As recently as August, Ouster Inc. founder and CEO Angus Pacala predicted a wave of consolidation throughout the lidar business. Now, Ouster is leading that charge.
On Tuesday, the San Francisco-based company said it had reached an agreement to acquire Sense Photonics, a Silicon Valley upstart which has, like Ouster, focused on developing digital lidar.
Ouster will purchase Sense Photonics in exchange for 9.5 million shares of Ouster's common stock. The shares rose 2.1 percent to close at $7.31 on Tuesday, a price that would value the deal at about $69 million.
The acquisition, if completed, would bolster Ouster's automotive offerings. The company would establish Ouster Automotive as a new division that intends to develop and promote lidar for mass-market consumer and commercial vehicles. Current Sense Phonotics CEO and former Ford Motor Co. executive Shauna McIntyre will lead the automotive division.
Pacala called the acquisition "an ideal pairing" of Ouster's digital experience and product development in adjacent industries with Sense Photonics' digital-lidar silicon. He expected the acquisition would accelerate Ouster's time frame for developing solid-state lidar by more than 12 months.
Ouster says the deal will advance discussions on five series-production programs worth more than $1 billion in potential revenue that are currently being negotiated with automakers. Should they reach fruition, Pacala says production would start in 2025 or 2026.
Sense Phonotics has developed a solid-state lidar platform that can help vehicles determine their exact position in the world and detect obstacles at ranges of 200 meters, which Ouster says will meet the performance requirements for use in Level 2 automated systems and above.
"There's no moving parts, no sweep," McIntyre said in September on the Shift mobility podcast. "It's illumination in one time stamp and detection in one time stamp, and that allows for really rich data to feed the vehicle."
Ouster will acquire more than 100 pending patents and an exclusive license for 250 patents from Sense Photonics as part of the acquisition.
Within the transportation realm, Ouster counts self-driving tech company May Mobility, automated-truck startup Plus and Qualcomm as customers. Sense Photonics has not publicly named its automotive customers, though in June it announced a development program with a major Detroit automaker.
In concurrent recent lidar news, General Motors chose Cepton to supply lidar for 2023 volume production in a deal announced in September.
The flurry of activity comes as automakers seek to partner with lidar companies that not only have technology capable of achieving range and resolution benchmarks, but which can also bring the capability of manufacturing their sensors in high volumes.
Dozens of lidar companies exist, but as those requirements are strengthened, Pacala believes there will be less than a half dozen that remain, including his own.
"I fully believe there will be consolidation and three to five companies that will win out," he said on the Shift mobility podcast in August. "A number of companies have gone public and pulled in huge amounts of money. They may be able to exist with very little market share and deep cash reserves as zombie-esque companies. When in reality, they're shipping almost no product. So how does Ouster win? It goes back to the technology. It's digital lidar, and digital dominates."
