Contributed by Jean-Christophe Eloy, President & CEO, Yole Développement
Business is there: moving from $300M in 2009 to $1.2B in 2015 only for smart phones…
No doubt that the motion sensing applications are taking full benefit of the availability of low cost and adapted specifications of 3 axis accelerometers, 3 axis gyroscopes and 3 axis digital compass. The total market for such devices (according Yole Développement recent report “MEMS for smart phones 2010”) was $300M last year for mobile phones and will go higher than $1.2b in 2015. In addition to the smart phone and mobile phone applications, you have to add the game consoles, the remote controls, the digital and video cameras… and almost all consumer electronic devices are already or will soon integrate motion sensors.
More complex functions have to be implemented…
So the business is there. And complexity is coming: from simple functions (portrait/landscape presentation of an image for example), more complex functions are now implemented like image stabilization, localization based services, advanced gaming… Such new functions will need multiple axis of detection like 3 axis accelerometers and 3 axis gyros or 3 axis gyros and 3 axis digital compass… Because of the need of more complex functions, the device makers have to offer a complete solution, a motion sensing function and not a simple device. Only few consumer electronic system makers understand how to incorporate such combo devices and the vast majority have to buy a simple working device with its software, firmware, API…
Price is decreasing, quarter after quarter…
Of course, with such growth of the market, the price decrease is extremely important, more than 5% every 6 months… So the 3 axis accelerometer was $3 in 2006, now is below $0.70 in volume. 3 axis gyroscopes in volume have a price of $2.50 at the moment and we can expect a very strong price decrease. STM and Bosch Sensortec are now taking full benefit of the 8’’ manufacturing facility used to produce MEMS devices and Invensense, as a fabless company, is also benefiting of both 6’’ and 8’’ production facilities from its manufacturing partners, especially Dalsa Semiconductor and TSMC. It will be extremely complex to compete against these 3 companies without a similar production infrastructure. All the existing players staying with 6’’ production facilities will at one point or the other have a decrease of their competitive advantage due to the cost benefit of the 8’’ production line of their competitors.
So which company can survive?
Yole Développement has identified more than 50 companies worldwide which are competing on the motion sensing business. But really only few are really making good business in the consumer electronic market. In all 3 fields (accelerometer, gyroscope and digital compass), 1 or 2 players are dominating the business: STM for accelerometer (50% market shares) followed by Bosch Sensortec; Invensense for gyroscope (almost 40% market shares) followed by Epson Toyocom; AKM for digital compass (more than 70% market shares) with no follower… STM is the only one now involved in all the applications (accelerometer and gyroscope with own device and sensor coming from Honeywell for the digital compass) but is competing with companies that are already very strong and deeply entrenched in each field. Few other companies like Kionix (acquired by Rohm) are able to come back in the first league but it will be extremely difficult for the others (Freescale, ADI…) which are focusing on more profitable business outside consumer electronics.
What will happen now? Fight of the 5 main competitors STM, Bosch Sensortec, Invensense, Epson Toyocom and AKM.
Invensense IPo is bringing fresh air into the motion sensing business. If the IPO is a success (and even if the IPO is delayed, Invensense will be able to find investors to fuel its growth…), the 5 major competing companies (STM, Bosch Sensortec, Invensense, Epson Toyocom and AKM) will enter a terrible fight in order to provide lower cost devices to more customers… or try to provide customers with new functions, whatever is included into the device used. Invensense has been the first one to promote and sell motion sensing solutions (and not devices) to be the key way to grow the business. And now companies with innovative business models (like Movea to name only one) are jumping onto the market, with strong engineering background on sensor fusion in order to enable new functions and forget that you are using a 3A/3G or a 3G/3M for a specific application…
The next months will be extremely interesting: motion sensing is facing a rapid consolidation because the main 5 players (which were not competing up to now) will have to integrate devices they are not producing at the moment in order to compete on the combo devices. STM is the competitor of all the others so maybe we will see STM competing against the rest of the motion sensing world… Invensense is certainly the company the most agile, both in term of management, development and production infrastructure and the IPO will provide to Invensense the financial capabilities to do great things, like in the last 6 years… The next months will be certainly very interesting…
For more information, please contact Sandrine Leroy (leroy@yole.fr)
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