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STMicroelectronics’ imaging division should have disappeared with Nokia’s handset business, but it did not. Instead, in october 2017 the outlook for this business unit was great. To the $75M per quarter it was earning from Time-of-Flight (ToF) ranging sensors, it has added around $100M per quarter by delivering near infrared (NIR) sensors for the iPhone X’s front 3D camera.

This turnaround is part of a bigger story of the $23.4B, 12.2% compound annual growth rate (CAGR) camera module industry Yole Développement details in its newly released “Camera Module Industry 2017” report. But what did it take for STMicroelectronics to survive smartphone disruption?

Compact Camrea Module Revenue Forecast 2012-2022

First, let’s credit the team and management’s innovative spirit. STMicroelectronics has shown that innovation is not just a game for startups; large companies can also make the right moves. The craziness of investing in Single Photon Avalanche Diode (SPAD) technology became the first step in maintaining life support to an endangered business. Passion for science and technology is not always logical, nor overly business-efficient, but it creates a positive environment for trying new things and going beyond traditional barriers, where no competitor even exists. ST’s technology was well suited to serve Nokia’s mobile handset business and became out-of-sync with the market when smartphones came in. Sony took 40% of this market, while Toshiba was absorbed and Aptina/On Semi retreated to the high-end niche. It is very unlikely that ST master-planned the pivot toward sensing it actually made. Instead of trying to stick to the same competition, it looked for opportunities that could be fulfilled with its existing assets, and with a little patience it is apparently succeeding.

Camera Module Industry Ecosystem

It also succeeded in getting Apple’s business because it has the right manufacturing assets. Yole is expecting 7.8 billion camera modules to be produced in 2022. This is an overwhelming number. LG Innotek is currently the largest camera module player, and has a global manufacturing capacity exceeding 1million camera units per day. At the CMOS image sensor (CIS) level, Sony is currently producing over 100,000 wafers per month. We can therefore understand the difficulties for new entrants, such as Heptagon/ams, the recent startup that has to deliver the other side of Apple’s 3D camera. Producing around 100M units per year means throughput in the order of 10 million components per month. In short, a big part of the reason for the ST imaging unit’s survival is the existence of a strong manufacturing capability. Its 300mm fab has two CIS processes, IMG175 and IMG140, able to do back-side illumination and deep-trench isolation. It has good quality intellectual property as a result of more than 15 years of continuing business, and constant investment into production know-how.

The last element to consider for this turnaround is probably out of ST’s control, as it benefited from exceptional times. Yole Développement’s report details the strong forces that are currently pulling the camera module industry. Augmented reality has been the buzzword for the last two years, but part of market momentum still lies into the notion of “interaction”. Smartphones leverage the addition of sensors in order to expand the capabilities of its owner. With the development of new computing capabilities and “artificial intelligence”, electronic devices’ perception is going further. The devices are not just recording inputs and outputs but automatically – some would say autonomously – managing an “interaction” with the world. This ‘Industry 4.0’ revolution is going on before our eyes, with services and devices for telecommunication, transport, medicine, security and the manufacturing industry. Humans are not the strongest primate, but being able to adapt to what we have and to nurture our smallest pieces of knowledge until they make a difference is probably what helped us beat Darwin’s odds.


Pierre Cambou - Yole Développement

Pierre Cambou joined the imaging industry in 1999. Following an engineering degree from Université de Technologie de Compiègne in parallel to a master of science from Virginia Tech in 1998, as well as graduating from Grenoble Ecole de Management’s MBA, Cambou took several positions at Thomson TCS, which became Atmel Grenoble in 2001 and e2v Semiconductors in 2006. In 2012 he founded Vence Innovation, now called Irlynx, in order to bring to market a disruptive man-to-machine interaction technology. He joined market research and strategy consulting company Yole Développement as imaging activity leader in 2014.



Source:  Yole Développement



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