Jabil's Global Mechanicals Intelligence Archive

Global Mechanicals Intelligence

Q4 2024 | OCTOBER - DECEMBER

MARKET DYNAMICS

• The automotive ADAS (Advanced Intelligent Driving Assistance System) camera is the most prominent symbol of autonomous driving, and the current 2M pixel is the mainstream specification.  Driven by technological innovation and market demand, 5M pixel and 8M pixel are gradually becoming high-end segments, leading to a higher demand for higher-resolution lenses.
• Sunny Optical Technology (02382. HK) was announced on the Hong Kong Stock Exchange in July.  The net profit was about RMB 1.048 billion to RMB 1.092 billion for the first half of this year, a year-on-year increase of 140% to 150%.  It was mainly due to the recovery of the smartphone market.  The improved product mix led to a year-on-year increase in mobile phone lens and camera module shipments, an average selling price increase, and an improvement in gross profit margin.
• Q Technology released its first-half-year performance announcement on the Hong Kong Stock Exchange. Revenue was approximately RMB 7.675 billion, a 40% increase year over year. Net profit was approximately RMB 115 million, a 431% increase year over year. In July, Q Technology sold 32.637 million mobile phone camera modules, and the high-end products with 32 million pixels and above were 15.404 million, a 20% increase year over year.
• Largan Precision announced that its consolidated revenue in July was NT$5.435 billion (approximately RMB 1.189 billion), the highest for the recent eight months and a 55% year-on-year increase. The periscope lens volume will be relatively large in the second half of the year, and the specifications of some customers’ high-end mobile phones will also be transferred to mid-range models. Largan is planning to complete the following new factory next year.

TECHNOLOGY OVERVIEW

METALENSES

• These flat lenses, made with nanostructures, offer advantages like thinner profiles, lighter weight, and potential for mass production at lower costs than traditional curved lenses. They are being explored for imaging, virtual reality, and augmented reality devices applications.

GRADIENT INDEX (GRIN) LENSES

• GRIN lenses have a gradually changing refractive index, allowing light manipulation and focusing within a single lens element. This reduces the number of lenses required in a system, leading to more compact and lightweight optical designs.

FREEFORM OPTICS

• This technology utilizes advanced design and manufacturing techniques to create lenses with complex, non-spherical surfaces. Freeform lenses can correct aberrations and improve image quality, especially in wide-angle and high-performance applications like photography and automotive vision systems.

LIQUID LENSES

• These lenses use electrically controlled fluids to change their shape and focal length, eliminating the need for mechanical movement. Liquid lenses offer faster focusing and zooming capabilities, making them suitable for applications like machine vision, barcode scanning, and smartphone cameras.

ADAPTIVE OPTICS

• This technology utilizes deformable mirrors or lenses to compensate for distortions caused by atmospheric turbulence or other factors, resulting in sharper and clearer images. Adaptive optics are used in telescopes, microscopy, and laser communication systems.

RECENT DEVELOPMENTS

Source: Press releases & company websites

DEMAND/SUPPLY OVERVIEW

DEMAND COMMENTARY

• The mobile phone market has recovered since Q1, and Q3 is the peak season for mobile phone lens makers, especially for suppliers supplying Apple & Huawei.
• With the strong driving force of intelligent driving, the automotive camera market continues to proliferate.  The average number of cameras installed in new cars is exaggerated, reaching 10.1 units. 
• Only some car makers use a few cameras, others have more than 10.  Compared with two or three years ago, the number of cameras installed in new energy vehicles has nearly doubled.  Asia-Pacific is the largest market, with a share of about 52%, while Europe and North America share about 22% and 19%, respectively.  The rear/surround view lens is the largest segment, with a share of over 65%. 

SUPPLY ANALYSIS

• Global geopolitical challenges and market uncertainties are prompting optical lens suppliers to diversify their supply chains.  Some producers have been setting up plants outside China, with Mexico and Vietnam as their first options.
• Overall, suppliers have surplus capacity, supply is stable, and the standard lead time of ~16 weeks remains unchanged (raw material ~12 weeks + ~4 weeks processing).
• The top 10 global automotive lens suppliers are Sunny, LCE, OFILM, Hitachi, Sekonix, Trace Optical, YTJZ, Sunex, Nidec, and SIRTEC (ranked by comprehensive strength).
• The top 10 mobile phone lens suppliers are Sunny 208M, Largan 151M, AAC Optics 113M, GSEO 69M, Huaxin 61M, Ofilm 54.4M, ZET 27M, DULE 23.5M, SPY 20M, and LCE 18.5 M.

PRICING SITUATION

• Optical glass lens raw material prices generally remained stable.
• Optical plastic lens raw material prices (resin) have increased due to increased labor costs, freight costs, handling, and trade and traffic issues.  Japanese manufacturers supply these resins, e.g., Mitsui Chemicals, Osaka Chemicals, etc.
• Major optical lens manufacturers have shifted their business focus from competing for orders to making money, which has corrected the unit prices of lenses and modules.
• Lens prices generally remain stable due to supply centralization and market demand restrictions.  There are limited opportunities for cost reduction except for the rolling high volumes.

KEY TAKEAWAYS

• The Optical Lens market price is returning to normal and will remain relatively stable for 2024.  There are signs of recovery in the mobile phone market; July & August are the peak season for lens stocking by various high-end lens makers like Sunny, Largan, O-Film, etc., the optical supply chain shipments are approaching, and new competition has begun. 
• Mobile phone and automotive market development is still the core driving force of the optical lens industry.