daily coverage of the optics & photonics industry and the markets that it serves
Featured Showcases
Photonics West Showcase
Business News

II-VI 'right on plan' with VCSEL build-out

26 Oct 2016

Manufacturing ramp on target for 2017 while demand for pump lasers and optical amplifiers grows strongly.

II-VI, the diversified US maker of photonic components, CO2 laser optics and more, says that demand for a whole raft of its products remains very strong, thanks mainly to buoyant market conditions in the optical communications sector.

The Pittsburgh-headquartered firm has completed a number of acquisitions this year as it targets a growing chunk of the photonics sector. Plans for a major ramp in VCSEL device production next year are said to be “right on plan”, while just a couple of weeks ago the company also acquired Germany’s Direct Photonics.

Photonics bookings up strongly
New CEO Chuck Mattera told an investor call that II-VI’s new fiscal year was “off to a great start”, with total bookings of $244.3 million in the quarter ending September 30 up 31 per cent on the same period one year ago.

Part of that is due to acquisitions, but the company’s photonics business unit – which largely comprises sales of optical products destined for the communications market – reported a 60 per cent surge in bookings compared with the same period last year, to $104.6 million in the quarter.

That maintains the momentum gained three months ago, and reflects strong ongoing demand for components like pump laser diodes and amplifiers needed to support capacity expansions in submarine fiber-optic networks, data centers, and a wider build-out of 100 Gigabit speed metropolitan networks in the US.

Mattera said that bookings for communications-related products had exceeded $100 million for the third consecutive quarter, with orders for delivery over the next six months at their highest level since II-VI entered the sector with its acquisition of key parts of the Oclaro business back in late 2013.

“At one level of integration or another, our products are enabling the growth of every major communications market segment,” Mattera said, adding: “With all of the indications we have today, we now believe that this strong demand could last into the second half of calendar year 2017.”

VCSEL build-out ‘on track’
At $31.6 million, II-VI’s latest profit figure was down slightly on the June quarter – although that is partly the result of the large investment being made to scale up production of VCSEL components, for which Mattera and his executive team see a big future.

The company attributed $7.6 million of its research and development spending to the VCSEL work in the latest quarter, with Mattera telling investors:

“We expect 3D sensing to be deployed in more applications. And we expect to be in a leading position to provide optical components and semiconductor lasers, particularly VCSELs, that enable 3D sensing functionality.”

More specifically, II-VI sees a burgeoning opportunity for the vertical-cavity lasers to find widespread use in virtual and augmented reality, lidar, gesture recognition, and biometric sensing.

At the moment, the components are largely used in optical mouse peripherals and short-range communications, but the planned build-out on a 6-inch wafer production platform represents a significant step up for the industry, and suggests that there is widespread interest from other applications.

Responding to an investor question, Mattera said that although it would take 9-12 months to install the required tooling and complete process qualification, so far the capacity expansion was progressing “right on track”, with a production ramp likely in the second half of 2017.

In addition to the VCSEL build-out, II-VI is also looking to add more production capacity to meet demand for pump laser diodes and amplifier components, where Mattera said that the company was in a “near sold-out” position on several product lines.

More incremental in nature than the VCSEL ramp, the company is targeting increases of 10-30 per cent by improving device yields and reducing production cycle times trough faster processing.

• Following the latest results, the II-VI stock price bounced back to approach a long-term high on the Nasdaq stock exchange.

In early trading on October 26, it was valued at just over $27 per share, equivalent to a market capitalization of around $1.7 billion.

ECOPTIKIridian Spectral TechnologiesHyperion OpticsTRIOPTICS GmbHBerkeley Nucleonics CorporationPhoton Lines LtdUniverse Kogaku America Inc.
© 2024 SPIE Europe
Top of Page