Why Finisar Shares Are Soaring Today

An assembly tool shining a red light on the Finisar manufacturing floor

What happened

Shares of Finisar (NASDAQ: FNSR) have soared today, up by 30% as of 12 p.m. EST, after the company scored a $390 million investment from Apple (NASDAQ: AAPL) . The investment was awarded from the $1 billion Advanced Manufacturing Fund that Apple set up in May of this year, which is dedicated to supporting innovation and job creation domestically. Apple previously awarded $200 million to another supplier, Corning , out of the fund.

So what

The money will help Finisar boost its research and development spending and ramp production of vertical-cavity surface-emitting lasers (VCSELs), the sensors that are a critical piece of the new 3D-sensing TrueDepth camera system in iPhone X. Considering the iPhone X's expected volumes, Apple is now a huge purchaser of VCSEL arrays.

"In the fourth quarter of 2017, Apple will purchase 10 times more VCSEL wafers than were previously manufactured worldwide over a similar time period," according to the Mac maker.

Now what

Finisar is in the process of acquiring a new facility in Sherman, Texas , to expand its manufacturing capacity, and the Apple award will help cover the costs. On its earnings call earlier this month, Finisar said the facility was acquired for $20 million, and the project will create 500 high-skill jobs. All of the VCSELs that Apple purchases from Finisar will be made in Texas, including at another nearby facility in Allen, Texas. Apple is also helping secure renewable energy to power the new facility.

"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," Apple COO Jeff Williams said in a statement.

10 stocks we like better than Finisar

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Finisar wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of December 4, 2017

Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends GLW. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.