The coronavirus pandemic has affected virtually all aspects of the world. While tragedies were abundant, opportunities also presented themselves as we struggled to detect, diagnose, and treat the disease.
Sensors are used in much of the medical equipment found in hospitals and labs. Flow and pressure sensors for ventilators, IR sensors for thermometry, and microfluidic diagnostic systems for detecting COVID-19 virus DNA or antibodies have seen a huge surge in sales. For sensors companies in the medical space and companies that are part of that supply chain, sales were brisk. Governments placed orders for hundreds of thousands of ventilators. Many of these one-time orders for ventilators were made with companies that previously had not made medical devices, like GM, Ford, Tesla, and Fitbit.
MEMS and sensor pioneers like Kurt Petersen and others founded Cepheid in 1996. The Cepheid systems enable molecular testing for organisms and genetic-based diseases by automating manual laboratory procedures. Cepheid and others, were given emergency FDA approval for their COVID-19 diagnostic test system. More than a dozen similar diagnostic systems are being used to test potentially infected patients. Wireless sensors for monitoring temperature and cough are being fast-tracked into use, as are apps for wearable health monitors and smart watches.
COVID-19-related quarantines and forced business closures did create a negative demand shock for many sensors and MEMS devices used in discretionary consumer electronics and automotive products as people stayed home for over two months. Starting in February, auto sales fell, and Apple stores and auto dealers closed in China, soon to be followed by closures in Italy and elsewhere.
A rolling two-to-three-month retail closure occurred worldwide. Even with online sales, according to Gartner, among all smartphone makers, total sales for the first quarter of 2020 reached 299.1 million, down from 374.9 million Q1 last year. If one assumes each mobile product has at least 10 MEMS chips in them, like filters, IMUs, oscillators, microphones, e-compass magnetic sensors, etc., then this drop of 75 million smartphones roughly translates into a reduction of 750 million MEMS chips for consumer MEMS devices.
Automobile sales and associated sensors also saw a dramatic drop last quarter. During 2018 and 2019, over 17 million new vehicles were sold in the US. For 2020 it is projected that just under 14 million vehicles will be sold in the US due to the coronavirus and resultant recession. US automotive sales in Q2 were down 35% from 2019. Given that each automobile can have from 40 to almost 100 sensors, we could see a reduction in more than 100 million automotive sensors this year.
In June, Dimitrios Damianos, a MEMS market analyst for Yole Development, predicted a 27.5% reduction in automotive sensor demand this year. Alternatively, Damianos predicted a 10% growth rate for MEMS sensors in 2020 due to the impact of COVID-19. Hopefully, pent-up demand will drive higher sales of these products, however a second wave of cases after a few weeks of store openings is prolonging the impact. For example, in late June, Apple announced it would close stores located in new hot spots a second time as COVID-19 cases surged again.
Impact on the Labor Force
The lockdowns and forced office closures also impacted IC designers. Many design were not prepared for telecommuting. Mary Ann Maher, CEO of SoftMEMS, has been advocating the microsystem community to embrace cloud-based design for several years. Until 2020 the rate of change was relatively slow.
Mary Ann noted that in early 2020, “many of our customers using OnScale on-premise were completely caught off guard when their offices abruptly closed during the COVID-19 crisis and their engineers could no longer access local OnScale licenses running on desktop CAE workstations. Fortunately, these customers were able to keep their engineers productive while working from home by switching to OnScale Cloud, which works just like a local desktop simulation tool but uses the power of cloud supercomputers to execute simulations. With OnScale Cloud, massive simulation studies of devices like MEMS, biomedical devices, 5G RFFEs, and much more can be set up and executed on the cloud from a low-power laptop. All you need is an internet connection and an OnScale subscription.” The forced shift to remote, cloud-based design work will change the way that many companies design sensors in the future.
Impact on Marketing
These are unprecedented times and provide a unique opportunity to rethink the marketing of MEMS and sensors. COVID-19 has not only affected the way we dine, plan corporate and personal travel, deal in real estate, buy automobiles, be entertained, and socialize; it has definitely had major implications on the conducting of business and, as part of this, the practice of effective marketing. Remote work and in-home quarantines have also altered the sales and marketing process for sensors.
While many of the areas of customer engagement have been affected, the most significant one is in the area of conferences and meetings. A recent report by Global Market Insights  opined that videoconferencing is expected to grow by more than three times in the next five years as a result of many organizations requesting/permitting employees to work from home. It has been reported by PCMA that, based on its May 2020 market survey of 1,776 professionals, 78% of event managers are taking their events online.
At Roger Grace Associates, we have recommended to our MEMS and sensor clients that they take advantage of this situation by creating webinars to help inform potential customers about their products and applications. This is especially valid since many conferences/technical trade shows have either been totally cancelled or rescheduled.
As with buying or selling a home, virtual is the approach that many conferences have adopted, including the MANCEF Commercialization of Emerging Technologies (COMS). The IEEE Inertial Sensor conference in Japan became a virtual conference this March. Sensors Expo was postponed from June to November, and, depending on which way the virus stats turn, may be canceled completely.
However, the virtual approach results in many lost opportunities to personally meet with potential customers, either in their booth, during technical sessions where they are giving a presentation, or at social events associated with the conference. In addition, we have helped clients in reassessing the return on investment (ROI) of their existing marketing program elements and helped them to judiciously consider the subsequent reallocating of resources rather than slashing overall budgets.
