Apple's (AAPL) upcoming iPhone 8 smartphone will include a 3D-sensing module to enable augmented-reality applications, Rosenblatt Securities analyst Jun Zhang said Wednesday.
Apple has included the 3D-sensing module in all three current prototypes of the iPhone 8, which have screen sizes of 4.7, 5.1 and 5.5 inches, he said.
"We believe Apple's 3D sensing might provide a better user experience with more applications," Zhang said in a research report. "So far, we think 3D sensing aims to provide an improved smartphone experience with a VR/AR environment."
Apple's iPhone 8 won't be the first 3D-sensing smartphone on the market. The Lenovo Phab 2 Pro and Asus ZenFone AR use Tango technology from Alphabet (GOOGL)-owned Google.
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With Tango, digital information is overlaid on live video taken with the phone's rear camera. The technology superimposes virtual objects, directions and other data on what the camera sees.
You can even measure your surroundings with 3D tools. For instance, Lowe's (LOW) has a Tango app for measuring dimensions and picturing furniture and appliance placement in a room.
Many smartphone makers are now considering 3D-sensing technology for their handsets, including Chinese firms Huawei, Oppo and Vivo, Zhang said.
"We expect 3D sensing to become the next innovative feature in smartphones and to grow 100% year-over-year over the next few years," Zhang said. "We expect the overall 3D smartphone attach rate to grow to 20% in 2018 and 30%-40% in 2019."
AMS is believed to be the 3D-sensing-module supplier for the iPhone 8. Other component vendors likely to be participating in the iPhone 3D sensor tech include Lumentum (LITE), II-VI(IIVI) and Viavi Solutions (VIAV), Zhang said.
Apple stock was up 1.6% to 121.85 in the stock market today, hitting a 14-month high and still in a buy zone from a breakout at 118.12 early this month.