Young Optics gears up for metaverse device boom

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Claude Hsu, president of Young Optics. 1 credit

Optical component and module maker Young Optics expects to launch shipments for metaverse device applications between late 2022 and early 2023.

Young Optics saw significant profit growth in the first half of 2022. New automotive products are expected to drive growth in the second half, especially digital headlights. Even after customer reviews, the company still expects a 40% growth rate in the second half compared to the first.

First-half 2022 revenue for Young Optics reached NT$2.46 billion (US$82.15 million) with annual growth of 15.4% and an average gross margin of 19.2%, exceeding the 16% of the same period in 2021.

Young Optics President Claude Hsu noted that his company’s automotive optics products are divided into three categories: optical components for head-up displays (HUDs), optical components and LiDAR products for advanced driver assistance (ADAS) and system development products for digital headlights. .

Hsu expects more and more vehicles to use digital headlights in the future. Currently, they are mainly used by European and Chinese customers. Initial deliveries to Chinese customers were for New Energy Vehicles (NEVs), but due to their price competitiveness, Hsu expects more widespread use in the future.

The LiDAR products will be used in Level 4 autonomous vehicles, with the possibility of also being used in industrial warehouse automation and other automation. Automotive sensors are expected to grow 20-30% in the second half.

HUDs accounted for 6-8% of Young Optics’ automotive revenue in the first half, while digital headlights accounted for 45% and sensors 44%. Overall, automotive products contributed 7% of company revenue in the first half.

Young Optics is already working with three customers on the development of virtual reality (VR), augmented reality (AR) and mixed reality (MR) lenses. The shipping volume for one of the customers can be very large. Mass production was originally scheduled for early 2022 and was pushed back to late 2022 or early 2023. Young Optics has entered into long-term agreements with these customers and has already negotiated plans for second-tier products. generation.

Hsu noted that the delayed mass production of metaverse products means its revenue contribution in 2022 will still be small, but is expected to be higher in 2023. Once the three customers’ products enter mass production, the company will expects one-month shipments to reach one million units. .

Young Optics has an investment plan of NT$200-300 million in 2022, up from NT$20-30 million in 2021. automotive optical components and VR/AR/MR. apps.

In terms of Young Optics gross margin, it is highest for automotive products, followed by 3D printing, imaging optics, optical components and pico projectors.

Hsu said the pico projectors benefited from customer shipments of new models in the first half, but inflation in the Japanese and Korean markets will lead to lower shipments in the third quarter. The Chinese pico projector market is also weak compared to previous years.

3D printing demand in the third quarter is expected to slow, Hsu said, due to the impact of the war in Ukraine on demand from its German customers. Young Optics’ main 3D printing customers are hearing aid and dental equipment companies in Germany.

In the first half of 2022, Young Optics’ inventory days stood at 85, with inventory as a whole increasing. Young Optics attributed this to the supply shortage of Texas Instruments (TI) pico projector chips in the second half of 2021, which are required by pico projectors and 3D printers. Young Optics aims to reduce inventory days to 60.

Young Optics’ factory in Japan produces glass lenses used by high-end instruments and its factory in Bangladesh focuses on glass lenses for consumer applications. In 2022, these factories will start producing pico projector, surveillance and smart home lenses. The Kunshan plant in China produces picoprojectors and optical modules and components for projection. In the future, it will also produce headlight lenses. The factory in Taiwan mainly produces optical components and molds for glass and automotive components.

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