How can Lumentum address the recent 20% increase in customer returns of its 3D sensing vertical-cavity surface-emitting lasers (VCSELs) for mobile devices?

Introduction

Addressing the 20% increase in customer returns of Lumentum's 3D sensing VCSELs for mobile devices requires a systematic approach to identify and resolve the root cause. I'll analyze this issue through a structured framework, focusing on data-driven hypotheses and actionable solutions.

Step 1

Clarifying Questions (3 minutes)

• Given the sudden increase, I'm wondering about recent changes. Have there been any modifications to the VCSEL manufacturing process in the last quarter?

Why it matters: Manufacturing changes could directly impact product quality. Expected answer: Yes, a new supplier for a key component was introduced. Impact on approach: If confirmed, I'd focus on supply chain and quality control processes.

• Considering the mobile device market, I'm curious about the timing. Is this increase aligned with any major smartphone releases?

Why it matters: New device integration could reveal compatibility issues. Expected answer: The increase coincided with a major smartphone launch. Impact on approach: I'd investigate device-specific integration challenges.

• Looking at customer segments, I'm thinking about geographical patterns. Are returns concentrated in specific regions or markets?

Why it matters: Regional factors could point to environmental or usage pattern issues. Expected answer: Returns are higher in tropical regions. Impact on approach: I'd explore temperature and humidity impacts on VCSEL performance.

• Considering product lifecycle, I'm wondering about the age of returned units. Is there a correlation between return rates and how long the VCSELs have been in use?

Why it matters: This could indicate degradation issues or misaligned customer expectations. Expected answer: Returns are highest within the first month of use. Impact on approach: I'd focus on initial quality control and customer education.