Apple spends $390 million to boost production of iPhone parts

Apple Inc. is spending $390 million to boost production from the maker of laser technology that’s critical for new features such as facial recognition in the latest iPhone X.

Apple, whose products can stretch the manufacturing capabilities of companies that supply it with components, will invest the money in Finisar Corp. from a $1 billion manufacturing fund announced earlier this year with the aim of creating more American jobs. Finisar will use the funds to reopen a plant in Sherman, Texas, that will employ 500 people, Apple said in a statement.

The design process at Apple balances creating ground-breaking technology against the manufacturing challenge of finding suppliers who can provide the number of components needed to put new features inside millions of handsets.

Many of Apple’s new facial-recognition features — including one in which emoji’s track a person’s facial expressions — require lasers that follow movement. The technology, which uses vertical-cavity surface-emitting lasers, is also part of the company’s emerging augmented reality efforts. Apple said it will purchase 10 times more of the technology this quarter than has ever previously been manufactured over a three-month period.

The deal with Finisar demonstrates Apple’s ability to play king-maker among component suppliers. After falling to $19.30 in New York yesterday, Finisar rose more than 30 percent in pre-market trading following the deal’s announcement. A competing maker of 3-D sensors, Lumentum Holdings Inc., fell more than 10 percent in pre-market trading.

Founded in 1988 and with 14,000 employees, Finisar has primarily made components used in networking and the internet, including sending voice and video communications, storage and television. Its other customers include Cisco Systems Inc., Hewlett Packard Enterprise Co. and Huawei Technologies Co.

With much of the manufacturing and assembly for its products done in China, Apple has faced criticism from U.S. President Donald Trump and others for not creating more jobs in the U.S. Chief Executive Officer Tim Cook announced the manufacturing fund in May. Corning Inc., the maker of glass for iPhone and iPad screens, earlier received $200 million for glass processing.

Now read: Apple reveals self-driving car tech

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Apple spends $390 million to boost production of iPhone parts