to produce large quantities of silicon carbide chips using Coherent’s 200mm wafer technology in the Japanese market.

In the 2023 fiscal third-quarter earnings conference call, Mary Jane Raymond, the Chief Financial Officer of Coherent Inc., mentioned that the revenue composition of the company’s four main markets is as follows, based on regional distribution: North America accounts for 53%, Europe accounts for 20%, Japan and Korea account for 14%, China accounts for 11%, and 3% goes to other regions worldwide.

For Coherent, capturing 14% of the sales in the Japanese and Korean markets is highly significant. If Coherent continues its collaboration with Japanese partners, it is highly probable that the production capacity of SiC power devices in Japanese-related companies will be increased. Additionally, this will allow Coherent to further expand its influence and presence in Japan.

(Photo credit: Coherent)

According to a report by TechNews, TrendForce held the Micro LED Forum 2023 on the 5th, inviting numerous companies to share insights on the next-generation display market trends. Eric Chiou, Senior Research Vice President at TrendForce, believes that Micro LED technology is making significant strides in the metaverse sector this year. Many technological challenges need to be overcome, such as semiconductor integration techniques. Ever since AUO announced the mass production of Micro LED watches, cost reduction has become a major focus for many companies.

Chiou stated that to cut costs, chips are the most effective components to optimize. Manufacturers are shifting from using 6-inch wafers to 8-inch wafers for chip production to help reduce costs. In terms of mass transfer techniques, a few years ago, stamp transfer technology was in use, but the industry has been increasingly leaning towards laser transfer while striving for efficiency. In the future, there’s a strong possibility of moving towards a “hybrid transfer” approach, which combines stamp transfer and laser bonding methods.

For instance, companies purchasing equipment might conduct in-house experiments and modify equipment to suit their needs. Equipment providers are also drawing from industry experience to create new solutions, offering next-generation equipment to inexperienced customers, making the production process more practical.

Regarding product development, the most evident direction for Micro LED is in smartwatches. Chiou revealed that by 2026, the cost of a 2.12-inch Micro LED Apple Watch from Apple could potentially drop to $100, compared to the current $40-50 for OLED displays. This suggests that Micro LED may pose strong competition to OLED in the near future.

TrendForce anticipates that Apple Watch will attract more brands to invest in the development and promotion of Micro LED wearable devices, leading to a compound annual growth rate of 873% from 2022 to 2027. This year, the Micro LED chip production value is approximately $27 million, and with the market’s continuous expansion, it is expected to reach $600 million. The compound annual growth rate from 2022 to 2027 is projected to be 111%.

Dr. Mingchi Hsu, Special Assistant at the AUO Display Development Center, mentioned during the forum that the challenges of mass transfer in Micro LED technology were previously considered bottlenecks, but significant improvements have been made in the last two years. As for the inspection and repair aspects, AUO has developed its own equipment and has already completed its development.

Porotech’s primary technologies include Dynamic Pixel Tuning (DPT) and PoroGaN technology. Daniel He, Director of Product and Marketing Taiwan Branch Manager at Porotech, disclosed that they are currently mass-producing 8-inch GaN wafers and collaborating with Taiwanese foundries. Although they can produce 12-inch GaN chips, they plan to observe market response before proceeding.

Mr. Lin Mao-Song, General Manager of Coherent Technologies, a leading laser source technology company, stated that the inspection and repair phase in Micro LED manufacturing might be longer than the actual manufacturing process. A 99.95% yield rate implies a high repair proportion, making it crucial to enhance production yield and reduce costs. Laser technology plays a significant role in increasing production speed and yield, with excimer laser being the best choice for repair and mass transfer, achieving yields of over 99.99%.