First smartphones, and new low-cost cores widen commercial markets and pave the way for consumer applications
EXISTING COMMERCIAL APPLICATIONS AND NEW CONSUMER APPLICATIONS WILL DRIVE MARKET GROWTH
After its first significant downturn in 2012, the Uncooled Thermal Camera market continued to decline in 2013 (-5%), plumbed by the ever shrinking military market (-15% revenues in 2013) which is the historical and most profitable business for uncooled infrared. Nevertheless, 2013 overall sales in total shipments have surged again (+15%) because of the dynamic commercial market where sales have grown by +24%.
For the next several years, thermal camera shipments will continue to grow rapidly, at +25% CAGR in volume between 2014 and 2019 to reach more than 1.4 M. Shipments will be driven by the existing commercial markets which are expanding quickly:
- Thermography: the market will be driven by ultra-low-end cameras with very attractive pricing (below $1000) that widen the audience of thermal technology. Leaders FLIR and Fluke have added many new models in 2013-2014 and will continue to lead the price war due to their vertical business model.
- Automotive: Autoliv, the market leader, will continue to introduce its Night vision 3rd generation on new car models. New EuroNCAP tests could boost the market by promoting, in 2018, night time pedestrian collision mitigation solutions potentially using a thermal solution, but only if the cost is sufficiently low.
- Surveillance: new visible CCTV players have entered the market recently (Panasonic, Mobotix) and will participate in thermal technology democratization. Price erosion will continue (-12%/year) and will enlarge the scope of commercial applications like traffic, parking, and power stations.
Those 3 markets are analyzed in detail in the report (more than 20 slides/application).
Consumer applications have moved to a new phase of growth in 2013-2014 and will be the high growth applications over the next few years, especially in terms of shipments (+61% CAGR):
- Personal Vision Systems (goggles, sight for security, hunting, outdoor observation): first successfully pioneered by FLIR and will continue to grow due to many new entrants arriving from the outdoor visible business.
- Smartphones: First smartphone modules (FLIR One, Opgal Android) have been introduced at the ground breaking price of $349 by FLIR in 2014. A high number of pre-release reservations for the FLIR One (> 30k units) already proves the commercial success of this smartphone platform.
An additional scenario (see illustration) envisions an aggressive rapid ramp up of the smartphone application based on a huge price erosion and the integration of the IR core inside the phone. Indeed, smartphone business is an almost 1 B units market in 2013, and any new sensor adopted induces high volumes produced. Those high volumes will only be possible if a huge cost reduction is obtained by the IR imaging industry.
TECHNOLOGICAL EVOLUTIONS KEEP DRIVING MANUFACTURING COSTS DOWN
Technological innovation is a key to significant price decline in infrared imaging. In 2013 and 2014, innovation has been focused on camera cores introduced by key players like FLIR, ULIS (with Sofradir EC collaboration), BAE, and also new entrant Heimann/Bosch. Several trends identified by Yole are present in these new cores and will be reinforced over the next few years:
- The first major trend is to move to wafer level manufacturing of both imager and optics to maximize the benefits of high-volume manufacturing and increase economies of scale. Wafer Level Packaging (WLP) is used by FLIR and Bosch, and Wafer Level Optics (WLO) are used by FLIR.
- Secondly, decreasing the sensor die size is another cost reduction factor. As a consequence, a race toward shrinking pixel pitch is ongoing with BAE being the first to introduce a 12µm pixel architecture. All key players are working on this pixel size and 6 microns will be the next step on the roadmap.
- Third trend is the need for low-cost & low-resolution sensors. Low-cost technologies such as pyroelectrics, thermodiodes or thermopiles are increasingly introduced in the market: pyroelectric from Irisys/Fluke in 2012, thermodiodes from Bosch/Heimann in 2014. Microbolometers are also present with FLIR and ULIS introducing low resolution cores with higher sensitivity than competing technologies.
- Last trend is the Core electronics integration: Core electronics now represent the most voluminous part of a core with bulky PCB boards. FLIR has adopted ASIC chips in its Lepton that significantly reduces the form factor. As the volumes grow, other players will adopt this approach and 3D packaging technologies.
In this report you will find detailed analysis of the status of current and future infrared imaging technologies.
GROWING VOLUMES AND PRICE EROSION INCREASE COST PRESSURE ON SENSOR AND CAMERA MANUFACTURERS: WHAT IS THE BEST STRATEGY TO SURVIVE?
Military market downturn and high price erosion have deeply affected traditional infrared imaging margins for the past few years at both the sensor and the camera level. Low-end applications now drive overall growth, thus requiring much higher cost reduction at both material and manufacturing levels. In addition to technological developments to reduce material costs (see next paragraph), economies of scale have become a key competitive advantage. Thus, FLIR, the market leader, and many players at both sensor and camera levels try to target as many commercial markets as possible to aggregate volumes.
In order to react to the strong price pressure, we see various trends depending on the business models of the companies:
- Vertically integrated players: with internal sensor manufacturing, these companies have an efficient cost structure to lead the price war happening in commercial camera markets: DRS and FLIR in the surveillance market, and FLIR and Fluke (for pyroelectric) in the thermography market. Those camera makers focus on core and camera manufacturing and have outsourced sensor manufacturing to foundries (FLIR, DRS, Raytheon) in order to reduce the sensor cost and benefit from the wafer level techniques of the foundries. Other vertically integrated companies (BAE, L3com and Lumasense ITC) will probably follow this path in the future.
- For sensor merchant suppliers: these players are under pressure because their camera customers can not follow the price war led by vertically integrated manufacturers. In order to maintain their competitiveness in front of the semiconductor foundries used by vertical companies, they have upgraded their production line to 8’’, climbed up in the value chain by providing cores with increased integration, and they have also develop innovative MEMS technologies customized for infrared imaging.
In the report you will find details about business strategies of the key players and supply chain dynamics that will deeply change the competitive landscape and create merger/acquisition opportunities in the next few years.
WHAT IS NEW COMPARED TO LAST EDITION
Latest industry news and analysis of new market entrants and exits.
Summary of mergers & acquisitions over the last 4 years.
More detailed and up-to-date applications analysis
Addition of new sensor segment (ultra-low resolution microbolometers) in the market forecast
2013 estimates of sensor manufacturers’ market share
Updated market forecasts (in $ and units) for the 2013-2019 period
Analysis of core electronics trend
Identification of current technological trends and ongoing developments