Core Pacific says: "we do have a number of concerns.
(1) High setup cost. To build a production line on active alignment components, some special machines and equipment are required, resulting in hefty CAPEX caused by depreciation. Besides, the technology is new meaning that more investment on R&D has to be made and the immature supply chain also leads to high sourcing costs for related components.
(2) Concern on technology knowhow. Sunny tends to develop its own production line on active alignment based on its R&D capacity. Although its technology knowhow is leading in the domestic market, it is still lagging behind those international players in Taiwan, Japan and Korea. We doubt whether its quality can be up to the international standard.
(3) Difficult to achieve the accreditation from first-tier global smartphone brands. We believe it still takes years for array camera to be mature. Before that the production cost is expect to remain high, implying that only high-end smartphone models, such as iPhone and Galaxy S Series, can absorb this cost. However, the entry barrier of these flagship models’ supply chain is extremely high. Sunny has no global footprints on HCM and the quality control is relatively weak comparing to the international peers. Whether or how long Sunny can achieve the accreditation of first-tier global smartphone brands remains in doubt.
So far, the visibility on array cameras business is low and we do not expect it to make contribution till FY15F."
Maybank writes: "Although array camera can provide a thinner design, quicker photo-taking response time and can refocus on multiple subjects on the phone, we think the adoption rate of array cameras will remain low in 2014 owing to its inferior photo quality in the near range and long range, and higher cost due to low production yield rates. So far, only several projects among the Chinese brand names and Nokia show an interest in adopting the array camera (meaning demand is not strong). In addition, our checks indicate that LiteOn can also offer a very competitive array camera design if its customers want to use it (suggesting another good array camera supplier)".
Another interesting quote from Maybank report is that, according to consumer survey by O2 in 2012, picture taking is the most used function in mobile phones:
