Strong impact of recession on top 30 MEMS makers

March 23, 2009

Presenting: The top 30 MEMS (microelectromechanical Systems) suppliers of 2008, thanks to Yole Développement (www.yole.fr), in Lyon, France.

“For the first time, STM is the third MEMS manufacturer worldwide. Overall sales of the top 30 MEMS manufacturers decreased by 2 percent compared to previous year, reaching $5.5 billion,” says Jean-Christophe Eloy, CEO of Yole Développement. The current economic crisis strongly impacts the 2009 edition of the top 30 MEMS manufacturers.

The preliminary top 30 MEMS manufacturers is based on Yole’s market research and expertise covering the MEMS field with more than 2,500 contacts per year. Yole Développement continues to analyze in detail the MEMS market and to follow the Top 30 MEMS manufacturers to deliver the most accurate information available, specifically in these times of big changes.

Major facts in 2008
In 2008, the MEMS market has seen significant changes in the ranking of the top 30 MEMS companies:

* STM has become, for the first time, the 3rd MEMS manufacturer by $ revenue in 2008.
* Delphi and Sanyo are moving out of the TOP 30 MEMS ranking.
* Kionix and IMT are entering the Top 30 MEMS ranking for the first time.
* IMT is again the world leader in the independent MEMS foundry business.
* HP and Texas Instruments, despite decreases in sales, are still numbers 1 and 2 of the top 30 MEMS ranking.

2008 has been a year of unusual movement in the industry:

* The winners: Eighteen (18) companies have shown growth ($ revenue) in 2008 compared to 2007, with Kionix leading the way with 70 percent, and also Measurement Specialties, STM, Panasonic and Murata, to name a few.

* The loosers: Twelve (12) companies have shown a decrease in sales ($ revenue) in 2008 compared to 2007 (in addition to Sanyo and Delphi exiting the top 30 ranking), with FormFactor, Silicon Sensing Systems and Lexmark showing the largest decrease in sales.

Note: The top 30 MEMS Manufacturers graph only considers companies designing and/or processing Si MEMS chips. So, for example, although Sensata is an important sensor manufacturer, its ceramic technology excludes it from the Top 30 ranking.

Economic crisis, specific impact on each MEMS sector
The economic crisis has definitively had an impact on MEMS companies’ financial results, specifically during Q4 2008. However, this impact is very different according to the various MEMS players’ markets. The automotive business is probably the most dramatically impacted by the downturn. In terms of units, it is in the range of -10 percent to -20 percent less compared to previous years.

However, some companies suffer less than others (as is the case for Robert Bosch for example) but all of them are impacted. The impact is also different according to the maturity of MEMS products. Established devices such as airbag accelerometers are suffering more than emerging devices (e.g. TPMS).

The consequences in consumer markets are also different, depending on the MEMS products. Manufacturers of inkjet heads are suffering a lot, with a decrease of about 15 percent IJH production for 2008. On the other hand, inertial MEMS products for the consumer market are still growing (in the range of a several percent) with some players (e.g., STMicroelectronics and ADI) showing pretty good results.

Major MEMS facts to be highlighted in 2008 are:
* Systron Donner Automotive had a very strong decrease because of its automotive business (- 14 percent in US$). This moves it from 10th position in 2007 to 13th in 2008.
* IJH players are dramatically impacted with a decrease in both sales and units (this is the case for HP and Lexmark, the latter undergoing the strongest decrease for IJH). However, HP is still the number one MEMS company for 2008.
* Texas Instruments has seen decrease in its DLP chip sales by about 13 percent (in US$).
* Thanks to its growth of the consumer market, STMicroelectronics’ MEMS business had a profitable 2008 with US$200M for its accelerometer business (twice 2007 sales). This is + 42 percent in euros. STMicroelectronics moves from 4th position in 2007 to 3rd in 2008.

Although it is probably the automotive MEMS player performing the best in 2008, Robert Bosch underwent a -10 percent decrease in euros compared to 2007. Its 8’’ fab is now ready, but production will start only when the economic conditions improve. So, Bosch is moving from 3rd position in 2007 to 4th in 2008.

* Avago has bought the BAW activity of Infineon in Q4 2008, however this sales volume (Yole Développement estimates to be $38 million) has been consolidated into Infineon’s 2008 financial results.
* VTI is suffering because of the automotive market slowdown (- 10 percent in euro).
* Boeringher Ingelheim microParts showed good performance (+ 9 percent in euro), showing that the biomedical market was not impacted by the crisis.
* Panasonic had a very good 2008 with a 10 percent increase in yen compared to 2007.
* Yole believes Panasonic has taken market shares in gyroscopes from Murata and SSS, which show – 4 percent and – 12 percent decreases in yen respectively. Panasonic is now in 16th position (19th in 2007).
* MEAS’s good performance (+ 57 percent in US $) is explained by the integration of Intersema’s sales results. MEAS is now in 19th position (24th in 2007).
* FormFactor underwent the strongest decrease (- 51 percent in US$). This moves it to 27th position (20th in 2007).
* IMT did quite well (+ 15 percent in US $), while Colibrys was affected (-19 percent in US $ and closing of its US activity).

This year, Sanyo and Delphi have disappeared from the 2008 ranking; Sanyo has stopped its foundry activity and Delphi has dramatically reduced its MEMS staff. We believe that only development/assembly will be kept.

How will the future be? Such a crisis will come to an end only when device stock levels fall. Some information from Taiwanese players seems to indicate a restart of semiconductor production. Although it could also be the case for MEMS, Yole believes that 2009 will be a flat year for the MEMS market.

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