Consumer MEMS shine amid gloom: iSuppli

January 28, 2009

I was fortunate enough to attend a webinar on MEMS organized recently by iSuppli. The webinar looked at the growth potential of this segment, especially during the downturn, as well as some top MEMS suppliers.

According to Jeremie Bouchaud, director & principal analyst, both consumer and mobile MEMS supply has been exploding. The overall MEMS market is likely to grow from $1 billion in 2006 to $2.5 billion in 2012! There will be strong acceleration due to growth of cell phones — a hotbed for MEMS, he said.

However, the share of MEMS for rear projection TV is vanishing. A market worth $300 million in 2006 is slowly disappearing, and will, in fact, disappear by 2012. Among other growth areas, personal navigation devices (PNDs) and remote controllers will also see growth.

Consumer and mobile market by MEMS device
The main segments include accelerometers, as well as gyroscopes, RF MEMS switches and capacitors, microphones, etc. The penetration of MEMS devices in CE products is said to increase quite fast.

MEMS growth in cell phones will be faster. It will grow from 3 percent in 2007 to 10 percent in 2008. All of the new, best selling smartphones, such as the iPhone, Nokia N95 and N96, Samsung Omnia, HTC Diamond, Google G1, Blackberry Storm, new Palm OS, etc., have accelerometers. A number of mid range phones also have accelerometers, eg. Sony Ericsson’s models.

MEMS usage is also growing in gaming. From 1998-2005, there was technology push with limited success. However, in 2006, Nintendo showed the way with its Wii, as did the Sony PS3. Microsoft did not enter this field back then!

Interestingly, 2006-08, motion sensing unveiled new, untapped target groups for gaming — the so called casual gamers. In Xmas 2008, Microsoft also embraced motion sensors with accessories. Hence, the penetration of motion sensors has really improved. The next third generation platform will include accelerometers and gyroscopes.

Top 15 MEMS suppliers
The key question: who all are shipping these products? According to iSuppli,The top 15 MEMS suppleirs for CE and mobile phones are: STMicroelectronics, Texas Instruments, Avago Technologies, Knowles, Analog Devices, Murata, Kionix, Epson Toyocom, Invensense, Panasonic, Bosch Sensortec, Freescale, Hokoriku, VTI and Memsic.

Some other companies to watch are:
Accelerometers and gyroscopes: Qualtre, Oki, Wacon, Alps, Virtus, Ricoh.
Pressure sensors: Intersema (MEAS), Metrodyne.
Microphones: Infineon, Wolfson, Memstech, Yamaha, Omron, Panasonic, MEMSensing, AAC, Goertek.
Pico-projectors and other MEMS displays: Microvision, Nippon Signal, Samsung, Konica Minolta, Scanlight, Qualcomm, Pixtronix, Unipixel
RF MEMS switches and capacitors: Wispry, Epcos, RFMD, Baolab.
MEMS oscillators: SiTime, Discera, NXP, Seiko, Intel.
BAW filters: Triquint, Skyworks, MEMS Solutions.
MEMS actuators for autofocus and zoom: Simpel, Sony.
Micro-fuel cells: Angstrom, Tekion, Medis.

It is understood well that not all of these companies will be successful. However, they all need to be monitored carefully.

Commenting on cell phones as a hotbed for inertial and magnetic sensors, Dr. Richard Dixon, senior analyst MEMS, iSuppli, said that the market for accelerometers, gyroscopes and magnetometers is in cell phones. This market will reach $730 million in 2012. Gyroscopes are not in the market yet, and are likely to enter by 2010. The total growth rate is very fast. In units, the annual growth rate is said to be 97 percent.

Interestingly, Apple has contributed significantly to growth of MEMS. The iPhone had a great application. Other vendors followed suite with a ‘me too” strategy. Apple also had sustainable business model with downloads on the Apple Store. The chicken and egg issue of price was solved. Also, with the iPhone, there was a free field test of motion sensing based applications.

