Apple didn't invest in Finisar

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Apple Inc is spending US$390 million (RM1.6 billion) to boost production from a maker of laser technology that's critical for new iPhone X features such as facial recognition.

Finisar shares soared 27% premarket after the award was announced.

With Apple's money, Finisar plans to reopen a 700,000-square-foot (65,000 square meters) manufacturing facility in Sherman, Texas, where Apple says some 500 jobs will be created including engineers, technicians, and a maintenance team.

An Apple-supplied image shows a Finisar factory.

The laser chips power features such as animoji. Finisar's speciality lies in making chips known as vertical-cavity surface-emitting lasers, or VCSELs.

"VCSELs power some of the most sophisticated technology we've ever developed and we're thrilled to partner with Finisar over the next several years to push the boundaries of VCSEL technology and the applications they enable", said Jeff Williams, Apple's chief operating officer.

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"The amount referred to by Apple represents anticipated future business between the companies over a period of time", Finisar said in a filing.

More powerful versions of the VCSEL arrays may also be used in the lidar systems required for future self-driving cars - another technology area with which Apple has been heavily linked. The iPhone X is now the only Apple product with a facial recognition sensor.

The deal with Finisar demonstrates Apple's ability to play king-maker among component suppliers. It's rumored that some of next years iPhone's will have Face ID included.

Any lingering concerns that investors may have had appeared to evaporate quickly following the Apple announcement, with Finisar's stock price immediately soaring in value by close to 23 per cent on the Nasdaq exchange.

Founded in 1988 and with 14,000 employees, Finisar has primarily made components used in networking and the internet, including voice and video communications, storage and television.

The iPhone maker came under fire in 2016 from President Donald Trump for basing much of its manufacturing in China. The first recipient was Corning with a $200 million investment.