Shifts Occurring in the MEMS Competitive Landscape

Contributed by Jérémie Bouchaud, Principal Analyst, MEM, iSuppli

iSuppli has just released its MEMS competitive analysis for 2010, which screens the revenue of almost 150 MEMS manufacturers—98% of the market—by device and application for the years spanning 2006 to 2009. Not only does this major ground-up and historical analysis provide a robust foundation for all MEMS forecasts at iSuppli, it also provides unique insights on the shifts induced by the crisis in the competitive landscape at the end of 2008 and in the second half of 2009. Finally, it helps to identify longer term trends like the growth of the fabless business or the importance of captive markets in the MEMS industry.

Avoiding Double Counting

iSuppli accounts the revenues of IDM and fabless manufacturers on the one hand and revenues from foundries on the other, contrary to rankings from other analysts. This separation of revenue avoids double counting and misunderstandings in publication of rankings. For example, the total revenue of STMicroelectronics in MEMS was $448 million in 2009. iSuppli counts the IDM revenue separately for sensors and lab-on-chip products on the one hand ($223 million) and the foundry revenue, mostly for inkjets for Hewlett-Packard and Xerox, on the other (estimated at $225 million).

Here are some high level findings of the “MEMS competitive analysis 2010”:

MEMS revenue of top 25 IDM and Fabless companies

The MEMS revenue accrued by the top 110 IDM (Integrated Design Manufacturers i.e. in-house manufacturers) and fabless manufacturers was $5.7 billion in 2009, down 8.8% from 2008. This is slightly better than the -9.8% forecasted in Q4 2009 by iSuppli. The last four months of 2009 saw an impressive recovery of sensor production, especially for the automotive sector.

Top IDM and Fabless Manufacturers

The Top 4 in 2009 are the same as in 2008: HP, Texas Instrument, Bosch, and Canon in order as shown in Figure 3.

HP revenues for inkjet printheads were down 8%. Sales of HP’s inkjet printers dropped 12% but the top player could cushion this drop with its installed based, which still provides significant revenues with disposable printheads on replacement ink cartridges. Noteworthy, more than half of HP’s MEMS revenue is fables; the company outsources the fabrication of a large portion of its printheads to STMicroelectronics. The seismic grade accelerometers introduced by HP at the end of 2009 haven’t yet contributed to its MEMS revenue.

TI has started to control the fall of its DLP revenue with only -7% in 2009 compared to -17% and -15% in 2008 and 2007. TI benefits from its pico-projector chips, which started to ship in 2009. Also, the RPTV business was stronger than anticipated. Mitsubishi keeps investing a lot on DLP rear-projection TVs, betting on lasers.

Bosch remains the No. 1 MEMS sensor manufacturer and overall keeps the No. 3 rank with only -3% in 2009. The automotive MEMS business was down 17% on the one hand but Bosch Sensortec increased its revenue 3.7-fold in 2009.

Canon—like Epson—managed to remain flat in terms of shipments of inkjet printers and therefore was able to increase its market share in the inkjet printhead segment. Canon was up 3% and Epson 12%, thanks to its booming quartz MEMS gyroscope business.

ST climbed the rankings from No.  8 to No. 6. IDM revenue from ST was down 5%. On the one hand shipments of accelerometers for cell phones—a segment in which ST holds more than 40%—climbed greatly in 2009 but sales for gaming were down last year. For the first time, the lab-on-chip also contributed to revenue.

All other Top 25 companies were down with the exception of FLIR, InvenSense, Ulis, and Kionix.

• iSuppli revised its estimate up for Knowles’s MEMS microphones in 2009. Although the company was hurt badly by the freefall of its historical #1 customer Motorola, Knowles largely compensated with a fast increase of its shipment to other OEMs especially Samsung, LG and SonyEricsson. As a result the company’s MEMS revenue was up 7% in 2009 with $126 million
• FLIR and ULIS are the No. 1 and No. 2 suppliers of microbolometers and were up by respectively 7% and 37%. ULIS managed to claw back the share it lost in 2008 when the export restrictions were eased and allowed U.S. suppliers to sell more outside their domestic market. The MEMS competitive analysis shows that the microbolometer was one of the few MEMS areas that grew in spite of the crisis. The revenues of the 7 suppliers (FLIR, ULIS, DSR, BAE, L-3, SCD, and Raytheon) were up 15% in 2009.
• In 2009, InvenSense became the top supplier of gyroscopes for the consumer market and increased its revenue by 2.5 times.
• Kionix grew 6%, mostly with accelerometers in cell phones.

Top MEMS Foundries

Revenue of the Top 30 MEMS foundries amounted $590 million in 2009, down only 2% from 2008. In term of devices, inkjet printheads still dominate the MEMS foundry revenue ($333 million in 2009) far in front of pressure sensors, optical MEMS for telecom, gyroscopes, and accelerometers.

iSuppli differentiates the pure play foundries (Figure 3) and “mixed model” foundries (Figure 2), which are IDM companies offering MEMS foundry services in addition to their core component business, e.g. ST, TI (foundry partner of Lexmark for inkjet).

Today, the foundry market is dominated by the mixed model companies because of the large contract of ST and TI with HP and Lexmark, respectively. Sensonor made a remarkable entry in this ranking at No. 3. Sensonor was spun-out of Infineon in February 2009 and the vast majority of its $38 million total revenue in 2009 was due to contract manufacturing, e.g. some process steps on pressure sensors for Infineon as well as foundry work for other automotive customers.

