Apple Supplier of iPhone 3D Optical Sensors Warns of Weak First Quarter Outlook, Skips Dividend

The Austrian firm that supplies Apple with optical sensors for 3D facial recognition features in iPhones expects revenue to fall in the first quarter of 2019 (via Reuters).


Sensor specialist AMS said its adjusted operating profit fell more than half in the fourth quarter of 2018 and it would not pay out a dividend because of slow demand from a "major customer" and restructuring costs.

AMS generated adjusted earnings before interest and tax (EBIT) of $61.9 million and revenue of $491 million in the three month through December. The company said it expects revenue to fall in Q1 2019 to $350-390 million, amid continued weak smartphone demand and a seasonal first-quarter dip in the consumer market.

AMS provides Apple with the optical sensors in its TrueDepth camera system featured in the iPhone XR, XS, XS Max, and 2018 iPad Pro. The Austrian group is said to generate around 45 percent of sales from Apple. Low demand for Apple's newest iPhones in China has reportedly put added pressure on AMS.

As early as November last year, reports began emerging that Apple had slashed production orders for its latest iPhone XS, iPhone XS Max, and iPhone XR models due to lower-than-expected demand, among other reasons.

While multiple reports have suggested the iPhone XR sold well over the holiday period, it did not sell as well as Apple had expected, at least in some areas around the world.

Apple lowered its earnings guidance for the first fiscal quarter of 2019 due to weak iPhone sales and has reportedly cut iPhone XR, XS, and XS Max production for the January to March quarter.


This article, "Apple Supplier of iPhone 3D Optical Sensors Warns of Weak First Quarter Outlook, Skips Dividend" first appeared on MacRumors.com

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Kuo: 2019 iPhones Unlikely to Feature Time-of-Flight 3D Sensor in Rear Camera

Looking ahead to next year, Ming-Chi Kuo believes that contrary to some analysts' expectations, Apple is unlikely to integrate a time-of-flight (ToF) depth sensing system in the rear camera of its 2019 iPhones.

Reports of Apple including rear-facing 3D sensing capabilities in its 2019 iPhone lineup first began appearing last year. At the time, Apple was said to be evaluating a ToF approach, which is different from the one it currently uses in the TrueDepth sensor system on the front of the iPhone X.


TrueDepth relies on a structured-light technique that projects a pattern of 30,000 laser dots onto a user's face and measures the distortion to generate an accurate 3D image for authentication. By contrast, ToF calculates the time it takes for a laser to bounce off surrounding objects to create a 3D image of the environment.

However, in a note to investors this morning, obtained by MacRumors, Kuo said that the company would not use a rear-side application of ToF technology in next year's smartphone lineup for two reasons.

First, the distance and depth information provided by rear-side ToF is currently too immature for creating the "revolutionary AR experience" that Apple ultimately wants to develop. Kuo believes that in addition to camera distance/depth data, the complete AR ecosystem Apple is aiming for requires 5G connectivity, augmented-reality glasses, and a "more powerful Apple Map database".

Second, the addition of rear-side ToF would do little to improve the iPhone's photo-taking capabilities, because the current dual-camera setup is already capable of capturing or simulating enough distance/depth information to make photo-features like Portrait Mode a reality.

"We believe that iPhone's dual-camera can simulate and offer enough distance/depth information necessary for photo-taking; it is therefore unnecessary for the 2H19 new iPhone models to be equipped with a rear-side ToF," Kuo concludes.

Last October, Kuo similarly pushed back against reports that Apple would expand its front-facing TrueDepth system to the rear camera on this year's iPhone lineup, which is due to be announced later today. Given Kuo's latest remarks on Apple's smartphone roadmap, rumors of rear-camera 3D sensing capabilities for next year's lineup seem just as unlikely.

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Snapchat Rolls Out First TrueDepth-Enhanced AR Lenses for iPhone X Users

Snapchat today began implementing Apple's TrueDepth camera technology in its Lenses selfie feature for the first time. The silent update means iPhone X owners who use Snapchat will see augmented reality masks pop up in the app that make use of Apple's advanced facial mapping technology to superimpose the mask onto the user's face more realistically and track motion more accurately.


