Analysis reports indicate that shares of Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) have risen sharply in 2017 largely based on the expectation that the firm has been picked to supply Apple Inc. (NASDAQ:AAPL) with 3D sensing components for the next version of the iPhone. But despite having appreciated by 56% this year, analysts at Morgan Stanley insist that the stock could rise by an extra 22%.

The upside will be because more manufacturers of smartphones will also copy Apple and introduce 3D sensing technology to their gadgets and this will translate to a bigger market for Himax 3D sensing technology.

3D sensing technology

Apple is believed to be planning to include 3D sensing technology in its upcoming iPhone which is rumored to have an OLED display. It will also encompass some level of virtual reality and augmented reality. Some of the technology companies that have popularized 3D sensors include Lenovo with its Phab2 Pro, Intel with its RealSense and Microsoft Corporation (NASDAQ:MSFT) with its Kinect. One of the benefits of 3D sensors is that they bring depth in a similar way to the human eye.

While there are many technology firms capable of supplying 3D sensing components to Apple, the choice of Himax Technologies by the Cupertino, California-based tech giant is believed to be due to the fact that Himax makes sensors that are smaller than competing companies. This is because Apple has, as a tradition, always preferred components with as small a technological footprint as possible.

“Himax’s wafer level optics (WLO) technology can further reduce the size and fit the 3D sensing in smartphones,” wrote Charlie Chan, an analyst at Morgan Stanley in a research note.

KGI Securities too

News that Apple would be introducing 3D sensing technology first came out last month through another research note from KGI Securities’ analyst, Ming Chi-Kuo. In his note, Kuo hinted that the 3D sensing technology would be provided by PrimeSense, an Israeli firm that Apple had acquired a couple of years ago. PrimeSense was also responsible for supplying 3D sensing technology to the first-generation version of the Kinect.

On Tuesday shares of Apple Inc rose by 2.07% to close the day at $143.80.Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) Expected To Be Key 3D-Sensing Supplier To Apple Inc. (NASDAQ:AAPL)Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) Expected To Be Key 3D-Sensing Supplier To Apple Inc. (NASDAQ:AAPL)