Major suppliers of accelerometers for cell phones today, include STMicroelectronics, Bosch Sensortec, Analog Devices, Hokuriku, Kionix, MEMSIC, Freescale, Oki. Of these, ST has really been very impressive, while Bosch saw impressive growth in 2008. MEMSIC dropped share in 2008.

Navigation in cell phones next big thing
According to Dixon, navigation in mobile phones is the next big thing. Leading navigation markets by platform are: mobile phone navigation, smartphone navigation, PNDs, car aftermarket and car OEM in-dash, respectively. By 2010, the mobile phone/smartphone navigation segment will account for over 60 percent of the market.

Similarly, magnetic sensors will take off in 2009 for e-Compass. There has been penetration of magnetometers in GPS phones. They have been around since 2003 in Japanese phones. These rather esoteric applications and also had technical issues.

There were successful implementations in 2008 for navigation. Eg., the G1 Street View, and the Nokia 6210. Also, 3D compass in combination with 3D accelerometers.

The leading suppliers in this space today, include AKM, Honeywell, Yamaha, Aichi Steel. In the R&D segment, the leading players are said to be Alps, Omron, Memsic, Oki, ST, Freescale, Demodulation. Growth will be steep from 2009 onward, and take off from 2010 up to 2012.

Another growth are is the multi-sensor packages and IMUs (Inertial Measurement Unit) for navigation. Today, we have six-axis e-compass combining magnetic sensors and accelerometers. In future, there will be IMU for LBS and indoor navigation also using gyroscopes.

The issue with gyroscopes is of: performance, price, size, power consumption and no availability of three-axis. Companies that need to be watched in this space are said to be Invensense, ST, Bosch Sensortec, Qualtre, Oki, Virtus.

Other opportunity areas
Later, Jeremie Bouchaud highlighted two other opportunity areas.

MEMS microphone market presents a major opportunity. It will reach close to $400 million by 2012. In 2008, already 325 million units were selling in cell phones and laptops. Leading players in this segment are said to be Knowles, Akustica, Infineon, Sonion, Memstech, AAC. Knowles has over 90 percent of the market share.

MEMS pico projectors is another growth area. Companies have made lot of progress in this segment. The pico projectors come in various varieties.

In the MEMS scanner based segment, the R&D is led by firms such as Microvison, Konica, Minolta, Scanlight, Nippon, Signal, Symbol. These solutions came first as stand alone projectors. Later, it will come on cell phones. The best opportunity is said to be at the module level.

Another sub-segnent is the DLP based projectors. First it will be in form of a pico-projector, later, followed by usage in cell phones.

Bouchaud advised watching out for non-MEMS alternatives, such as Light Blue Optics,
3M and Logic Wireless.

Coping with commoditization and price erosion
The ASP of MEMS devices for CE and mobile phones is dropping at -13 percent per year. So, what are the ways to get profitable?

To be profitable, there is a need to achieve economies of scale by combining consumer and automotive. Also, there is a need to move wafer size to 8-inch. Next, there is a need for externalizing to foundries. ADI and TSMC have already showed the way. Now, USMC, Tower, Dongbu, Magnachip, Omron, etc., are following.

Innovation, in terms of packaging and 3D integration, test, multi-sensor packages, is another way for making profits. There is an opportunity for the equipment suppliers as well.

Consumer MEMS is currently glowing as a light in today’s dark times! It is said to grow from $1 billiom in 2006 to $2.5 billion in 2012, with 19 percent CAGR. This optimistic forecast has already started. Accelerometers are present in 10 percent of cell phones in 2008 as against 3 percent in 2007.

There exist a number of opportunities. Small companies can be successful, eg. Kionix and Invensense. There are still opportunities for newcomers. These can be large companies, fabless startups, foundries, software companies, equipment suppliers, etc. Consumer MEMS is an extremely dynamic market, having fast design cycles.

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