Application Breakthroughs Fuel Optical Hardware Boom

The consumer electronics sector, particularly smartphones, is undergoing a notable revival marked by several advancements in optical technologyThis rejuvenation is spurred by a growing push from domestic manufacturers to elevate the quality of their optical products, aiming for high-end market segments while gradually enhancing their supply chainsIn this context, companies specializing in VR (Virtual Reality) and AR (Augmented Reality) optics and components are accelerating their investments, establishing a strong presence in various sectors including automotive and machine vision.

Smartphone cameras have evolved significantly, especially in terms of functionality such as imaging and biometric recognitionThe demands for optical lens technology have escalated, specifically in areas like zoom capability, high resolution, optical image stabilization, and overall reliability

Notably, periscope-style cameras have emerged as a prevalent trendThe competition in the smartphone camera and security sectors has intensified, while the growing assortment of automotive optical products has led to a decrease in unit pricesManufacturers are starting to expand their focus toward automotive optics and VR/AR technologies to forge new growth avenues.

As the demand for advanced driver-assistance systems (ADAS) escalates, automotive manufacturers are increasing the number of cameras in their vehicles, including front, rear, and surround viewsThe expansion of domestic electric vehicle (EV) manufacturers has led to a significant reduction in the prices of head-up displays (HUDs), with many products now reaching mass production across mainstream technical routes.

In machine vision, where upstream components and software algorithms constitute about 80% of the total value, the maturation of camera and sensor industries has broadened the application scope for machine vision technologies

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By integrating cutting-edge artificial intelligence techniques like deep learning, machine learning, and large language models, organizations can enhance data processing efficiency, feature extraction, and recognition within 3D visual perception systemsThis adaptation promotes smarter systems, positioning machine vision as a driver of innovation across various industries.

The innovative trajectory of smartphones is intrinsically linked to advancements in camera technologyTypically, smartphones utilize two to three fixed-focus lenses to facilitate “optical zoom,” with telephoto lenses being crucial for achieving high zoom ratiosPeriscope cameras, designed to lay out the camera horizontally within the phone, utilize specialized prism technology to efficiently direct light into the lens assembly, thus resolving spatial constraints while maintaining a slim profile

This design ambition has existed for over a decade, with companies such as Sunny Optical, Huawei, and other East Asian optical enterprises beginning their foray into developing periscope cameras.

The iPhone 15 series marked the first mainstream adoption of a periscope telephoto lens, sparking a market trend toward compact camera modules and lightweight technology developmentAnalysts predict a substantial growth in the global periscope camera market, projecting revenues to reach approximately $4.4 billion by 2025. The first quarter of 2024 saw global smartphone shipments reach 300 million units, indicating a 12% year-over-year growth and providing a catalyst for upstream optical suppliers.

Crystal Optoelectronics reported impressive revenue growth across its optical components, thin-film optical panels, and reflective materials sectors, thanks in part to smartphone market recovery

Specifically, revenue from optical components surged by around 21.11%, driven by strategic adjustments and enhanced competitiveness within the sectorThe company aims to establish itself as a market leader in high-end optical solutions, particularly in micro-prism modules and specialized optical filters.

In the realm of micro-prism module development, Crystal Optoelectronics has made significant investments, extending its reach beyond smartphones into wearables, laptops, and tabletsAs a result, capital expenditure saw a significant spike as new projects came into play, with a focus on innovation and modernizationFor 2024, the company anticipates its investment strategy will pivot toward new projects with potential incremental returns while targeting a 30% reduction in overall capital expenditure compared to 2023.

The resurgence in market dynamics is evident, with Crystal Optoelectronics forecasting revenues of approximately ¥5.076 billion for 2023, a 16.01% increase from the previous year

Their optical components now constitute 47.06% of total revenues, showing a robust year-over-year growth as operational margins improveSimilarly, Yutong Optical has recorded significant sales in optical lens manufacturing, indicative of the heightened demand encompassing over 96% of the company's business sector.

Vision technology is also rapidly evolving within the automotive sector, especially concerning the integration of camera systemsCurrent automotive protocols require multiple camera types—including interior, rear, front, side, and surround cameras—to adequately support advanced driving assistance technologies, with new EV models averaging over ten integrated cameras eachAs manufacturers balance functional imaging with safety, the analytics predict the automotive camera market will expand to approximately $35.5 billion by 2026, with potential market capitalization nearing $50 billion.

A significant trend is the integration of augmented reality (AR) capabilities into HUDs—displaying key information directly onto a vehicle’s windshield or dashboard glass

This development enables drivers to access real-time data while maintaining their focus on the road, thereby maximizing safetyMarket forecasts suggest that the AR HUD sector will see a meteoric rise, with estimates projecting the market could grow from ¥3 billion to ¥30 billion between 2021 and 2025.

The proliferation of domestic AR HUD products has led to substantial decreases in prices, thereby enhancing accessibility and stimulating industry demandFor instance, Yutong Optical reported a year-on-year revenue increase of nearly 193% in automotive products, including lenses and HUD components, indicating a significant market uptickConcurrently, various enterprises are increasingly delivering mass production of AR HUD systems, meeting the rising demand in the automotive sector.

Moreover, the market share of AR HUDs in the overall HUD sector reached 21.1% in Q1 2024, marking a 10.5% growth from previous metrics

As the functional scope of AR HUDs—including navigation and situational awareness—matures, their adoption rate across diverse vehicle models is projected to climb, setting a foundation for consistent growth within this market sector through 2025.

Beyond automotive applications, 3D perception technology is steadily making strides across multiple industriesInitially launched in industrial settings for precision measurements and tracking minor deformations, 3D vision technology is now diversifying into consumer-oriented applications, leveraging its capabilities in high-demand fields such as architectural visualization and retail analyticsInnovations from companies like Orbbec, merging audio-visual elements with machine intelligence, exemplify the versatile impact of 3D technologies.

The demand for robot vision capabilities—characterized by requirements for 3D vision and high degrees of integration—continues to catalyze advances in mainstream 3D perception technologies

With applications in robotics effectively pushing the boundaries of traditional manufacture, industry experts forecast this integration will enhance operational efficiency within various manufacturing processes.

In the autonomous driving domain, sensory components bifurcate into visual and LIDAR (Light Detection and Ranging) solutionsThe visual approach, primarily reliant on cameras enhanced by additional sensors like radar and ultrasonic units, remains economically favorable despite its sophisticated algorithmic demandsConversely, LIDAR solutions prioritize high-level sensing capabilities complemented by visual data to bolster safety and operational reliability.

With the increasing penetration of L2 and L3 automation technologies, the demand for integrated sensors per vehicle has significantly increased

Analyses predict that by 2025, the market value for automotive sensing technologies is set to reach approximately ¥52.77 billion, with specific segments for onboard cameras, millimeter wave radar, and ultrasonic sensors reaching respective valuations of ¥13.29 billion, ¥14.22 billion, and ¥17.24 billion.

Overall, the machine vision market is experiencing steady growth, with the global sector valued at approximately ¥92.52 billion in 2023, representing a year-on-year growth rate of about 5.8%. By 2025, this value is expected to exceed ¥110 billion, congenitally driven by domestic demand within China alongside advancements in 3D vision technology and deep learning capable of permeating complex industrial environments.

The integration of 3D visual technologies into VR and AR interfaces promises to redefine interactive experiences across educational, training, and entertainment sectors