http://www.barrons.com/articles/BL-TB-54426

Seems they are estimating their vcsel array will cost them $1.50  how does that line up with our vcsel cost?

J.P. Morgan analyst Rod Hall today reiterates an Overweight rating on shares of Apple (AAPL), and a $142 price target, after reflecting on the prospects for so-called 3-D scanning in the next iPhone.

3-D scanning, for those who don’t know, involves using an infra-red light to detect depth in a given space. Many believe the next iPhone may have 3-D scanning, after Lenovo Group (0992HK) introduced a phone with the technology last fall.

Among Hall’s conclusions in todays research note are, first off, as he’s said in past, that the technology will likely be used for “facial recognition,” rather than creating “augmented reality,” or AR.

That means an infrared camera on the front of the iPhone, rather than on the back as Lenovo did. And secondly, that may add $10 to $15 of cost to the iPhone, he surmises.

And last, he thinks the clues he’s picking up from suppliers suggest to him that this may show up not just in a larger, 5.8-inch iPhone, but in other models in the portfolio as well.

His assumption about face recognition is based on speculation the new model will eliminate a physical “Home” button, and also the prospect Apple wants greater security than that afforded by fingerprint recognition:

Apple certainly has an interest in AR (augmented reality) as a long-term technology, but we do not expect this sensor to initially be used for that purpose. We believe Apple is initially planning to use the front-facing 3D sensor package for highly accurate biometric facial recognition. In our opinion this is due to the removal of a home button on the OLED iPhone (see Figure 4) and the difficulty that various companies have had in getting under screen fingerprint sensors to work. Apple itself talks about a 1 in 50,000 chance that another person is able to unlock your phone using their fingerprint. We believe that this type of detailed 3D facial mapping may provide a significantly higher level of security, which would likely be of interest to Apple Pay payment providers as well as merchants.

Hall thinks facial recognition trumps AR:

We realize that AR has more “fake news” appeal than facial recognition. However, we believe that facial scanning biometrics would alleviate irritating fingerprint sensor failure in the wet conditions iPhones are now designed to survive. We also suspect that facial recognition is more secure than 1 in 50,000 fingerprint scanning and could help with Apple Pay adoption.

As far as cost, Hall offers this breakdown of the potential part prices for Apple:

But he also estimates that the total enhancements to the iPhone, including not just the IR camera-detector “module,” but also the AMOLED screen and what he calls “double-glass surfaces” will add $50 to the iPhone’s average bill of materials.

For a different take on possible AR functions on the iPhone, see the report today by Bloomberg‘s Mark Gurman.

Apple shares today are up 86 cents, or 0.6%, at $140.85.