Global MEMS market suffers first-ever decline in 2008

EL SEGUNDO, USA: For the first time in its 20-year commercial history, the worldwide Microelectromechanical Systems (MEMS) industry suffered a revenue decline in 2008, and is expected to post another contraction in 2009, according to iSuppli Corp.

Global MEMS revenues declined by 7 percent in 2008 and will fall by another 7.5 percent in 2009, causing the market to decrease by $938 million in just two years.

"In 2007, the market for MEMS sensors reached a historical peak at close to $6.7 billion in revenue," said Jérémie Bouchaud, principal analyst, MEMS. "However, the market will shrivel to $5.8 billion by the end of 2009, wiping nearly $1 billion in revenue from the industry—a major event whose consequences will tear through the MEMS supply chain like a Tsunami."

However, even as the recession pulls global MEMS revenue down, the market is paving the way for a possible rebound.

"The MEMS market has always been broad and diverse enough to continually reinvent itself," Bouchaud said. "This is happening again now with new products picking up the slack from those that are struggling. Indeed, the market will pick up with renewed vigor again in 2010, and by 2011 will even exceed the level it attained in 2007."

Revenue will rise by 6.6 percent in 2010 and by 13.1 percent in 2011. Revenue will reach $6.99 billion in 2010, higher than the $6.7 billion in 2007. The global MEMS market will manage a Compound Annual Growth Rate (CAGR) of 10 percent from 2009 through 2013.

MEMS multiplicity
MEMS are tiny machines that perform simple mechanical functions. Uses for MEMS vary from accelerometers that trigger car airbags during collisions, to gyroscopes in video game console controllers.

The MEMS market consists of five major sectors: mobile handsets, consumer electronics, automotive, data processing and industrial and process control.

The market for mobile phones and consumer electronics together is the fastest growth area for MEMS, with a CAGR of 16.5 percent expected from 2008 to 2013, overtaking automotive sensor sales for the first time in 2010. By 2013, this area will be the largest MEMS application, accounting for $2.5 billion or 30 percent of the total MEMS market, compared to 19 percent in 2008.

MEMS products benefitting from these new and emerging markets are low-g accelerometers for cell phones, gaming and laptops, followed by gyroscopes for gaming, digital still cameras (DSCs) and microphones.

MEMS for motorists
Despite the current troublesome situation in the automotive industry, the market appears to be relatively stable for MEMS during the long term.

After a contraction in 2008 and 2009 caused by the precipitous drop in worldwide car production, the automotive MEMS market will return to growth in 2010 and exceed $1.8 billion by 2013. Also by 2013, pressure sensors, accelerometers and gyroscopes will be the largest opportunities within the automotive market, accounting for nine out of 10 sensors shipped.

The drivers for this market are government mandates for Electronic Stability Control (ESC) in the U.S. and Europe from 2012 onward as well as for Tire Pressure Monitoring Systems (TPMS) in Europe from 2012. Multiple MEMS are needed for these systems, with four or more pressure sensors usually required for TPMS systems.

IT blues
One of the applications that is losing ground is data processing, the top application for MEMS in 2008. But as revenue for inkjet printers and Digital Light Processing (DLP) devices for business projectors shrinks, this market is under increasing pressure. Market revenue for data processing MEMS will decline by 14.6 percent in 2009.

The credit and financial crisis has badly hurt the IT peripheral market, especially printing equipment. Shipments of inkjet printers actually dropped on an annual basis for the first time in 2008. iSuppli previously highlighted the fact that inkjet heads will no longer drive MEMS revenue as in the past and a heightened decline of inkjet printer sales accelerated this transition.

The industrial and process control markets for MEMS will expand rapidly during the 2008 to 2013 time period, rising at a CAGR of 17 percent. This market is strongly influenced by wafer probe cars used for automated test and measurement applications and that test all kinds of devices.

MEMS move to mass market
Although conditions in the MEMS market now are challenging, the stage already is being set for the resurgence of the industry, due to the rise of multiple, diversified applications in high-volume products.

"A great strength of the MEMS industry is its diversity coupled with evolving markets that become mass applications," Bouchaud said. "These attributes are key to navigating and indeed overcoming macroeconomic forces that are impacting the MEMS landscape."