Figure 2: Top 10 “mixed model” foundries: IDM offering MEMS contract manufacturing services

Overall, the pure play foundry model appears to be more successful (+4% in 2009) than the mixed model (-4%). There are several reasons for this:

• The inkjet market is declining.
• Some mixed model foundries are now focusing more on their IDM business and don’t try actively to expand their foundry business, this is the case of Colibrys and Memscap.
• The start-up companies tend to favor pure play foundries as manufacturing partners. IP is all that fabless start up companies own and they are often afraid that mixed model companies would steal IP. iSuppli believes that risk is limited though.

Pure Play MEMS Foundries

Among the pure play MEMS foundries, Dalsa took the lead in 2009 for the first time thanks to its contract with InvenSense for the manufacturing of the 2-axis gyroscopes that sold in the Nintendo Wii Motion plus accessory.

Micralyne was down 20% in 2009 and lost its No. 1 ranking. iSuppli estimates that optical MEMS for fiber optical telecommunications accounted for slightly more than 60% of the Canadian foundry in 2008, mostly for JDSU. The market for fiber optical telecom suffered greatly in Q4 2008 and in the first half of 2009 and this is the main cause for Micralyne’s drop.

An important trend in the 2010 ranking is the ascension of Taiwanese foundries, which hold four places among the Top 10 pure play MEMS foundries.

• Touch Micro-system Technology managed to keep flat revenue thanks to its leadership in the emerging MEMS scanner foundry business (Manufactures the MEMS scanners for Microvision, Opus Micosystems, and Texas Instruments).
• APM won some automotive pressure sensor business and grew by 11%.
• The giant TSMC and UMC enter the Top 10 for the first time (No. 5 and No. 10). The major MEMS contracts of TSMC are the fabrication of ADI’s consumer accelerometers and microphones as well as the fabrication of the new generation of InvenSense 2 and 3-axis gyroscopes. Several additional MEMS mass products are in the pipeline for the two Taiwanese foundries and will make TSMC and UMC climb further in this ranking in the next 2 years.

Figure 3: MEMS pure play foundry: top 10 suppliers

Points of Discordance with Other MEMS Rankings

Other MEMS analysts are publishing rankings and some of iSuppli’s readers will for sure have noticed major differences. Here are some comments on the most outstanding.

Denso

·         iSuppli estimates for 2009: $203 million, -11%:

·         Other analyst estimate: $120 million, -30%

·         Denso shares its yearly shipment by MEMS device with iSuppli and it has a robust estimate of the ASP for each sensor type. Therefore iSuppli believes its revenue estimate for Denso is right within +/-5%.

·         One must notice that Denso did not drop as much as other automotive suppliers. In October 2009, the Japanese company hit a production record above the historical peaks of 2007. Also, the company has grown outside its historical captive market for Toyota, and has a growing sensor business for General Motors, for instance (source iSuppli H1 2010 Automotive MEMS tracker).

Panasonic

• iSuppli estimates for 2009: $143 million, -17%
• Other analyst estimate: $207 million, +67%

iSuppli has examined the various MEMS business of Panasonic.

• Panasonic Electric Works was down in 2009 (mostly pressure sensors and some accelerometers, RF MEMS switch activity stopped).
• Panasonic Semiconductor is working on a MEMS microphone but it has not generated any revenue in 2009 yet.
• Panasonic Industrial accounts for the majority of the MEMS business with gyroscopes for cameras and automotive applications. The gyroscope business for DSC was down in 2009 as shipments of DSCs dropped 16% (source H2 2009 Consumer and Mobile MEMS tracker).
• Panasonic’s business for navigation gyroscopes was down 28% in 2009 (Automotive H2 2010 automotive MEMS tracker).
• Panasonic grew its market share in yaw rate gyroscopes for Electronic Stability Control business in 2009, and started to ship to TRW and to Continental at the expense of SSS and Systron Donner, respectively. However, this displacement is gradual for new platforms and one can not assume that Panasonic delivered 80% or 100% of TRW and Conti in 2009 already as other analysts seem to assume.

ULIS

• iSuppli estimates for 2009: $50 million, +37%
• Other analyst estimate: $61 million, 0%
• ULIS shared its revenue with iSuppli. ULIS was down 28% in 2008 as it lost share in Asia following to a change of the export restrictions for U.S. suppliers of microbolometers. It grew again 37% in 2009 mostly in industrial applications in Europe.

Micralyne

• iSuppli estimate for 2009: $23 million, -20%
• Other analyst estimate: $30 million, +7%
• Micrylane indicated to iSuppli that it lost 20% to 25% of revenue in the calendar year 2009 and confirmed that its optical MEMS for telecom business suffered most while its sensor and life science business was more stable.

All the data quoted in this article is extracted from the H1 2010 MEMS competitive analysis. This unique tool gives the ability to make apple-to-apple comparisons and is the robust way to analyze the competitive landscape or that of the customers. The easy-to-use pivot tables examine the revenue of 108 IDM and fabless MEMS manufacturers, as well as 32 MEMS foundries for the years 2006-2009. The tool shows the MEMS revenue by device and application for each company and allows to cross-combine numbers of parameters such as IDM versus fabless, captive vs. merchant, and substrate type.