Electronic and Social Media Rule
As a primary recommendation, we are major advocates of webinars. YouTube and other video outlets are also recommended, as is asking our clients to take a careful look at their website’s content and navigability to ensure that potential customers are able to obtain the necessary information to issue a purchase order.
Additionally, the website must be connected to an automated email marketing program like Constant Contact to be able to effectively deliver messages remotely. This condition will create the “new normal” for the sensor marketing community, and, like everything in life, every challenge and every hardship is a lesson to be learned.
Impact on Infrastructure
Most MEMS and IC wafer fabs have continued to operate as normal through the pandemic, even in Wuhan and elsewhere in China. As figure 1 shows, a HEPA-filtered, Class 10-100 cleanroom, where face masks and gloves are worn continuously, would seem to be an ideal working environment this year. Automated equipment can be loaded and operate for hours unattended, and social distancing is not a problem in the fab.
There was a short-supply shock in February for some fab and packaging materials companies in Asia. Smaller companies in the wafer fab supply chain located in large cities that were locked down caused problems for fabs and fab-tool OEMs for several months. Fabs in Malaysia report that the government required companies to request permission to continue operating at 50% staffing levels.
One wafer fab in the European Union (EU) had to temporarily reduce production due to its labor union insisting on temporary workforce reductions. Electronics assembly ground to a halt for several months in much of China between February and April. While large factories and wafer fabs typically have significant spare parts on hand, smaller fabs, often MEMS fabs, rely on a just-in-time (JIT) inventory management approach. JIT operations relying on international supply lines failed in the COVID-19 pandemic. Just-in-case management will be used in the future to prevent downtime.
COVID-19 travel bans showed the importance of local support for wafer fabs. In Asia, only local and large international OEM equipment and service companies with a presence in the country or region could provide support during the periods of international travel bans.
Applied Materials is an example of an OEM company that was able to support the wafer fabs in China during this crisis. Mike Rosa, Strategic and Technical Marketing Manager at Applied Materials said, “During the COVID-19 outbreak, manufacturing did not stop at their Xi’an, China and US facilities. They kept a reduced staff on site to continue to manufacture fab equipment and run the sample wafers for customers in their cleanrooms. The wafer fab tools are automated, and an engineer can load one or more cassettes of 25+ wafers for overnight processing and can control the fab tools remotely. Offices were empty during the peak of COVID-19, and people worked remotely.”
“New safety protocols were put in place and office floor plans were changed, with more desk spacing for social distancing prior the return to the office, which has already happened in Xi’an after a two-month lockdown in that city.”
They found that many office functions, like accounting, legal, fab tool design and marketing strategy, could all be done very well remotely. Fab tool OEMs that did not have in-country service support in 2019 are scrambling this year to hire local tool engineers for installations and fab support.
The supply chain and logistics disruption has prompted a hard look at using 3D printing to support many factories. The DoD and NASA have already embraced 3D printing of repair parts in remote locations like ships, forward military bases, and the International Space Station. Now in 2020, many industries are beginning to warm to this concept.
On-site metal and plastic 3D printers will see increased use for virtual warehouses to support the MEMS fab supply chain. This is already being used for making out-of-date replacement parts for older 150-mm and 200-mm wafer size legacy fab tools. To shorten the supply chain, many repair parts for wafer fabs and assembly houses will be 3D-printed on site, without the logistics problems that have been encountered this year. In the future, MEMS fabs will use 3D printers not only for replacement parts for facilities and fab equipment, but to quickly make cavity package housings for prototypes and even print structured MEMS wafers to speed up the wafer fab development process.
Figure 3 shows an example of a 100-mm diameter, 3D-printed MEMS-sensor wafer. Additive manufacturing is opening up a variety of new substrate materials, from superalloys to polymers, and eliminating hundreds of traditional MEMS wafer processing steps in making sensors. These printed wafers can leverage existing fab infrastructure for manufacturing new medical and industrial sensors and microfluidic devices. 3D printers will become commonly found tools in all MEMS and IC wafer fabs to reduce downtime, speed up prototyping, and improve supply chain resilience.
The US government’s financial support for start-up companies and research departments in the medical device space saw an abrupt increase in funding opportunities beginning in the April-to-May timeframe. Many government agencies and programs began to both direct more money toward COVID-19 research and speed up the approval process for related medical devices, drugs, and treatments.
As an example, portable testing company Cue Health raised $100 million in new venture capital funding in June, shortly after acquiring a US government contract to develop a rapid, point-of-care coronavirus diagnostic. The proceeds of Cue Health’s COVID-19-related funding round will support the development and commercialization of a cartridge-based COVID-19 test, currently under emergency authorization review by the FDA.
Japan, China, the US, and other countries have announced billions in new infrastructure funds for increasing local manufacturing. In the US, a Paycheck Protection Program (PPP) was set up to protect small businesses and their employees from the economic impact of COVID-19 shutdowns. Some micro/nano start-ups were able to leverage these resources to continue operation. For example, Zendrive, which uses mobile-sensor data to provide insights that improve safety, received more than $1 million in PPP loans.
Microsystem industry like MANCEF, SEMI, and the Semiconductor Industry Association have lobbied governments for support and provided a face-to-face platform for networking and exchanging ideas on how best to navigate the new government regulations and grant opportunities. For example, in May of this year, the Semiconductor Industry Association sent a $37 billion proposal to the US government that includes subsidies for the construction of new wafer fabs, aid for states seeking to attract technology investment, and an in research. Look for these team and others to continue to do this lobbying and networking this year.
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