Apple first demoed the AR Snapchat Lenses at its iPhone X event last year, as part of its on-stage TrueDepth technology unveiling. Apple's Animojis work using the TrueDepth camera. Face ID also uses its structured-light technique to project a pattern of 30,000 laser dots onto a user's face and measure the distortion to generate an accurate 3D image for authentication.

Apple says the Face ID mathematical image data is encrypted upon generation and never leaves the smartphone's Secure Enclave. Third-party app developers are however able to access TrueDepth's visual face maps separately, including a live read-out of 52 micro-movements in the eyelids, mouth, and other features. At the same time, Apple explicitly forbids this data being exploited for user profiling or ad marketing purposes, but that hasn't stopped privacy advocates and some developers from raising concerns about third-party app access to the TrueDepth Camera.

At present there are three Lenses that utilize TrueDepth, demonstrating closer tracking of facial expressions and head movement. Snapchat says the TrueDepth camera also lets it blur the background and more accurately apply small details and 3D objects, which reflect and react to ambient lighting to project shadows and add highlights. The TrueDepth Lenses only appear for iPhone X owners and more of the AR masks are likely to appear periodically in the future.

Snapchat is a free download for iPhone and iPad from the App Store. [Direct Link]

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Apple Has Two-Year Lead Over Smartphone Rivals in 3D Sensing Race

Apple has gained a two-year lead over its rivals in the smartphone industry in the area of 3D sensing technology, according to a new report on Tuesday.

Following talks with three major parts suppliers, Reuters estimates that Android phone makers will have to wait until 2019 to duplicate the 3D sensing feature behind Apple's Face ID security, which debuted last year in the iPhone X.

According to parts manufacturers Viavi Solutions Inc, Finisar Corp and Ams AG, bottlenecks on key parts will mean mass adoption of 3D sensing will not happen until next year, disappointing earlier expectations.

That means that China's Huawei, Xiaomi and others could be a total of almost two years behind Apple, which launched Face ID with its iPhone X anniversary phone last September.
Android producers are reportedly struggling to source vertical-cavity surface-emitting lasers, or VCSELs, a key component of Apple's TrueDepth camera that the company moved to secure supplies of last year. In December, Apple said it planned to invest $390 million in Finisar Corp, which supplies the components for VCSELs.

Apple said the investment would enable Finisar to exponentially increase its R&D spending and high-volume production of VCSELs, which power some of the iPhone's X flagship features, such as Face ID, Animoji and Portrait mode selfies, as well as the proximity-sensing capabilities of AirPods.

According to Reuters' sources, Apple was initially sourcing VCSELs chiefly from California-based Lumentum, and it was bottlenecks in production there last year that also spurred the $390 million deal with Finisar.

Meanwhile, Lumentum, which declined to comment on the report, is ramping up additional manufacturing capacity for VCSELs and edge-emitting lasers for the first half of fiscal 2019, according to the company’s earnings call.

Another producer, Austria-based Ams, also expects to have VCSEL chips widely available next year and says it has won a large deal with one phone maker.

Viavi, the only major supplier of optical filters needed for the 3D sensing modules, believes only one Android handset maker will deliver 3D sensing by the end of the calendar year, but volumes are likely to be very low. The company expects at least two more Android-based phones to follow that trend in 2019.

According to a report in October by KGI Securities analyst Ming-Chi Kuo, inquiries by Android smartphone vendors into 3D-sensing technologies tripled after Apple unveiled its TrueDepth camera and Face ID technology, which will likely replace traditional Touch ID fingerprint recognition in future iOS devices.

Apple is reportedly working on a new high-end 2018 iPad that will adopt many of the design elements from the revamped iPhone X, including built-in support for Face ID. The new tablet device, which is likely to be a "Pro" model, will reportedly do away with the Home button.

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Barclays Says Second-Generation iPhone X Could Have Smaller Notch

Apple will launch a trio of new iPhone models later this year with a second-generation TrueDepth camera system, which will potentially be reduced in size, according to a research note issued today by analysts Andrew Gardiner, Hiral Patel, Joseph Wolf, and Blayne Curtis at investment bank Barclays.


