The VCSEL market is expected to be worth $1 billion this year and to show 18.3% CAGR between 2020 and 2025 to reach $2.7 billion at the end of the period, reports Yole Développement.

While 3D applications for mobile and consumer are still booming, automotive, medical and AR&VR applications are emerging.

Mobile 3D sensing will represent around 75% of overall VCSEL revenues in 2020. 3D sensing is a diversification opportunity.

VCSEL technology is not yet mature and could further develop in the future.

50+ VCSEL manufacturers have been identified: more than a third of these have their HQs in the US.

Lumentum is dominating the consumer market but new players are emerging.

Other Chinese VCSEL suppliers are expected to emerge as other smartphone manufacturers like Oppo, Xiaomi, or Vivo could follow Huawei and establish a local source of supply.

In the VCSEL market, telecom and infrastructure applications, mainly datacom, are expected to generate revenue of $277 million in 2020 and should reach $516 million in 2025 at a CAGR of 13.2%.

Other applications are not significant yet but could emerge in the mid- to long-term, such as automotive applications like LiDAR or driver monitoring systems.

The supply chain is also strongly impacted by politics and the US-Japan trade war.

In May 2019, the US ban Huawei. Lumentum stopped supplying Huawei and Huawei must find a new provider of VCSELs.

This ban severely damaged Huawei’s supply chain. Huawei had no choice but to build its own supply chain. This precipitated the rise of Vertilite.

Other Chinese VCSEL suppliers are expected to emerge as other smartphone manufacturers like Oppo, Xiaomi, or Vivo could follow this trend and develop a local ecosystem to secure their supply chain.