The microelectromechanical systems (MEMS) market enjoyed a strong 2010, with revenue growing by 18.3 percent year-over-year. But this is just the beginning of a new cycle of double-digit growth for the MEMS and sensors market that will extend all the way through 2014, according to new research from IHS iSuppli.
In 2011, MEMS will grow by 10 percent, vastly exceeding the expansion of the semiconductor industry. The reason for this continued growth is that the MEMS market is less cyclical than the rest of the industry and thus is less affected by swings in the economy. While 18.3 percent MEMS growth in 2010 pales to the 32.5 percent growth forecast for the total semiconductor industry last year, the 2009 to 2014 compound annual growth rate (CAGR) for the MEMS market is 12.6 percent compared to 9.7 percent for the overall chip business.
Overall, the MEMS market was less affected by the economic downturn than the semiconductor market in 2009. As a result, the “rebound effect” in 2010 was not as big for MEMS. The relative importance of industrial applications—such as industrial, aero-military and medical—is higher in MEMS, at 20 percent, compared to the total semiconductor industry, at 9 percent. These segments are much less sensitive to such cycles. Furthermore, safety mandates or emissions regulations for passenger cars have a significant impact on the overall MEMS market, and are also independent of such cycles.
Main Growth Driver
In 2011, the main growth driver for MEMS will be the consumer electronics and mobile handset markets, growing by 25 percent year-over-year. Revenue for MEMS in consumer electronics and mobile handsets will reach 2.1 billion in 2011, up from $1.6 billion in 2010. By 2014, IHS iSuppli forecasts MEMS revenue for consumer electronics and mobile handsets will reach $3.7 billion.
MEMS gyroscopes appeared in limited numbers of cell phones in 2010, but will experience exploding growth in 2011. In 2010, less than five cell phone models included MEMS gyroscopes. This year will see the introduction of more than 45 phones and tablets equipped with gyroscopes—most of them mostly based on the Android operating system.
Tablets will play a very large role in the future of MEMS and sensors. In fact, at the recent Consumer Electronics Show (CES), tablets presented by Motorola, Acer and other companies featured MEMS accelerometers, gyroscopes, BAW filters and even pressure sensors. Tablets will be the second-largest application for MEMS in the consumer and mobile area in 2014.
Soft Landing for Automotive Sector
Following a 32 percent increase in shipments in 2010, the automotive MEMS market will experience a soft landing, equaling a 7.3 percent increase in shipments. Revenue will grow by only 3 percent as a result of price erosion that is occurring even amid the strong demand.
The main reason the automotive MEMS market will achieve growth for the year is the favorable inventory situation. Although purchasers engaged in overexuberant ordering of parts in 2010, the MEMS automotive sector will return to a normal inventory situation by mid-2011. That will result in a soft landing rather than a dip into negative territory this year.
The automotive market is less dynamic than the consumer electronics market. However, car sales rebounded strongly in 2010 after a disastrous 2009.
The car MEMS supply chain had run dry and needed to be replenished, which led to very long lead times in many cases. As a result, 2010 shipments were up by more than 30 percent. This raised the specter of a double-dip downturn for automotive MEMS in 2011.
Underlying drivers for the industry are robust sales in new regions like China—even with lower electronics content—and in established car economies such as the United States, Japan and Europe, particularly through safety mandates.
Thus, 2011 shows modest growth as a result of the more or less full recovery of car sales in the established regions, recovery of the supply chain and because of the current safety mandates—for tire pressure and vehicle dynamics control. However, moving past 2011, IHS iSuppli sees full fitment rates by 2014 for these mandated safety technologies, as strong adoption of safety sensors will start in 2012.
China’s Love of MEMS
Demand for MEMS is soaring in the BRIC countries—Brazil, Russia, India and China—and is becoming a focal point for many markets specifically in China. In the automotive arena, MEMS sensor revenue for cars selling in China is set for explosive growth from 2009 to 2014. Digital light processing (DLP) is another example of current growth in front projectors for education happening in China and India.
The stimulus package provided by the Chinese government aimed at stimulating fiber-to-the-home (FTH) ultimately pulls the global demand for optical MEMS for fiber optical telecommunications. As a result, this segment will grow at a CAGR of 17 percent for the 2009-2014 period. The deployment of smart meters based on MEMS flow sensors and accelerometers in China is beginning to take off after the government’s plan to focus on its Smart Grid. In 2011, we should see smart meter sales soar, benefiting MEMS.
A Few good MEMS
The issues facing the 21st century are increasingly impacted by the MEMS market. MEMS sensors, for example, are being used in the energy sector to help find and tap new energy sources—geophones for oil/gas exploration, inertial sensors for measurement-while-drilling, or to maximize current energy resources via improved