The rise of China's MEMS is inevitable

According to Yole, a well-known analyst firm, 2021 will be an extraordinary year for MEMS. First, driven by continued sensing in consumer and automotive applications, as well as advances in medical and industrial end markets and related applications, the MEMS market Second, ASPs for some MEMS devices, such as inertial and pressure MEMS, increased slightly in 2021 due to chip shortages and global distribution issues, creating additional revenue growth for the market.

Globally, MEMS makers' revenue increased 17% year over year, from $11.5 billion in 2020 to about $136B in 2021, according to Yole Intelligence senior technology and market analyst. Is this revenue related to primary packaged MEMS devices? Sold by IDMs and fabless companies to OEMs/integrators, but also includes revenue from MEMS foundries.

Who is supporting and profiting from current and future growth? Of course, it's mostly the established players in the top 10, which, as the chart above shows, haven't changed much over the past few years: Bosch, Broadcom, STMicroelectronics, Qorvo, TDK, Goertek, Texas Instruments, HP, UK Feiling, Knowles Electronics, etc. But let's not forget the long tail of other smaller specialist MEMS players, which are also expected to grow due to emerging MEMS devices and applications. These include SiTime, USound, xMEMS, OQmented, Sensirion and more...

Of the total revenue, $570 million in 2020 and $690 million in 2021 came from players that provide foundry services to fabless companies and IDMs that cannot do 100% of their sensor manufacturing in-house. Until a few years ago, top MEMS foundries had little revenue (usually less than $60 million). Now, MEMS foundries are reaping the benefits with strong revenue growth as new companies' interest in outsourcing MEMS manufacturing continues to emerge. Silex, Teledyne MEMS and TSMC fall into this category.

With the unprecedented demand for MEMS sensors, MEMS manufacturers are currently investing in new production plants: Bosch, SilTerra, Silan Microelectronics (160kwpy), FormFactor... However, with the shortage of chips, increasing production capacity is the current general trend in the semiconductor field, The equipment market is completely saturated, with high equipment prices and lead times of more than 15 months.

Acquiring MEMS businesses from other companies has also become an option. Analysts at Yole Intelligence cited several important examples: Silex acquired Elmos' 200mm wafer production line, Mitsumi acquired Omron's MEMS business... At the same time, Bosch announced the construction of a 300mm MEMS production line that will open in 2026, to consolidate its leading position.

Emerging Application Trends of MEMS

MEMS sensors and actuators are part of everyday life and are found in systems ranging from smartphones to cars to fighter jets. MEMS is experiencing an unprecedented period of growth, reaching $13.5 billion in 2021 (up from $22.5 billion in 2020), effectively growing +17% y/y in 2020-21 after +10% y/y growth in 2019-20. The market is expected to cross the $22 billion mark in five years, growing at a compound annual growth rate of about 9% between 2021 and 2027.

The main growth comes from traditional MEMS devices (microphone, RF, inertial, optical), which are used in wearables and hearables (especially sensor-packaged TWS), 5G smartphones, ADAS, industrial monitoring and many other applications . Nonetheless, future growth prospects for emerging devices (now small markets) such as gas sensors for air quality monitoring and ultrasonic MEMS for haptics and medical imaging, where much hyped is MEMS timing/oscillators and tiny speakers . Both have the potential to replace decades-old technologies, and they're on the right track.

To support future growth, there is no shortage of financial movements and developments related to various MEMS. Numerous fundraisers at various stages across multiple target devices and applications totaling over $700 million: OQmented for Optical MEMS, Vesper for Piezo Microphones, xMEMS, Usound and SonicEdge for MEMS Micro Speakers… …new technologies and equipment are still attracting buyers, and the number of mergers and acquisitions is still increasing: Arioso by Bosch, Sensonor by Safran, Resonant by Murata… In addition, collaborations help companies develop new promising markets: TriLite with Dispelix, LaSAR Alliance, AudioPixels and Earth Mountain, ETC…

Finally, as a force to be reckoned with, Chinese MEMS manufacturers have grown rapidly in the past few years, with multiple IPOs (Goermicro - IPO to be finalize, MEMSensing, Novosense...) and financing (Sappland, EpicMEMS, MEMSonics, Hypernano, Beijing Zhixin Tech , ZITN, GWIC…) The focus area of Chinese companies is radio frequency (BAW equipment), which is urgently needed in the future of 5G in China. By attracting as many customers as possible and improving their sensor performance, China's growing influence in the future MEMS market seems inevitable.

MEMS sensor manufacturers are trying to move out of the product commoditization cycle and move up the value chain by adding software, processing and computing power to MEMS sensors to provide them with additional functionality and added value. Clearly a path is being formed by major MEMS manufacturers including preprocessing and sensor fusion (TDK Invensense, Bosch, STMicroelectronics, Melexis, etc.) and AI/ML/DL at/on/in the edge (Bosch, STMicroelectronics, Aspinity w/ Infineon , Syntiant w/ Infineon, etc.). Related products include ISPU from STMicroelectronics, BHI260AP and BME688 from Bosch, etc...

The continued shift in some applications from traditional ("dumb") sensors to next-generation (smarter sensors) is bringing lost value back to sensor manufacturers through future applications and enhanced user experiences that support end customers. End user, this inevitably has to do with data insights and analysis from sensor data!

But what should we expect in 2022 and beyond? Right now, then, the market is driven by three forces:

1. Strong demand for MEMS, with some MEMS foundries already on schedule to the end of 2023.

2. Higher operating costs due to the current microeconomic and macroeconomic situation, resulting in lower profit margins, resulting in an increase in the average selling price of certain MEMS devices.

3. Future inventory glut caused by integrators hoarding chips, including MEMS, could lead to sluggish MEMS vendor activity in 2023 and beyond.

So, the message to the evolving MEMS industry players: tread carefully.