MicroVision’s Switch to Class 1 Lasers for IoT Displays to Delay Production for a Year
Laser-scanning display developer MicroVision is making “significant progress” landing global tier-one customers for its display-only and interactive-display products for consumer IoT applications, said CEO Perry Mulligan on a Q2 call Thursday. MicroVision’s decision at customers’ requests to replace the Class 3R lasers in the display modules with Class 1 laser components will cost the supplier roughly a quarter’s delay in production, he said.
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“While both Class 1 and Class 3R are safe for consumers, providing a Class 1 product makes it much easier to sell the product globally and enable larger volumes,” said Mulligan. Switching to Class 1 from 3R entails no significant performance tradeoffs, he said. The American National Standards Institute is the U.S. body that sets laser-safety classifications criteria based on injury risks to the eyes or the skin.
Switching to Class 1 raises “the likelihood of a larger-scale rollout,” said Mulligan. It could give MicroVision “an opportunity to sell well in excess of 10 million units to multiple customers, with perhaps 1 to 3 million units shipping during the first 12 to 24 months of production,” he said. But the production delay means products won’t launch for another year, and MicroVision won’t get revenue from the project until Q2, he said. That business could begin turning a profit a quarter later, "depending on volumes and product mix considerations," he said.
Mulligan’s delay disclosure sent the stock tumbling 13.3 percent Friday, closing at 75 cents a share. The stock survived a delisting threat in February when the company regained compliance with Nasdaq’s minimum-bid rules (see 1903060009). It faces a renewed delisting risk under a Nasdaq “delinquency notice” received June 13 after shares sold for under $1 for 30 straight trading days, said an SEC filing Friday. The notice gave MicroVision until Dec. 10 to bring the stock back above $1, it said.
MicroVision received the last $2.5 million owed under a $15 million April 2017 contract to develop a laser-beam-scanning display system for a major tech customer this month (see 1904180001), said Mulligan. The customer is a "global technology leader" preparing soon to launch a commercial product, he said. He again was secretive about the customer and the nature of the looming product, which is believed to be a head-mounted display for consumer augmented-reality applications. "We have not been able to comment historically on the customer's launch plan," he said
With the development contract complete, "we have shifted to a new phase of our relationship with this customer, and this month will begin shipping production parts," said Mulligan. "We expect product shipments to this customer will generate between $3 million to $5 million in sales through the balance of 2019. As our customer launches their product into the market, we expect to gain further insight and will provide guidance on what revenue we could expect to see in 2020."