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Jul 21st, 2010
Rapid adoption of sensors in cell phones will create a $7.9 billion market
Hard to believe that not so long ago a mobile phone was just a phone, and not a pocket sensor platform.
Mobile phone makers have rushed to adopted accelerometers, now including them in more than a third of all handsets. With the first handset to include a gyroscope hitting the market this summer, gyros will start a similar adoption ramp, to become an $80 million business this year. And a host of other sensing applications will push the total market for sensors in cell phones to more than $4 billion in 2010, with steady double digit growth to $7.9B by 2015.
By far the biggest cell phone sensor segment remains optical devices, mainly image sensors and ambient light sensors, but most of the rest of the opportunity is for MEMS products. The mobile phone market for MEMS saw more than 150% growth over the last two years, jumping from $375 million in 2007 to $629 million in 2009, as phones moved beyond FBAR filters and a few silicon microphones to aggressively add motion sensors. Phone makers are now also looking seriously at adding a wide range of new options, including digital compasses, pressure sensors, RF variable capacitors, oscillators, autofocus systems, and micromirror picoprojectors.
Demand for all these sensors is of course being driven by the proliferation of smart phones and applications. With demand growing by 30% a year, as many as 44% of all mobile phones will be smart phones by 2015. GPS applications in particular are becoming common, no longer limited to just high end phones, but included in a third of all phones this year. That’s driving demand for more compasses and motion sensors for more precise navigation and location-based information services. New 4G high data-rate network standards and the increase in multimode, multiband phones also open opportunities for RF components and will enable more online services demanding more sensors.
Motion sensors see most growth, and most competition
The most dynamic area is motion sensors, likely to see 25% CAGR through 2015 to become a $1.2 billion market. But the competition is dynamic too, as Yole tracks some 50 companies now aiming at a piece of that market.
InvenSense and STMicroelectronics introduced the first 3-axis gyroscopes last year, small enough for mobile phones and with costs as low as around $2.50 in high volume, providing the capability for full motion sensing at an acceptable cost for the handset market for the first time. That’s still a lot for a cell phone component, but phone makers consider the added value of better games, and multiple possibilities for quick and precise user interfaces using gesture recognition, worth the cost. The same unit can also be used for image stablilization to produce sharper pictures, in high end phones with 8-10 megapixels, though reducing power consumption for the process remains a much bigger issue for the phones than for cameras. Once the app makers start taking advantage of the possibilities of ST gyro on the new iPhone with compelling applications, other cell phone makers will rapidly follow suit. Yole estimates gyro makers will sell $492 million worth of product to the mobile phone market in 2015.
Accelerometers are already a mainstream cell phone component, as phones surpassed gaming as the biggest consumer market for the sensors last year. But only three years into the market, prices have fallen to as low at $.50, sending suppliers scrambling to distinguish their products from the commodity level by adding value with smaller devices, lower power consumption, and more friendly interfaces to facilitate adoption of functions. That’s spurred rapid technology improvement as well. Next generation packages now in the pipeline are down to 2mm x 2mm. More intelligent power management has reduced power usage down to 2µA. ST leads the market with about 50% share and a $110 million business in 2009, but Bosch Sensortec, Freescale and Kionix have all built up a mobile phone business of $20 to 50 million in a couple of years.
The emerging trend is to integrate accelerometers with magnetometers and/or with gyros for a higher value-added motion processing solution. ST is producing a 3x accelerometer- 3x compass combo sensor with a magnetometer from its partner Honeywell, and offering engineering samples of a 3x accelerometer -2x gyroscope. Ultimately the gyroscope makers will likely also dominate the combo sensor market, since they control the highest value part. But the cost of the combination has to be lower than the separate units, and so far separately packaged parts still cost less. Combo sensors have a huge potential going forward, but it will take some time for them to become a major part of the market.
Future growth will also be driven by a next generation of more precise gryos and accelerometers, to enable precise pedestrian navigation and pointing applications—technologies getting a strong push by their potential to make money for the network company by location-based ads or information services. Though much development is underway, Yole doesn’t expect to see volume production of these precision devices until about 2014. In the meantime, demand will be strong for digital compasses to at least add the correct direction and orientation to maps and early location based services.
The silicon microphone market may be also starting to pick up. The 10%-15% higher cost has kept MEMS microphones from big penetration of the cell phone microphone market. Also an issue has been the declining market share of their major proponent Motorola, who adopted the mics for its ultrathin profile phones. But the cost differential over conventional electret microphones has narrowed enough to interest phone makers in the potential of improving sound quality with active noise cancellation, as in the iPhone, where a second microphone collects ambient noise to counter it with noise cancellation circuitry.
While the big integrated IDMs STMicroelectronics, Robert Bosch subsidiary Sensortec, and Freescale do dominate the cell phone sensor market, with their 8-inch fabs to ramp consumer volumes and drive down costs, fabless companies and startups have also actually done relatively well in this fast growing and changing environment. Fabless Knowles is the leader in Si microphones. Fabless startup InvenSense dominates the gyro market, though largely from the game side so far. Startup Kionix has made a mark in accelerometers. And plenty of new startups see opportunity here as well, though they will have to ramp on 8-inch lines to be serious players.
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