Please ensure Javascript is enabled for purposes of website accessibility

These 2 Chipmakers Could Get an Augmented Reality Boost

By Harsh Chauhan – Oct 6, 2017 at 2:16PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Himax Technologies and Finisar are working in the world where reality meets not-quite-reality.

Augmented reality (AR) is going to be big business thanks to its growing adoption in the retail and manufacturing industries. Digi-Capital estimates that increasing AR adoption on mobile platforms could push the industry's revenue to as much as $83 billion by 2021, driven by an increase in sales of related hardware, software, and services.

One way to tap this huge opportunity is through chipmakers such as Himax Technologies (HIMX 0.62%) and Finisar (FNSR), which are already developing the hardware to enable AR experiences on smartphones and other platforms. Augmented reality overlays digital information on a user's real-life environment. Let's take a look at how these two companies are approaching the AR opportunity.

A woman wearing AR glasses, with colorful icons showing the information she is interacting with.

Image source: Getty Images.

Himax is gaining traction in AR

Himax Technologies has been looking for its next big play after the death of Alphabet's Google Glass project, and AR could turn out to be a much-needed catalyst. The chipmaker has already made some progress on this front, supplying the technology for Microsoft's AR headset, HoloLens. However, HoloLens hasn't gained traction in the mass market thanks to its prohibitive pricing, restricting the kit to the developer community.

But Himax seems to have made a good display of its AR capabilities with this product, which is considered the most developed AR device on the market. Additionally, the HoloLens is gaining traction in the commercial space.

For instance, automaker Volvo is using the technology to help customers customize their cars, while Lowe's is helping customers customize their homes virtually before buying a product. The increasing commercial adoption of the HoloLens platform could be a big deal for Himax in the long run. .

Himax could soon tap the mass-market AR opportunity on the back of its recent partnership with Qualcomm. The two companies are going to develop a 3D camera system to enable vision-based functions for different use cases such as biometric face authentication and scene perception, among others, for use in smartphones, cars, and Internet of Things applications.

Qualcomm and Himax believe that they can start manufacturing the new platform on a mass scale from the first quarter of 2018. This is a big deal for Himax, as a partnership with Qualcomm opens the doors to tapping the fast-growing AR opportunity in smartphones.

Allied Market Research expects the smartphone 3D camera market to grow at an annual rate of almost 50% until 2022. Himax is now in pole position to tap this growth.

Finisar has started making moves

Finisar's moves in the AR space aren't as visible as those of Himax, but it could make a big splash very soon as some expect Finisar to land the 3D sensing chip spot in the upcoming Apple iPhone.

CEO Jerry Rawls has already talked about receiving purchase orders for its 3D sensing solution powered by vertical-cavity surface-emitting laser (VCSEL) technology. The chipmaker believes that it could start shipping its 3D sensing chips from the current quarter after receiving customer approval.

Finisar is a leading player in VCSEL technology, having shipped more than 150 million units of the chip for commercial applications. The chipmaker has now decided to extend VCSEL's applicability to gesture recognition and 3D optical sensing, optimizing it to work at high levels of efficiency and consume less power at the same time.

Finisar claims to be the largest supplier of VCSEL for the data communications market, so it can leverage its existing expertise and sales channels to tap the AR opportunity.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by MSFT. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends GOOG, GOOGL, and AAPL. The Motley Fool recommends Lowe's. The Motley Fool has a disclosure policy.

Stocks Mentioned

Finisar Stock Quote
Himax Technologies Stock Quote
Himax Technologies
$7.32 (0.62%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.