MEMS' high-volume growth: a sure-win
As MEMS scores design wins from some of the biggest brands in CE, the opportunity for high-volume MEMS growth is clear.
Accelerometers to detect motion, orientation and hand gestures are turning up in cell phones and game consoles, notably the Nintendo Wii, while MEMS timing devices and gyroscopes are being adopted by manufacturers of digital still cameras.
The battle for MEMS business will be hard-fought. IDMs are going head-to-head against specialised automotive MEMS makers. At the same time, fabless MEMS start-ups are racing to market with devices for consumer products.
Each group has its own set of marketing and technical challenges—a situation complicated by a lively mergers-and-acquisitions market that keeps changing the competitive battle lines.
The incumbents are IC players that dominate the MEMS market rankings. But each has generally ridden its own market niche to achieve that leading position, so it will be no trivial task for these giants to expand into other areas and get the marketing right for a wider consumer market. Their advantage is that they already have economies of scale in terms of the MEMS they are making.
"The challenge is to understand what market or segment you can open at which price break," said Hubert Geitner, who heads MEMS marketing and business development for STMicroelectronics, the European chip giant and MEMS pioneer.
In other words, price elasticity is an important factor in the inertial sensor market, which is the one that ST has its eye on at the moment. "At Rs.88.24 ($2) to Rs.132.36 ($3) for a tri-axis accelerometer, it is only for high-end cell phones. At Rs.2 (50 cents), it could be a standard component in any cell phone," said Jeremie Bouchaud of market research firm Wicht Technologie Consulting.
Geitner agrees. "At one price, you can enable demand among high-end applications such as portable PCs," he said. "But cut the price in half—by changing the performance, design, production and testing of the sensor—and you can access a much bigger consumer market, such as toys, for example."
For IC manufacturers, price elasticity is an opportunity, but for established automotive MEMS players, cheaper accelerometers could threaten to cannibalise existing sales. They could end up with customers demanding lower prices even though "specs are totally different," said Bouchaud.
It is a notion downplayed by Rudi De Winter, CEO of automotive chip supplier Melexis SA. "If there is a lot of competition in the automotive sector, then the margins can be just as bad as in the consumer markets. Having said that, we have shown that margins can be maintained with innovation," he said. About 70 per cent of his company's MEMS sales are derived from the automotive market and 30 per cent from the consumer sector.
"Players can reduce price pressure sensitivity by moving up the value chain, developing modules that combine several sensors together and getting the packaging right to reduce production costs," said Tim Wilson. As a general partner at venture capital firm Partech International, Wilson is on the board of both Invensense Inc. and Discera Corp., two start-up MEMS companies.
Working on specialised processes, although inherently high-cost, can help companies stay competitive. It is a strategy that has been pursued to great effect in the past by Bosch Sensortec. "Bosch is developing a new front-end process using porous silicon membranes. By stabilising the process, it can save hugely on testing—each die will no longer have to be tested individually," said Bouchaud.
Another challenge is to convince more CE manufacturers to design-in accelerometers, gyroscopes and the like. It is one thing to offer a replacement of an existing chip with a faster one, or a lower-power one, but it is a harder thing to persuade a manufacturer to add a new device to the BOM.
Both Geitner and Bosch's Frank Melzer noted that potential customers have not used accelerometers in their products before. "It is still rare that a customer has a final product that uses accelerometers as the main hardware pillar, like Nintendo did with its Wii controller," said Geitner.
"CE manufacturers look at the bottom line. If they can add features at the right price, then they are open to suppliers from the automotive market," said De Winter of Melexis. De Winter sees more similarities than differences between the two markets—namely high volume, quality and reliability standards.
"The key for us is that CE manufacturers learn how to drive the benefits for users," said Hannu Martola, CEO of VTI Technologies Oy, a company that generates 90 per cent of its sales in the automotive market. "Right now, we have had a few exciting success cases. Further down the road, combining sensors will drive further benefits for end users. Then the issue is proving how you can supply the OEM," said Martola.
Mike Leavy, co-founder and CEO of Point 35 Microstructures Ltd, says IDMs have a better handle on that. Point 35's Memstar Division supplies etch and deposition equipment to MEMS foundries. "They have the technical know-how for volume manufacturing," he said, explaining that IDMs can make more integrated products that match with "the integration of CMOS and MEMS in the same fab spaces."
The consumer market typically calls for smaller sizes and less power consumption. This is something that may not be as challenging technically for semiconductor makers entering the MEMS market for the first time, but could be for the automotive MEMS players.
Indeed, Bosch's Melzer said that its new products for consumer applications are all smaller than any of its existing automotive versions and are based on Bosch's new low-power concept.
Bosch markets the digital pressure sensor as a product that can enable new features like vehicle GPS systems. For navigation on highways with multi-level ramps, a pressure sensor can determine the driver's level and help provide directions with better accuracy, said Melzer.
- Valerie Thompson
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