Englewood, Colo. - Global revenues for the semiconductor-based magnetic sensor market grew less than one percent in 2014, primarily due to ongoing price erosion in the electronic compass sensor market, according to IHS Inc. However, the market researcher forecasts nearly four percent growth in 2015 due to rising demand in the automotive sector.
The automotive sensor market accounted for 55 percent of the overall market for magnetic sensors in 2014 with sensor penetration still increasing in mature markets like North America, Europe and Japan. “China and other emerging markets, for which the bulk of vehicles have relatively low electronics content today, are rapidly adding more sensors for improved safety, greater comfort and better fuel economy,” said IHS.
Commoditization was cited as one of the biggest reasons for the shrinking electronic compass sensor market, and with increased competition, price erosion and lower profit margins followed. Case in point. In 2008, a three-axis compass was priced at about $1.40. Today, the price of a magnetometer used in a GPS-enabled mobile phone at high volumes is priced at less than $0.20 and is expected to drop even further over the next five years, according to IHS.
“Samsung and other large customers buying in large quantities have subsequently forced the price down to a point that no other supplier can compete with; however, an aggressive pricing policy has also been pursued by Yamaha and other companies, which has added to the rapid commoditization of the market,” said Richard Dixon, Ph.D., principal analyst for MEMS and sensors at IHS Technology., in a statement.
“Once the rising star of the magnetic sensor market, 3-D magnetometer compass sensors have quickly entered a plateau dominated by commoditization,” Dixon added. “Many magnetic sensor suppliers focused on compasses, which are used in GPS-enabled smartphones and tablets, are seeing their market shrink before their eyes, while those serving the automotive sector continue to bolster their revenue.”
In addition to price erosion, the IHS Magnetic Sensors Market Tracker also finds low penetration of compasses in low-end smartphones and long-touted applications not coming to fruition as other primary reasons for the decline of the magnetic electronic compass market.
Because 3-D magnetometers are not a requirement you won’t find many compasses in low-end smartphones. “3-D compass penetration rate is high in mid-range smartphones and saturated in high-end smartphones,” Dixon stated. “Unfortunately these markets no longer drive growth.”
In addition, applications touted for more accurate sensors like magnetometers never happened. “Just a few years ago, indoor navigation and augmented reality promised to drive the market requirement for more accurate sensors, including magnetometers with higher angular resolution,” Dixon stated. “This market requirement has not materialized, and with it, any requirement for higher performance devices would command a higher price.”