While the analysts believe the new TrueDepth system will only "evolve slightly," they predict it could allow for a "smaller notch" on the 2018 range of iPhones with Face ID, which is rumored to include a second-generation iPhone X, a larger iPhone X Plus, and an all-new mid-range 6.1-inch LCD model.

MacRumors obtained a copy of the research note, which also corroborates rumors about Apple extending Face ID to the iPad Pro this year:
Based on several data points within the 4Q17 reporting period and our supply chain meetings at CES, we remain confident that Apple is set to deploy its TrueDepth 3D sensor across the iPhone range in 2018 and to also add it to the pending iPad Pro refresh as well.

Given the complexity and multiple years spent developing the current generation of module, combined with supplier comments over the past month regarding multi-year customer commitments, we do not envisage a major change to the architectural make-up in 2018 […]

We do expect the sensor to evolve slightly, potentially reducing in size (i.e., smaller notch) and improving in specificity […] helping to further drive very strong growth [for some Apple suppliers] in 2H18 as the second generation of sensor ships in this year's new iPhones.
A smaller notch would be a welcomed change for critics of the iPhone X design, but it remains to be seen if it will happen so soon. An earlier rumor suggested the notch won't be reduced in size until 2019 or later, and it's generally expected that 2018 iPhones will look virtually identical to the iPhone X.

The prevailing thought is that Apple doesn't want to deal with the type of delays it faced with the iPhone X last year, and by keeping the hardware relatively unchanged, suppliers could avoid some retooling. However, it's certainly possible the TrueDepth camera system could be slightly shrunk down this year.

Beyond this year, the Barclays analysts believe Apple is "working hard" on a rear-facing TrueDepth camera system for future iPhones. The technology could be ready by 2019, but it sounds too far out to know for certain.
A key discussion point regarding 2019 is whether or not Apple will be ready to insert a rear or world-facing sensor, given the additional complexity associated with a greater range and field of view and […] the potential safety implications for the human eye.

Our discussions with suppliers suggests Apple and its partners are working hard on a world-facing solution, but development is ongoing and with over 18 months to go until the 2019 iPhone cycle, not all is yet determined.
The rear-facing TrueDepth camera system would pave the way for expanded augmented reality capabilities on iPhones. Apple has repeatedly expressed a profound interest in augmented reality, and recently highlighted some use cases of the technology in areas like education and gaming with a new page on its website.

Bloomberg News previously reported that Apple is exploring rear-facing 3D sensing, to be added to iPhones as early as 2019, while KGI Securities analyst Ming-Chi Kuo agrees the technology won't be ready in 2018, so there does appear to be consensus about back-and-front TrueDepth being a next-year feature.

Apple's trio of new iPhones should be announced in September as usual, while the new iPad Pro with Face ID could debut in June.

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2019 iPhones Could Have Smaller Notch as Apple ‘Looking Into’ Combining Face ID and Front Camera

A new report from South Korea's ETNews insinuates that iPhones may have a smaller notch in 2019 or beyond.


The report, citing industry sources, claims Apple is "looking into" combining the front-facing camera and Face ID on next year's iPhones, a move that could certainly reduce the size of the TrueDepth sensor housing.
According to industries, it is heard that Apple is planning to strengthen face sensing function starting from 2019 models. That is why it is planning to increase number of parts that will be used for iPhones and is looking into combination of a face recognition module with a camera module.
The confusing bit is that the report mentions a singular face recognition module, whereas Face ID is powered by an infrared camera, dot projector, and flood illuminator. The report doesn't specify how Apple would manage to combine these components, so like many very-early-on rumors, this one isn't entirely clear yet.


The notch is easily the most controversial attribute of the iPhone X's design. While many early adopters don't mind the small cutout at the top of the display, others have heavily criticized it, including The Outline's Joshua Topolsky.
The "notch" on the new iPhone X is not just strange, interesting, or even odd — it is bad. It is bad design, and as a result, bad for the user experience. The justification for the notch (the new Face ID tech, which lets you unlock the device just by looking at it) could have easily been accomplished with no visual break in the display. Yet here is this awkward blind spot cradled by two blobs of actual screen space.
Unfortunately for those critics, it doesn't look like the smaller notch will arrive in 2018, as new iPhones and iPads set to launch later this year are expected to have the same TrueDepth sensor housing as the iPhone X.

