Scottsdale, Ariz. Although revenues for micro-electro-mechanical systems (MEMS) reached record levels in 2007, aggressive price reductions, legal wrangling, and rising pressure from competitive technologies took their toll on the MEMS industry, according to a new study from Bourne Research LLC. While sales of sensors for industrial automation surged, it wasn't enough to make up for significant revenue shortfalls in other core segments, said the market researcher.
Revenues for MEMS as a whole rose 5.8% in 2007 to $8.6 billion, and the outlook is mixed. Unit shipments of MEMS devices are forecast to increase at a compound annual growth rate (CAGR) of 6.4% through 2012, with revenues forecast to increase at a CAGR of 5.5% during the same period.
"The consumer electronics market, particularly cell phones, is a double-edged sword," said Marlene Bourne, president & principal analyst of Bourne Research, in a statement. "One can't argue with the lure of a billion unit market, and the rush to reduce MEMS prices to ever-lower levels will indeed open the door to more applications, but at what cost?"
Bourne warns that the resulting "commoditization" of MEMS sensors may result in near-term revenue paralysis since unit shipments currently aren't sufficient to offset the lower prices. As a result, many are moving into industrial automation, and the combined use of GPS, RFID and MEMS sensors are projected to find the greatest traction in commercial equipment. Case-in-point: Five of the top ten suppliers of MEMS devices are leaders in industrial sensing, most of whom are missing from other widely publicized rankings, said Bourne.
Another key finding in the 2008 MEMS Forecast report indicates that declines in automotive production, saturation of the consumer ink jet market, and a change in direction for digital TV the three largest revenue streams for MEMS will continue to have a dampening effect on revenue growth for the next few years.
In addition, the shift from televisions to "pico-projectors" is rapidly evolving along with greater competition, and optical networking is making a comeback. RF MEMS may reach a turning point in 2009, but as with microphones, there are inherent business model problems, Bourne said. MEMS suppliers must not dismiss the impact nanomaterials are starting to have on this industry both from a complementary and competitive perspective, she added.
The report also details venture capital funding for 2007; provides a ranking of MEMS suppliers based on actual 2007 revenues, and outlines growth opportunities and challenges over the next five years. The forecast includes unit shipments and revenues by major device category and end-use market through 2012.
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