Faced with a second year of stagnant growth, competition in the consumer and mobile micro-electromechanical (MEMS) sensor market will continue to be tough for suppliers. After declining by 3.4 percent in 2015, a slow growth trend in the consumer and mobile MEMS sensor market is not expected to start until 2017, according to IHS Markit.
This means buyers can expect MEMS suppliers to focus more on performance improvements and portfolio expansions into new sensor types and end markets. Acquisitions also will be on the table, which could impact the supply chain, as well as new business models such as software services to boost revenues. Buyers also should expect lower average selling prices (ASPs), which have dropped significantly over the past three years.
“With less potential for organic volume growth due to slowing end-product markets, market-share competition will dominate in 2016,” said Marwan Boustany, senior analyst, MEMS and sensors, IHS Markit, in a statement. “MEMS suppliers will therefore focus more on sensor improvement (power and performance), portfolio expansion and innovation (new sensor categories), acquisitions (rapid capability integration), new business models (software services based on sensors) and expansion into new product categories (drones, smart homes, etc.).”
“The consumer market is challenging MEMS manufacturers,” agreed Yole Développement’s analysts. “Although volumes are still increasing, this market is becoming highly competitive.”
“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 at 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.”
Despite the slowdown for motion sensors and other traditional MEMS markets, there are new opportunities for growth in the consumer segment, according to Boustany. These opportunities include the use of motion sensors and microphones in virtual-reality headsets, motion sensors in drones, flow sensors in e-cigarettes, as well as the use of gas, humidity and temperature sensors in home environmental monitoring.
Yole Développement (Yole), for example, recently forecast the gas sensor market to reach $920 million in 2021, growing at a 7.3 percent compound growth rate (CAGR) over the 2014 to 2021 period, if there is widespread adoption in consumer products.
Consumer MEMS sensor suppliers face several challenges, which include downward price pressure. Despite greater adoption in mobile phones, MEMS microphones, inertial, pressure and gas sensors have very low margins, said Yole analysts.
The ASPs for consumer MEMS devices has dropped below $1 since 2013, according to Yole’s Status of the MEMS Industry 2016 report . Another challenge cited in the report is a lack of emerging high-volume markets in the short term. Although promising growth markets, the Internet of Things (IoT) and wearable electronics are still at low volume demand.
Despite the slowing MEMS market, leading MEMS sensor suppliers have been expanding their product offerings and business models, including the top three consumer and mobile MEMS sensor suppliers - STMicroelectronics, Knowles and InvenSense, according to the IHS Markit’s MEMS & Sensors for Consumer & Mobile Intelligence Service. Each boasted about a 17 percent market share (based on revenue) in 2015 led by STMicro at 17.85 percent, and followed by Knowles at 17.32 percent and InvenSense at 17.26 percent. Rounding out the top ten are Bosch, Goertek, AAC, AKM, Rohm (Kionix), Memsic, and BSE.
“STMicroelectronics is still the revenue leader for consumer MEMS, thanks to its business across a wide range of sensor types,” said Boustany. “The company’s consumer MEMS revenue lead continued to erode at a fast rate last year, with competitors growing share, the company’s first-place revenue lead has narrowed from $100 million in 2014 to around $10 million in 2015.”
STMicroelectronics earned the MEMS Manufacturer of the Year award at the 2016 MEMS World Summit. The company has shipped 11 billion MEMS sensors to date, and claims to be the “only company with the expertise to cover the full range of micro-machined silicon devices that include both sensors and micro-actuators.”
“The performance of 6-axis MEMS sensor modules, which have become a key building block of today’s consumer and IoT devices, has enabled new features in smartphones and more broadly new user experiences,“ said Andrea Onetti, group VP and general manager, MEMS Sensors Division, STMicroelectronics, in a statement.
At number two among leading consumer and mobile MEMS sensor manufacturers, “Knowles is still the dominant leader in MEMS microphones, leading the second-ranked suppler (Goertek) by a power of three in units and revenue,” said Boustany. “In addition to offering a wide range of analog and digital-output microphones, Knowles has also started shipping its VoiceIQ microphones with local processing in 2016, as it seeks to address both mobile and internet of things (IoT) applications.”
InvenSense moved into the third-ranked revenue position, overtaking Bosch, according to Boustany. “The company leads in consumer motion sensor revenue, thanks to dramatic volume growth for 6-axis IMUs as well as its dedicated optical-image stabilization (OIS) gyroscope. InvenSense is the standout MEMS supplier in terms of motion sensor revenue growth, with 26 percent year-over-year revenue growth, while the other sensor leaders suffer declining revenue.”