European foreign capital recently released a report stating that the market share of stable iPhone 3D VCSEL orders is expected to decline from 85% in 2017 to 45% by 2019. This shift is partly due to Finisar becoming the main supplier for the back-end 3D VCSEL, which could indirectly affect the company's operations. As a result, European investors have downgraded their rating of the stock from "neutral" to "underperform relative to the broader market," and the target price has been cut from 270 yuan to 205 yuan.
The stock was impacted by this news, opening higher on the day but later falling over 5.7% to 253.5 yuan. The report also highlighted that while the three iPhones launched in the second half of 2018 will still use front-end 3D sensing systems, the new designs in 2019 are expected to incorporate rear 3D camera sensing technology. This change is likely to further reduce the demand for iPhone-specific VCSEL components.
In the Android market, more brand manufacturers are adopting similar 3D sensing designs, creating potential for growth. However, increased competition from integrated component makers may pose challenges. Additionally, the expansion of the epitaxial wafer’s usable area could reduce processing demand. According to channel surveys, only 40-50% of current VCSEL wafers meet Apple's standards, leading to higher processing needs. But as manufacturing yields and uniformity improve, these requirements may decrease, affecting the overall growth of related sectors.
Due to the declining sales in the VCSEL market, European analysts have revised their earnings forecasts for 2018 and 2019, cutting them by 7–11%. They now estimate the company’s earnings per share at 12.4 yuan for 2018 and 15 yuan for 2019. Overall, the outlook remains cautious, with ongoing concerns about market share erosion and competitive pressures.
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