II-VI's (IIVI) CEO Chuck Mattera on Q4 2017 Results - Earnings Call Transcript

Second, we acquired one of the best multi-purpose six-inch compound semiconductor wafer fabs in the world. Given the future opportunities we anticipate in 3D sensing and other breakthrough technologies, this acquisition was lower cost and will allow us faster time to market than for example, building a proprietary greenfield site and will allow us to have control of our manufacturing footprint hereby enhancing our supply chain leadership position.

It adds to our in-house capacity for VCSELs and is also part of a broader strategic move to provide a pathway to gallium arsenide, silicon carbide and indium phosphide-based products. During the last 18 months, we added capacity, developed an integrated new technology and they’re preparing to ramp 3D sensing VCSELs at our U.S. epitaxial wafers and optoelectronic device manufacturer sites. We will leverage our experience to accelerate the readiness of the new fab.

Given our deep expertise in history and consumer VCSEL technology, we have been a design in partner for participants in the emerging 3D sensing market from the beginning. We believe that our continued investments in this and related technology and our strategic acquisitions of scalable manufacturing capacity will help us to become a leading VCSEL technology product and manufacturing partner.

To-date, we have received and accepted initial orders for millions of VCSEL arrays that we intend to fulfill on a schedule controlled by our customer over the next few quarters. We have been and we will continue to work closely with the customer as part of their overall manufacturing plant. We expect follow-on orders as 3D sensing products ramp through FY 2018.

From our active design engagements with a broad base of over 10 3D sensing customers, both in the consumer electronics and automotive markets, we expect 3D sensing to be a significant growth driver over the coming years. We expect that early adopters in next generation consumer electronics will enable transformative applications, including virtual reality, augmented reality and the Internet of Things, as well as the automotive industry who are looking to laser-based 3D sensing to enhance capabilities and enable new applications.

These will require that we have additional capacity to develop and manufacture for multiple products and customers on tight timelines. That is among the reasons, we invested in the new fab.