Back in November, KGI Securities analyst Ming-Chi Kuo said Face ID will be featured on a second-generation 5.8-inch iPhone X, a larger 6.5-inch iPhone X Plus, and a new mid-range 6.1-inch iPhone. Apple will also release at least one iPad Pro model with Face ID this year, according to Bloomberg News.

LG Innotek will reportedly supply all or the majority of 3D sensing modules for the next-generation iPhone and iPad models, based on an $821 million investment, which may have been funded at least partially by Apple.

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LG Expected to Supply Face ID Technology on iPad Pro, iPhone X, and iPhone X Plus This Year

Apple is planning a significant investment in LG Innotek to secure supply of 3D sensing modules for next-generation iPhone and iPad models expected to launch this year, according to Korean website The Investor.

iPad Pro render by Benjamin Geskin and rough mockup of iPhone X and iPhone X Plus

The upfront payment could be worth as much as around $820.9 million, which LG Innotek would use to build additional facilities for production of 3D sensing and camera modules for smartphones, the report claims.

The 3D sensing modules assembled by LG Innotek, including the flood illuminator and dot projector, are key components of the iPhone X's new TrueDepth camera system, enabling features such as Face ID and Animoji.

The investment would make sense given Apple plans to launch a refreshed iPhone X, a larger iPhone X Plus, and a mid-range iPhone each with Face ID later this year, according to KGI Securities analyst Ming-Chi Kuo.

Apple will also release at least one iPad Pro model with Face ID this year, according to Mark Gurman at Bloomberg News.

The investment could help Apple avoid the temporary supply chain issues it experienced with 3D sensing modules late last year, ensuring availability of the iPhone X, iPhone X Plus, and new iPad Pro is more plentiful.

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Apple’s Upgraded TrueDepth Camera System in Future iPhones Will Necessitate Larger Batteries

iPhone models released in 2019 and later will likely feature an upgraded TrueDepth camera system that will consume more power, resulting in a need for larger-capacity batteries, according to KGI Securities analyst Ming-Chi Kuo.


In a research note obtained by MacRumors, Kuo said Apple has technologies at its disposal to develop larger-capacity batteries.
Apple capable of designing new system for large-capacity batteries: We believe the adoption of TrueDepth camera for 3D sensing in 2017-18 will create demand for larger-capacity batteries. From 2019, we predict iPhone may adopt upgraded 3D-sensing and AR-related functions, and it will consume more power, further increasing demand for large-capacity batteries. We believe Apple's key technologies, including semiconductor manufacturing processes, system-in-package (SIP), and substrate-like PCB (SLP), will create the required space for larger batteries.
Kuo unsurprisingly expects Apple will use these technologies to continue increasing iPhone battery capacities in 2019 and 2020, as it routinely does, which should result in even longer battery life for future models.

Kuo reiterated that TrueDepth will be expanded to a trio of iPhone models next year, including a new 5.8-inch iPhone X, a larger 6.5-inch model we're calling iPhone X Plus, and a new 6.1-inch mid-range model with an LCD display, but it sounds like the camera system will remain unchanged in 2018.

As far as next year is concerned, Kuo previously said the second-generation iPhone X could have a one-cell L-shaped battery that would provide up to 10 percent additional capacity compared to the two-cell battery in the current iPhone X, which of course could result in slightly longer battery life.

He added that next year's so-called "iPhone X Plus" is likely to retain a two-cell battery design, but the larger size of the 6.5-inch device will still allow it to have a higher capacity in the range of 3,300 to 3,400 mAh.

Apple is expected to release the new iPhone X and iPhone X Plus in its usual timeframe of September to October next year.

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Rainbrow: New Eyebrow-Controlled Game for iPhone X Takes Advantage of TrueDepth Camera System

Washington University computer science graduate Nathan Gitter has released Rainbrow, an eyebrow-controlled arcade game for iPhone X.

