Valve, LG and Apple are investing approximately $10 million in a Hopewell Junction, New York-based firm, eMagin, a maker of OLED microdisplays that are used in the industrial, medical and military fields though in the recent past it has begun supplying to firms that make consumer headset devices. This was revealed in a Securities and Exchange Commission filing.
The investment will see the three firms issued with eMagin shares. Apple, Valve and LG also stand to benefit from getting first priority when it comes to supplies. It is understood that the three invested in the firm in order to boost its production capacity. Per the filing the investment was set to be concluded before the close of last month. One of eMagin’s flagship products is a 2K display which offers a fill factor of 70% and a 2,048px by 2,048px resolution.
The investment comes in the wake of the growing importance of virtual reality as well as augmented reality in the tech sector. While virtual reality transports users equipped with headsets to a 3D environment that has been computer generated, augmented reality on the other hand overlays images in real-world environments.
Last month the ARKit 1.5 of Apple was released to developers as the iPhone maker prepares to launch iOS 11.3. Some of the new features that are expected in the new version of Apple’s operating system for mobile devices with regards to augmented reality include the ability to overlay objects on vertical surfaces such as vertical doors and walls and not just on horizontal surfaces such as tables and floors.
The interest and Valve and LG are believed to be mostly because of their VR technology ambitions. Recently the two partnered in the development of a virtual reality head-mounted display. A smartphone-backed virtual reality headset has already been commercialized by LG and this is the LG 360. The second generation of the LG UltraGear VR is also expected to be released in the next few months. By 2020 most analysts expect the augmented reality, virtual reality and mixed reality technologies market to have grown into a market worth approximately $40 billion.
Additionally LG is also interested in ramping up its manufacturing capabilities with regards to OLED displays. The South Korean technology giant is understood to be planning to have all its premium smartphones equipped with OLED displays, a fact which has already been demonstrated with the V30.
The investment by Apple, Valve and LG in eMagin comes in the wake of analysts at Goldman Sachs indicating that the time is ripe for the Cupertino, California-based tech giant to make an acquisition that is larger than any other that the company has ever done. Typically Apple has tended to make small deals such as acquihires where it purchases nascent technologies or small teams or both.
Unlike other tech companies of its stature Apple eschews blockbuster acquisitions involving tens of billions of dollars. Since its inception the largest acquisition that the tech giant ever made was that of headphones maker, Beats. Apple forked out $3 billion for the firm associated with hip hop artist, Dr. Dre.
Tax code overhaul
However as a result of the tax cuts in the United States which saw the corporate tax rate reduced Apple will have ample cash to spend. The tech giant is estimated to have $252 billion in cash reserves and once it meets its tax obligations in various jurisdictions it will have around $200 billion sitting idly.
“We see capacity for several cash usage scenarios including an increased buyback (GSe $192bn over FY18-FY20), a higher dividend payout, and larger, more meaningful M&A, all of which could be positive events for the stock,” wrote Rod Hall, an analyst at Goldman Sachs.