MEMS microphones shipments to rise to 1 billion in 2013

EL SEGUNDO, USA: Despite a slowdown in 2009, global shipments of Microelectromechanical System (MEMS) microphones are set to more than triple from 2008 to 2013 due to their strong acceptance in mobile handsets and other applications, according to iSuppli Corp.

Worldwide MEMS microphone shipments are set to reach 1.1 billion units in 2013, up from 328.5 million in 2008. This strong growth will come despite a deceleration in shipment growth and a decline in global revenue in 2009, the first such contraction in the history of the market.

The figure presents iSuppli’s forecast of global MEMS microphone shipments.Source: iSuppli, Sept. 2009

MEMS microphones are tiny microphones that employ a pressure-sensitive diaphragm etched on a semiconductor using microelectromechanical technology. They are commonly employed in cell phones, headsets, notebook PCs, video cameras and cars.

“MEMS microphones are truly one of the success stories in the MEMS market,” said Jérémie Bouchaud, director and principal analyst, MEMS, for iSuppli. “Market shipments are set to exceed 1 billion in 2013, largely because these MEMS are becoming less expensive as the volume increases. Silicon microphones also outperform conventional microphones in terms of size, scalability, and sound quality. The simplification of applications like noise cancellation and beam forming for directional microphones using MEMS will further boost their acceptance.”

Demand for digital technology microphones also will boost sales of MEMS devices for laptops and increasingly for cell phones.

Microphone check
Despite the rosy outlook for MEMS microphones, the year 2009 will be a poor one for the market.

“After five consecutive years of double-digit growth, global MEMS microphone shipments will rise by only 7.5 percent in 2009,” Bouchaud observed. “With the weak rise in unit shipments and decline in pricing, global revenue will drop to $132.4 million in 2009, down 2.4 percent from $135.7 million in 2008.”

The MEMS microphone market largely can attribute its 2009 sales woes to one company: Motorola.

“Motorola was the first company to widely adopt MEMS microphones, making extensive use of them in its best-selling ultra-thin RAZR handsets,” Bouchaud said. “The company accounted for about 30 percent of global shipments of MEMS microphones for mobile handsets in 2008.

However, the company has suffered a major downturn, having fallen to the world’s No.-4 position in the global handset market in 2008, down from No.-2 in 2006. Motorola is continuing to lose handset share in 2009. This has seriously impacted MEMS microphone sales.”

Beyond Motorola, another factor impacting the MEMS microphone market in 2009 is the weakness in the worldwide mobile handset market. Global cell phone shipments are set to decline significantly in 2009.

Furthermore, MEMS microphones continue to face competition from older electret condenser microphones.

“Electret condenser devices are still significantly cheaper than MEMS and are now available as Surface Mount Devices (SMDs), and thus will remain in the market for many years,” Bouchaud said.

MEMS microphone makers’ machinations
Because of the strong promise of MEMS microphones, new suppliers are entering the market and changing the competitive landscape. Two large companies -- EPCOS and Bosch -- bought entry tickets into the MEMS microphone market during the last six months by engaging in acquisitions.

While Knowles still largely dominates the market with more than 80 percent of units, two companies are emerging as volume manufacturers next to Knowles: Infineon and MemsTech. Overall, nine companies now are shipping MEMS microphones to customers.

“This is a good news for a market that has been suffering from a lack of second sources for volume production.” Bouchaud said.

Motion sensors driving MEMS growth

In a recent report, iSuppli predicted that driven by new demand from consumer electronics (CE) and wireless applications, the global market for microelectromechanical systems (MEMS) will expand to $8.8 billion in 2012, up from $6.1 billion in 2006.

I caught up with Jérémie Bouchaud, Director and Principal Analyst, MEMS, iSuppli Corp., to find out more about the dip in the fortunes of the mainstay products and the latest trends in the MEMS market, especially, the significance of consumer electronics applications such as motion sensors for gaming, laptops and DSCs, and mobile handsets.

Will the mainstay products for MEMS actuators, inkjet heads and DLP chips, will lose market share? Or, is it a slight dip?

