Micron Technology Inc., the world's largest supplier of CMOS image sensors, could be in the process of spinning off that business amid a slump in the sector, according to recent reports.

It's also been a topsy-turvy period for OmniVision, Samsung, STMicroelectronics, Toshiba and other suppliers in the CMOS image sensor arena.

"The first half of 2007 has been a disaster for CMOS image sensor suppliers," said Robert Lineback, an analyst with IC Insights Inc. "This is mostly due to the decline of orders from the cellular phone segment. This correction continued in the second quarter, but market conditions should improve in the second half of 2007."

In 2006, CMOS image sensor sales totaled $4.2 billion, up more than 30 percent from about $3.2 billon in 2005, according to IC Insights. The current outlook for CMOS image sensors is for only 4 percent growth in 2007 to $3.4 billion, after a year-over-year decline in the first half of this year, according to the firm.

Overall, worldwide revenues for image sensors -- including both CCDs and CMOS image products -- fell about 4 percent in the first six months of 2007, according to the firm.

"CCD sales have been down just slightly compared to the steeper drop in CMOS imagers, which have been clobbered with lower unit volumes and the erosion of average selling prices (ASPs) in the first two quarters this year," Lineback said. "Both CCD and CMOS image sensor segments are expected to improve in the Q3 and 4Q periods."

There is a bigger issue for CMOS image sensors: the sector is generally becoming mature, said Stephen Marlow, executive vice president for Toshiba's U.S. chip unit, Toshiba America Electronics Components Inc. (Irvine, Calif.).

"What is the penetration rate for cameras in cell phones? It's pretty saturated," he said. Still, Toshiba plans to expand its production of CMOS image sensors, as the company claims to have generated design wins at four of the top five cellular phone vendors.

Compounding the problem are some transitional issues in the market. "One major problem facing CMOS imager suppliers has been the slower-than-expected migration to higher resolution embedded cameras in handsets," IC Insights' Lineback said.

"VGA imagers continued to hold the largest share in camera phones through most of 2006, with 1.3-megapixel devices pulling even early this year," he said. "Our projection shows 1.3-Mpixel CMOS imagers holding a 50 percent share in camera phones, but VGA will still account for about 35 percent of the sales. Persistently high unit volumes for VGA cameras phones have pushed down ASPs in the entire handset arena."

Other applications are growing slower than expected. The vast majority of digital still cameras still use CCD image sensors despite significant improvements being made in CMOS picture quality and device integration. "We don't see a crossover between CMOS and CCDs in digital still cameras until 2009," Lineback said.

"Therefore, CMOS image sensor makers continue to fight for new embedded camera applications in automotive, video security systems, Webcams in notebook PCs, and medical applications," he said. "With digital still camera unit growth overall slowing from the torrid pace earlier this decade -- due to market saturation -- these other image sensor applications will be needed to maintain average CMOS-imager sale growth rates in the 16 percent CAGR range between 2006 and 2011."