Optical lens maker Largan Precision held an earnings briefing on January 8, 2026, during which chairman Adam Lin expressed a wary smartphone industry outlook. Surging memory prices are squeezing smartphone bills of materials (BOM), making customers more hesitant to pursue lens specification upgrades. Visibility for the full year of 2026 remains unclear, with only the first quarter confirmed to be affected by the traditional off-season, during which capacity utilization will be lower than in previous years.
New technologies such as variable aperture and slim lenses were previously expected to create new profit opportunities in 2026, but Lin said that market sentiment is currently mixed. Variable aperture products are expected to begin shipping in the third quarter of 2026, but complicated inspection processes, undefined final specifications, and uncertain yields after mass production all remain potential variables. As for slim lenses, weak end-market sales have weakened major customers' willingness to follow suit.
Memory price hikes prevent upgrades
According to Lin, the increases in memory prices have impacted smartphone brands' cost structures, making customers extremely price-sensitive. As a result, many planned lens upgrade projects have been postponed, and some non-memory components are even facing pressure for specification downgrades due to cost considerations.
This stagnation or delay in upgrades is most evident among smaller customers, who have less ability to absorb cost fluctuations and therefore tend to stick with existing solutions. Tier-one customers are still interested in advancing new specifications, but their approach has become more conservative. This indicates that the smartphone optics market in 2026 may face increased price competition and stalled specification upgrades.
Unpredictable variable aperture shipments
The market previously had high hopes for variable aperture technology in 2026. Lin said shipments are expected to begin in the third quarter of 2026, initially targeting flagship models. However, the pace of adoption remains uncertain, mainly because customers have yet to fully finalize the specifications.
The main problem surrounds negotiations over inspection processes. Variable aperture lenses involve switching among multiple aperture levels, each of which requires separate inspection, significantly increasing the number of inspection stations. The more inspection stations required, the higher the number of lenses that may be rejected. Discussions with customers are still ongoing, and finalization may not come until as late as the second quarter of 2026. Even then, post–mass production yields remain difficult to predict.
Lin also confirmed that customers are adopting a dual-supplier strategy for these projects and are expected to introduce a second supplier from the outset. While this reflects customers' strong emphasis on supply chain risk diversification, it also erodes Largan's original technological advantages.
Slim lenses' momentum slows down
Slim lenses, which once attracted considerable attention, have seen weak sales, said Lin. Because of inadequate market response to slim models, brands have reduced their willingness to follow competitors. This has prompted the market to believe that there will be no additional demand for slim lenses in 2026.
For foldable smartphones, Lin said that while related projects may ship toward the end of the year, the lens specifications used in foldable devices are not significantly different from those in conventional smartphones and do not necessarily require extreme slimness. As a result, there is limited room for higher technical barriers or price premiums.
For other technologies such as under-display cameras, Lin said that their current positioning is not for high-quality image capture, but rather for sensing or other non-imaging functions. Specification requirements are therefore relatively low, making it unlikely for them to become mainstream in 2026. As for hybrid glass-plastic lenses, demand remains concentrated in flagship models, with no clear signs of trickling down to the mid-range market.
Customers are adopting conservative strategies toward specification upgrades. As a result, new products that were originally expected to ramp up in 2026 may struggle. The smartphone optics market this year could be a dead end, with stable volumes and pricing but a lack of strong upgrade momentum. Facing unclear market conditions, Lin said the company will adopt a more pragmatic order-taking strategy to safeguard its profit baseline.
Article edited by Jack Wu
