The MEMS market is projected to reach $20 billion in 2021, up from $11.9 billion in 2015, according to Yole Développement (Yole). This translates into a compound annual growth rate (CAGR) of nearly nine percent over the next five years. The CAGR for unit shipments is forecast at 13 percent.
The MEMS markets are growing more slowly due to demand leveling off for smartphones and other portable devices, which have been big volume growth drivers, according to Yole. However, there are several emerging market segments that could spur growth over the next several years, analysts said. These include wearable electronics and Internet of Things (IoT) applications, which look promising, although volumes are not high yet.
Other pockets of growth include industrial, medical, and automotive applications. Case in point: “The car industry is still hungry for sensors, with 20 MEMS devices per car on average today, and autonomous cars might offer more possibilities for MEMS technologies,” said Dr. Eric Mounier, senior technology & market Analyst at Yole, in a statement.
“New opportunities in medical come with long-term developments that are finding the market today. These include silicon microfluidic chips for medical micropumps, with Debiotech earning significant revenue from its MEMS micropump in 2015. Industrial and defense markets also provide growing opportunities for high-end and high-margin devices such as inertial and pressure sensors,” he added.
The consumer market continues to be challenging for MEMS manufacturers, according to the Yole Status of the MEMS Industry (2016 Edition) report. Although volumes are still increasing for devices such as MEMS microphones, inertial sensors, pressure sensors, and gas sensors in mobile phones, the margins are very low. MEMS average selling prices (ASPs) for consumer applications have dropped below $1.00 since 2013, said Yole. Other challenges for market growth cited include “end users are giving their suppliers a hard time as the business relationship is sometimes very short, shifting from one device maker to another.”
As a result, Yole analysts said they do not see large volume markets as a short-term growth driver for MEMS. Another challenge cited in the consumer industry is commodization.
“Over the past five years, the MEMS industry has been driven by increasing volume from the consumer industry with smart phones and wearables. This industry has in turn pushed for smaller dies for integration in thinner handsets. This reduced prices, shrinking margins so that the MEMS market currently does not have the same comfortable growth rate as previous years,” according to the report.
Yole’s recommendations to deal with commodization include lowering costs and creating more value.
- The “Production Infrastructure” pathway with either shared manufacturing infrastructure cost with other applications, for example between automotive and consumer, or improved processes that lower cost, like CMOS MEMS.
• The “Creation of Value” pathway with either new devices, like gas sensors, merging with other sensors to make combos, or improved sensor output. The CMOS image sensor (CIS) industry offers an example of the last option, solving the commodization issue by increasing pixel and die size, and therefore also price, as customers’ value high quality pictures. “Creation of Value” is closely linked to the growing importance of software embedded within the sensor to deliver higher level functions for system makers.
Looking ahead, Yole expects several new device types, including gas and environmental sensors and combos, ultrasonic MEMS, and silicon microfluidics, to fuel MEMS growth in the future. The market researcher also believes existing devices such as RF MEMS or inertial measurement devices (IMUs) will help drive more growth. RF MEMS companies showed “impressive growth in 2015” for RF devices, according to Yole analysts. These include Avago Technologies and Qorvo.
“2016 might be challenging for MEMS companies, but there are also opportunities with emerging and growing demand for pressure and gas sensors, fingerprints, and autofocus shaping the consumer market,” said Claire Troadec, technology & market analyst, semiconductor manufacturing, Yole, in a statement. “At Yole, we believe the future growth of the MEMS market will be driven by various applications, including smartphones, wearables, automotive and medical.”