The simple game requires players to use their eyebrows to move an emoji face up and down the screen to collect stars, worth one point each, while avoiding other emoji obstacles such as cars, basketballs, and ducks.


Simply raise your eyebrows to move the emoji up, frown to move the emoji down, or make a neutral expression and the emoji stays still. Note that if you raise your eyebrows, and keep them raised, the emoji will continue to move in an upwards direction, and vice verse when maintaining a frowning expression.

While there are no levels, the game gets increasingly difficult as more obstacles appear. The goal is simply to get the highest score possible, but players can only compete against themselves right now. Gitter told us that he plans to integrate Apple's Game Center for multiplayer competition in a future update.


Rainbrow is a novel concept since it's an early example of a game using ARKit, an iOS 11 framework that can detect the position, topology, and expression of a user's face in real time using the iPhone X's new TrueDepth camera system.

Gitter told us he believes there is a lot of future potential for face-based apps, especially for those that improve accessibility. He pointed us to another face-controlled game that was released earlier this week, Nose Zone, which tasks players with destroying targets by pointing at them with their nose.

Upon first opening Rainbrow, a prompt asks for permission to access the front-facing camera. As with any app, this permission can be toggled on or off at a later time in the Settings app under Privacy > Camera.


Rainbrow's privacy policy, which all apps with face tracking are required to have, says that depth data is collected only for gameplay purposes, only stored on the device locally, and only for the duration of a game session. The policy adds that depth data is never stored remotely, given to third parties, or used for any non-gameplay purposes.

Rainbrow is free to download on the App Store for iPhone X. Gitter told us he may add an optional in-app purchase to unlock new emoji characters in the future, but he does not plan on implementing ads into the game.

Gitter works at mobile app studio SwiftKick Mobile in Austin, Texas. His personal website says he's available for iOS design and development work.

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Apple Reportedly Working on 3D Sensor System for Rear Camera in 2019 iPhones

Apple is developing 3D depth sensing technology for the rear-facing cameras in its 2019 iPhones, according to a new report by Bloomberg on Tuesday. The 3D sensor system will be different to the one found in the iPhone X's front-facing camera, and is said to be the next big step in turning the smartphone into a leading augmented reality device.

Apple is evaluating a different technology from the one it currently uses in the TrueDepth sensor system on the front of the iPhone X, the people said. The existing system relies on a structured-light technique that projects a pattern of 30,000 laser dots onto a user's face and measures the distortion to generate an accurate 3D image for authentication. The planned rear-facing sensor would instead use a time-of-flight approach that calculates the time it takes for a laser to bounce off surrounding objects to create a three-dimensional picture of the environment.
The existing TrueDepth camera would continue to be used in the front-facing camera of future iPhones in order to power Face ID, while the new system would bring the more advanced "time-of-flight" 3D sensing capability to the rear camera, according to the sources cited. Discussions with manufacturers are reportedly already underway, and include Infineon, Sony, STMicroelectronics, and Panasonic. Testing is said to be still in the early stages, and could end up not being used in the phones at all.

With the release of iOS 11, Apple introduced the ARKit software framework that allows iPhone developers to build augmented reality experiences into their apps. The addition of a rear-facing 3D sensor could theoretically increase the ability for virtual objects to interact with environments and enhance the illusion of solidity.

Apple was reportedly beset with production problems when making the sensor in the iPhone X's front-facing camera, because the components used in the sensor array have to be assembled with a very high degree of accuracy. According to Bloomberg, while the time-of-flight technology uses a more advanced image sensor than the existing one in the iPhone X, it does not require the same level of precision during assembly. That fact alone could make a rear-facing 3D sensor easier to produce at high volume.

Late last month, oft-reliable KGI Securities analyst Ming-Chi Kuo claimed that Apple is unlikely to expand its front-facing 3D sensing system to the rear-facing camera module on iPhones released in 2018. Kuo said the iPhone X's 3D sensing capabilities are already at least one year ahead of Android smartphones, therefore he believes Apple's focus with next year's iPhone models will be ensuring an on-time launch with adequate supply.

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