Apple Pays Finisar $390 Million To Try And Lock Down Its Supply Of Precious iPhone X Sensors

Apple Pays Finisar $390 Million To Try And Lock Down Its Supply Of Precious iPhone X Sensors

Tech giant Apple brought the iPhone X to market this year, but not without significant production stumbles that resulted in predictions of supply shortages for retailers and consumers. Reports on Wednesday show that Apple is moving quickly to ensure future access to some of the device’s more elaborate parts to decrease the odds of that happening again in the future.

Per Reuters, Apple’s $US390 ($509) million deal with Finisar Corp will not only lock in the company’s future supply of vertical-cavity surface-emitting lasers (VCSELs) – part of the complicated sensor set behind the iPhone X’s Face ID tech — but simultaneously make it more difficult for any of its competitors to get their hands on some.

VCSELs are not a new technology, but the miniaturized kind used in smartphones to enable highly detailed 3D mapping are often cited as the future of augmented reality technology. Fitting them into a tiny device like the iPhone X is such a technical challenge that Apple reportedly had to relax quality requirements to meet launch deadlines, as Bloomberg reported earlier this year:

The dot projector is at the heart of Apple’s production problems. The dot projector uses something called a vertical cavity surface-emitting laser, or VCSEL. The laser beams light through a lens known as a wafer-level optic, which focuses it into the 30,000 points of infra-red light projected onto the user’s face. The laser is made of gallium arsenide, a semiconductor material, and the lens is constructed of glass; both are fragile and easily broken. Precision is key. If the microscopic components are off by even several microns, a fraction of a hair’s breadth, the technology might not work properly…

Face ID is the only component of the iPhone X that truly needs VCSELs to function, but they’re probably eventually going to be used in a wider range of AR applications. For example, a less sophisticated version of the hardware embedded in the Microsoft Kinect can track users’ movements across a room; in smartphones, they may hold the power to enhance the fidelity of AR objects being projected live into a real-life scene. VCSELs have also been used in several other phone brands for less flashy functions like autofocus.

According to Reuters, Apple made the $US390 ($509) million payment out of a larger $US1 ($1) billion fund reserved for U.S. manufacturing. Finisar described the deal not as an investment, but representing “anticipated future business between the companies over a period of time.” To meet demand, it will re-open a 700,000-square-foot plant in Sherman, Texas.

Because that facility will be producing VCSELs for Apple, the deal is likely to put at least a temporary roadblock on its competitors’ ability to obtain them. One of the only other manufacturers is Lumentum Holdings Inc., which was widely rumoured to be Apple’s source of the components earlier this year — though it was plagued with production bottlenecks before the the iPhone X launch. As Bloomberg noted, Finisar’s stock rose up to 32 per cent on Wednesday, while Lumentum lost up to 15 per cent.

Though this might mean iPhone X-style capabilities are a little slower coming to your Samsung, Huawei, or Google devices, don’t fret too much: As Gizmodo noted in our iPhone 8 review, you can get by just fine without the latest lasers in your phone.