Lidar-maker Ouster has Obtained StereoLabs, a company that makes vision-based vision systems for robotics and industrial applications, for a combined $35 million and 1.8 million shares.

The deal is the latest in a march toward consolidation among perception sensor suppliers. Last month, MicroVision bought the lidar assets of buzzy-but-now-bankrupt Luminar for $33 million. Ouster itself plays the M&A game a fair amount, too. In 2022, the company merged with rival player Velodyne. Last year, it was bought the lidar startup Sense Photonics.

This consolidation is happening as companies and investors rush to build businesses around “physical AI” – a broad term that covers everything from humanoid robotics and drones to self-driving cars and automated warehouse systems. Suppliers are more ambiguous raising large rounds of funding as these technologies advance. Some startups are even trying to spin up entirely new sensor modalities.

Ouster co-founder and CEO Angus Pacala told TechCrunch in an interview that he had been eyeing StereoLabs for years. He said he sees lidar as “the core part of safety-critical, capable systems,” but he wants to “move up the stack.”

The “obviously additional sensors” that will begin to work with in addition to lidar, Pacala said, are cameras. Pacala says 15-year-old StereoLabs is “best in class” in terms of hardware, but he’s particularly impressed with how the company leverages cameras through “incredible know-how to adopt cutting edge AI and edge compute models.”

In particular, Pacala highlighted StereoLabs’ development of a basic AI model that can determine the depth of objects from stereo cameras.

“It was a no-brainer for us to go out and approach them and basically promote this vision of working with us to become a unified sensing and perception platform – a tier one (supplier) for these advanced physical AI systems,” Pacala said.

Despite the focus on integration, Ouster said StereoLabs will operate as a wholly owned subsidiary.

And while the hype is feverish, Pacala said he didn’t buy into StereoLabs just because of the attention and money thrown at physical AI. In fact, he committed perhaps the worst sin one can commit during a hype cycle: he poured some cold water on the buzz, especially around robotic humanoids.

“The business model here is not just to sell passion, it’s to create working systems that are certified, safe, that solve customer problems,” he said. “There’s a little bit of frustration with physical AI because it’s a very long time to market for all these humanoids.”

Pacala is not the only one trying to take a realistic view. In a recent interview with TechCrunch, MicroVision CEO Glen DeVos said the sensor industry is “ripe for consolidation” because he believes there isn’t enough revenue to support all the current competition.

“You either get consolidation, or you get kind of a weed out of the industry as people fall by the wayside,” he said.