In a global cellphone and tablet industry worth over $550B, sensors commanded US$12.2B in 2015, with 9.5% CAGR forecasted for 2015-2021.
The sensor market is still growing impressively, but needs to reinvent itself to avoid commoditization
While many are fearing a general slowdown due to smartphone market saturation, our forecast is rather optimistic concerning sensors. Driven by the expansion of the smartphone category over other phones and new applications, the sensor industry for cellphones and tablets is expected to grow at a 9.5% compound annual growth rate (CAGR) from 2015-2021. The market was worth US$12B in 2015, and will reach US$21B by 2021.
The sensor offering has never been so diverse. The list includes: Accelerometers, gyroscopes, gyroscope for optical image stabilization (OIS), magnetometers, e-compasses, inertial measurement units (IMUs), including nine degree-of-freedom (9DOF) IMUs, microphones, pressure sensors, humidity and temperature (H&T), gas, ambient light sensors (ALS), proximity, red/green/blue (RGB) color sensors, heart rate monitors (HRMs), laser rangers, 3D cameras, CMOS image sensors (CISs), fingerprint and iris recognition. Makers of all such sensors need to stay at the cutting edge of innovation. In this report, we’ve analyzed and forecasted evolution of those sensors integrated in current smartphones, distributed in three different categories: the motion sensing hub, the environmental hub and the optical hub.
Each of these hubs has its own dynamics. The inertial hub groups accelerometer, gyroscope, magnetometer and IMU, and is experiencing difficult times. Average selling prices (ASPs) are low and IMUs are becoming increasingly integrated, at the expense of discrete sensors. Due to very high cost pressure, inertial sensors have entered a commoditization phase, leading to increasing volumes of low-value sensors being sold. This brings flat revenues and strong competition. Main players like STMicroelectronics, Bosch, and InvenSense are now introducing intelligent sensors to add more value with a microcontroller unit (MCU) embedding sensor fusion algorithms. However, this requires significant investments and change in strategy, including very close collaboration with phone- and tablet-producing OEMs.
The environmental hub groups microphone, pressure and gas sensors. It should see a healthy 7.6% CAGR. MEMS microphones, pressure sensors and gas sensors combined will make a market will worth US$1.5B by 2020. Thanks to new approaches in microphones, with piezoMEMS technology, and emerging gas sensors, the environmental hub will have an exciting and bright future.
Finally, the optical hub represents US$9.5B market value in 2015, reaching US$17.6B by 2020 at an impressive 10.9% CAGR. This hub combines ambient light sensors, proximity, RGB, biosensors, laser rangers, CIS, fingerprint, iris and 3D cameras. Yes - 3D cameras.
We believe than 3D cameras will be a game-changer in the smartphone industry in coming months and years. 3D cameras are low-cost sensors that can enable the growth of a long list of applications. For example, we think that by leveraging 3D sensing technology it is now possible to transform the live video call experience of Facetime and other Skype lookalikes. Being able to remove the background, create avatars, to look into the eyes of the caller while eventually using a VR headset has the potential to be truly transformative.
Times are changing for cellphones and tablets
After long years of one-on-one combat between Apple and Samsung, the smartphone market is entering into a three-way fight, now involving the Chinese competitor, Huawei. Looking back three years, the two well-known smartphone giants shared 450M units per year. Huawei sold more than 100M units in 2015 and is expected to sell even more this year. Yet the two leaders combined still sold more than 530M units in 2015. Despite an overall market of 1.36B units, growing 3.3% in 2015, the cellphone and tablet market is experiencing difficult times. The insane growth rates of recent years have gone, giving way to more reasonable rates, which are declining year-over-year. This is due to market saturation, a slowing Chinese economy, and a decreasing interest in renewing well-aging smartphones. The tablet market is seeking a second wind, with growth opportunities in the professional segment, transforming itself to compete with the threatening tablet PC and phablet markets.
Yole Développement expects 1.4% cellphone market value CAGR between 2015 and 2021 and, reaching $434B by 2017. We would be not surprised to see Apple lose its second place to Huawei within four years and also predict that by 2017 seven out of ten of the largest cellphone manufacturers will be Chinese-based.
This three-way fight has led sensor makers to stay innovative, deliver new sensors or functionalities with sensor fusion. Behind the top three players, many other OEMs, such as Oppo, Xiaomi, ZTE, and Vivo, practice a low-cost strategy. Yet they are still very innovative, requiring more sensors and pushing performance, packaging and cost boundaries. While every OEM claims that sensors are mandatory, they are also an opportunity to differentiate their products and offer an alternative value proposition. Looking closely, we recently observed changes with Chinese players now ready to take the lead in the innovation. For example, Huawei launched a dual rear camera, and Oppo integrated a new OIS stabilization design. All of this is a consequence of large investments done a few years ago. Thanks to their growing experience, a large pool of customers and, of course, money, combined with innovation centers established in the Silicon Valley, and a large pool of suppliers to build their products, their innovation is faster and more independent than ever. Today, the real question is: Which technology or sensor could today give a key advantage over the competition by opening new applications and boosting sales? Here, we propose some insights.
Heading for fingerprint, 3D imaging and improved sound input
In this report, you will find detailed roadmaps of volume, value and technology evolution of current and future sensors. We comprehensively cover different sensors embedded in recent smartphones, and highlight sensors with strong potential. Among the rich offering, we believe that capacitive or piezoelectric micromachined ultrasonic transducer (pMUT)-based fingerprint technology, 3D cameras, and microphone sensors are the most likely to evolve and grow in the next 5 years. There are also opportunities for new products like gas sensors, infra-red (IR) or multispectral imaging to penetrate the market, standing out from the competition and offering a better value proposition in fragmented markets. All of this will potentially lead to a reordering of the major players in the sensor market.
Objectives of the Report
Characterization and analysis of the cellphone and tablet landscape:
- Determination of the applications range
- Market and technology evolution
- Market trends and forecasts
- Key players at application and system levels
Analysis and description of the sensor technologies involved:
- Sensor forecast by application and technology
- Major global actors
- Technology trends
- Main drivers and challenges
- Updated market landscape and forecast 2015-2021
- Accelerometer, gyroscope, gyroscope for OIS, magnetometer, e-compass, IMU, 9DOF, microphone, pressure, H&T, gas, ALS, proximity, RGB, HRM, laser ranger, 3D camera, CIS, fingerprint, iris recognition
- Sensor maker strategies analyzed, broken down into inertial, environmental and optical hubs
- Market trends identified
- Expected challenges and technical roadmap