MEMS Market Contracts by $600 Million in 2009 Tweet

Despite a strong recovery during the last nine months of the year, an extremely weak first quarter caused the global Microelectromechanical Systems (MEMS) market to suffer an 8.6 percent decline in 2009, equaling $600 million in revenue. This represents the second consecutive year of losses, which total together have resulted in $1.2 billion in revenue wiped out since the market’s historic high point of 2007, according to iSuppli Corp.

Like the rest of the economy, 2009 picked up where 2008 ended—namely, badly—for the MEMS industry. It was not until the second quarter that a strong recovery occurred, one that continued through the end of the year. However, following three consecutive bad quarters, this recovery wasn’t enough to generate annual growth for the market.

The hardest hit MEMS market in 2009 was the automotive industry, which suffered a nearly 20 percent decline in revenue compared to 2008. With multiple sensors in each car, a major collapse of the manufacturing base crippled sensor sales and all but dried up inventory until the second quarter of 2009. Other badly-impacted industries included printers and business projectors. Industrial applications, including instrumentation, oil and gas exploration and health usage monitoring, also were among those that suffered.

Interestingly, although overall MEMS revenue declined, shipments rose by 10 percent in 2009, reflecting major commoditization in the industry, especially in the new market for MEMS in consumer electronics and mobile phones. The cell phone now is recognized as the primary driver of MEMS sensor sales. Based on the features of the 1,000 new phones that iSuppli examined in 2009, 27 percent had an accelerometer on board, up from 11 percent the year before. The main benefactors were big MEMS players like STMicroelectronics and Bosch Sensortec.

Prices for accelerometers fell much faster than anticipated and contributed significantly to the general market commoditization. Despite being the best-selling MEMS product in 2009, accelerometers did not have it all their own way, with a major application for the device—the gaming controller for Nintendo’s Wii—finally having become saturated.

Commoditization is also the affliction of MEMS microphones, which must compete on price with the well-established incumbent microphone technology, which is widely regarded as inexpensive and very competitive. Furthermore, as a leading adopter of MEMS microphones, Motorola’s fast decline in the cell­phone space has disproportionally affected the fortunes of the technology in 2009. However, the impact of Motorola’s downturn was mitigated somewhat by the rising sales of MEMS microphones in Apple Inc.’s new fifth-generation iPod nano.

Knowles remains the 1,000 pound gorilla in the MEMS microphone field. However, determined to fill their massive 200mm MEMS fabs, Bosch and STMicroelectronics also intend to push their way into this market. Bosch plans to make its entry with its acquisition of Akustica and STMicroelectronics in cooperation with Omron, starting next year.

Another consumer electronics bright spot for MEMS in 2009 was the pico projector, a tiny projector that can piggyback on a cell phone or act as a highly compact standalone unit. These products first hit the shelves early in 2009 from Samsung for the Korean market. LG also introduced one in time for the holidays. Both of these devices use Texas Instruments Inc.’s Digital Light Processing (DLP) technology.

A MEMS scanning laser technology approach from Microvision also was offered through Vodaphone’s Nokia N97 to the Spanish market.

Gyroscopes also made big gains in the gaming arena via the Nintendo Wii MotionPlus plug-in addition to its controller for advanced motion gaming. This helped propel the small U.S. company InvenSense in 2009. Its giant competitor, STMicroelectronics, also announced a range of consumer gyroscopes this year, which is sure to speed adoption for gaming in mobile platforms in future.

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