Finisar Corporation (FNSR - Free Report) has decided to expand the vertical-cavity surface-emitting lasers (VCSELs) and associated 3D sensing technologies by inaugurating a new manufacturing facility in Sherman, TX on Jul 9. The production process is expected to begin by the end of this year.
VCSEL Capital of the World
The site building, previously owned by MEMC and SunEdison, was under renovation since December 2017. Currently, it has been certified as “clean room operational and the first production tooling has been installed and qualified”. The company intends to make this unit, the “VCSEL capital of the world”. The applications which will have the facility’s main focus are 3D facial recognition, augmented reality and automotive in-cabin sensing and automotive LIDAR. About 200 employees including staff for operations and support services have already been hired to help start off production. Finisar expects to hire more employees by the end of the year to support the anticipated high-volume production.
Ripple Effects of the New Facility
Finisar’s expertise in optoelectronic component making and VCSEL technology has been long documented. It has produced more than 300 million VCSEL die in its existing facility in Allen, TX. With this new facility, the company expects to meet higher customer requirements for VCSEL products. The motive behind the new facility has largely been Apple’s (AAPL - Free Report) demand for the Finsar’s VCSEL technology for its handsets, and its early purchase order. This facility is expected to lead to manifold increase in the production capacity of VCSEL products, gradually pushing down the price of the technology. Finisar has also benefited the economic growth of the region, creating numerous employment opportunities.
In the past three months, the stock has gained 25.9% compared with the industry’s 8% rise. The company expects an increase in demand for its VCSEL technology for 3D sensing applications in fiscal second quarter, which is likely to have a positive impact on its revenues.
Zacks Rank and Stocks to Consider
Finisar currently carries a Zacks Rank #4 (Sell). Some top-ranked stocks in the space are Comtech Telecommunications Corp. (CMTL - Free Report) and Motorola Solutions, Inc. (MSI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Comtech has an expected long-term earnings growth rate of 5%.
Motorola has an expected long-term earnings growth rate of 8%.
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