A New Virtuous Cycle for the MEMS Industry

yole_memsSince 2000, we have entered the age of sensing and interacting with the wide diffusion of MEMS and sensors that give us a better, safer perception of our environment. MEMS have grown in volume to be almost a 15 billion units market today. And we believe that this market will double to almost 30 billion by 2020, in less than 5 years. (Source:Status of the MEMS Industry, Yole Dveloppement, May 2015).

Since its early beginning, MEMS technology has been considered as a transfer function technology: taking existing products such as Hg tilt sensors, syringe, galvanometric mirror and transforming them in IMU , micro-needles, micro-mirrors. The interest of MEMS relies in the miniaturization and lower cost manufacturing brought by a semiconductor technology.

Today the MEMS & Sensors industry is transitioning towards three main hubs: the inertial hub (a closed package hub), the optical hub and the environmental hub (open package hubs).Looking closely at the inertial hub, complete integration has been achieved at sensor level. The miniaturization race is still ongoing to lower the sensor cost and developments are focusing on advanced packaging technologies (e.g. TSV , WLP ) and power consumption reduction.Major developments occur at software level to achieve sensor fusion and get precise data acquisition, precise tracking within the environment. Hence the inertial Bill of Materials within a smartphone today is around $1.

This is nothing compared to the $10 spent for the optical hub within the same smartphone since imaging is highly valued by the end customer. This is part of our human nature, where vision represent around 83 percent of our external world perception .

And what about the environmental hub? At Yole, we do believe that the environmental hub is an interesting way for the MEMS industry to gain value. Therefore, particles, gas detection are real market pull applications, which would make sense to be integrated in a smartphone. Some more integration could also be achieved by combining pressure and microphone for example. Of course, this increased integration is not an easy task but represents real market opportunities. Todays environmental sensors Bill of Materials in a smartphone is around $0.70 and could represent $1.50 tomorrow with this increased integration path.

Increasing volumes driven by the consumer wave (more and more smartphones sold and more and more sensors integrated in smartphone) leading to sensor die size reduction to answer the strong price pressure dictated by the consumer market. But this affect sensors margins, which shrink if the process is not re-tuned to gain on margin again. Overall resulting in a stable or declining market in terms of value.

Well, one might take a step back and look at what the CMOS Image sensor industry has achieved. Driven by the self-love or narcissism of human kind, the front cameras of our smartphones have increased in resolution for us to achieve better quality images of selfies: Hence the front camera resolution has been increased by a factor four in four years, thanks to increased number of pixels and thus sensor die size, leading inevitably to higher sensor prices.

What can we learn from this story and apply to the MEMS industry to gain value?
More complexity at system level: drive for better accuracy/precise tracking and features, meaning:
Sensor fusion
More integration: Pressure + microphone for example
Improved environment tracking: particles and gas sensing

MEMS markets challenges are thus Evolving
Power consumption is becoming a major trend while mobiles, tablets, wearables have to survive for long periods on battery while interacting with the environment (voice calls, Wi-Fi, Bluetooth, GPS, and sensors).Sensor fusion, software and added features are the current battleground of the hubs integration path.

Finally the user case is definitely mandatory. The idea is to start with applications, and work downwards to the chips needed to support them. This will be easier for a system maker than a pure sensor player who is further away on the supply chain and thus further away from his final end user needs!

In brief a new virtuous cycle is needed for the MEMS industry to gain value and stop being limited by shrinking prices and margins.

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