Jérémie Bouchaud says that MEMS actuators, include inkjet and DLP, and also RF MEMS switches. While selling prices stay constant, MEMS inkjet heads are losing shipments at a rate of 6 percent per year over the forecast period, so the market grows only slightly at 0.4 percent CAGR from 2006-2012.

DLP shipments continue to grow, but price erosion is running at 10 percent CAGR, which means that the market is shrinking at close to 5 percent per year to 2012. RF MEMS switches are the one bright spot that helps the market for this type of MEMS device to recover slightly in 2012. RF MEMS switches will grow at 100 percent CAGR over this time to top $260 million in 2012.

The new wave is partly founded in the rapid rise of consumer electronics applications such as motion sensors for gaming, laptops and DSCs, and mobile handsets. How much share are these segments likely to garner?

According to the analyst, all types of sensors in wireless communications and consumer electronics (inertial, pressure, microphones, filters, oscillators etc) exceed $1,5 billion: or 17 percent of the total MEMS market.

"Specifically, the motion sensing opportunity, including accelerometers and gyroscopes, for consumer applications like MEMS accelerometers for mobile phones (e.g., image rotation such as in iPhone and Nokia phones), gaming (Nintendo Wii, Playstation 3), etc., and gyros (mostly digital still cameras and camcorders, gaming like Playstation 3) will grow at over 20 percent CAGR from 2006 to 2012 to exceed $680 million, about 8 percent of the total market," he said.

iSuppli has also mentioned automotive as a key area for MEMS. What kind of growth does it see for automotive?

Bouchaud adds that automotive will grow at 8 percent CAGR to reach $2.1 billion in 2012, up from 1,3 billion in 2006. The market is largely driven by mandates for tire pressure monitoring, electronic stability control systems and reduced emissions, accelerating growth for pressure and inertial sensors.

So, will "new players have a chance to address a relatively open market", and if yes, what would those markets be?

Bouchaud indicates that the consumer electronics market is more open than the automotive sector, which features established, long-term supply arrangements, and production cycles lasting five or more years.

CE applications are characterized by fast time-to-market and short product lifetimes. For example, mobile phones that change yearly or even more frequently, and supply agreements satisfied by fast manufacturing ramp-up and ability to meet seasonal demand spikes, and often several suppliers in the same product, (e.g. ST and ADI in Wii). As sensor specifications are more relaxed than automotive, price and footprint are most decisive.

Will there be a growth in dedicated mass production facilities then?

According to him, several large MEMS players, e.g., STMicroelectronics, Freescale and Bosch Sensortec, have or are now invested in upgrading to 8" production facilities to meet the higher demand from the consumer sector. By 2011, at least 12 companies will operate at this larger wafer size.

"Some companies like Analog Devices are at the limit of their current capacity, due to its strong automotive sensor offering, and has recently decided to work with non-MEMS CMOS foundries like TSMC, a first in the industry. UMC will also join the MEMS community, partnering with Asian Pacific Microsystems," he says.

And, how would the new entrants be investing in R&D? Will they be doing enough?

The analyst says that R&D rates run high in automotive (12-15 percent of MEMS revenues) and even higher in consumer (can be 15-20 percent). The high R&D rate is needed to sustain leading edge products in fast moving markets. Deep R&D pockets are needed, a luxury that is not available to all.

Elaborating a bit more on the market consolidation, he says: " Today, the share of the MEM revenues in the hands of the top 30 MEMS companies grew at about the same rate as the market. The markets that drive growth in MEMS are consumer electronics and automotive sensors.

"The sensors will be increasingly commoditized due to extreme price pressure in both sectors, and iSuppli expects the production of MEMS devices for these two markets to be concentrated among fewer companies in the future. One facet is manufacturers attempting economies of scale by combining sales in automotive and consumer areas, e.g. at Bosch, and in future with Freescale and ST.

"Other companies are pioneers and hold a strong market position for a relatively long time. Examples are TI with DLP chips and Knowles with MEMS microphones. We also expect more M&As in the near future to exacerbate the consolidation."