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MEMS market profitability lies in data, not hardware

Posted: 01 Oct 2015 ?? ?Print Version ?Bookmark and Share

Keywords:InvenSense? MEMS? Yole Developpement? sensor? IoT?

The CEO of fabless MEMS company InvenSense Inc., Behrooz Abdi, has expressed that MEMS sensor component companies should offer complete IoT application solutions including data analytics. The reason for this is that the price of MEMS sensor components is expected to decline rapidly and largest part of the value is perceived to be in the services that can be based on the data acquired by those sensors.

"Yes the value is the data rather than the hardware," said Abdi. "We do plan to bring end-to-end solutions to market in multiple vertical markets," he stated at the European MEMS Summit. "It requires a lot of investment but we have to take this chance and try. Otherwise it's a race to the bottom."

The bad and the ugly

Abdi portrayed the issue as "the good, the bad and the ugly" of MEMS. The good is that there are plenty of predictions of strong CAGRs for unit shipments. In 2016 this could produce 16 billion shipments of MEMS units with an average selling price of $1, Abdi said.

Behrooz Abdi

Behrooz Abdi

The bad, Abdi said, is severe price erosion in all the significant MEMS product categories including: inertial combos, microphones, gyroscopes, oscillators and RF MEMS.

The ugly is that while semiconductors overall and MEMS in particular are forecast to have 2010-2020 CAGRs of less than 10 per cent, the IoT equipment based on those semiconductors and MEMS are set to have a CAGR of between 30 and 60 per cent.

"Our industry is creating such a lot of value but it's all getting sucked up somewhere else," Abdi said. Abdi flashed a slide showing that by 2020 a $1.4 trillion industry would be supported by a MEMS sensors market that would only register a few billion dollars. According to Yole Developpement estimates, the annual MEMS market will be worth $20 billion in 2020.

"Google is going to become a phone operator, laying down cable, selling phones. The Android phone is a collection of sensors. Android is a portal for making money on the data the service operator collects."

Abdi added: "But ambient computing is necessary. You can't clog up the bandwidth with raw data." There needs to be local processing as well as processing on the edge of the network and in the cloud, Abdi said. "And that's an opportunity."

IoT revenue

IoT revenue in billions of dollars by point in value chain. Source: GSA, McKinsey, IHS, InvenSense

Fragmentation can hinder and help

Abdi said that fragmentation of the IoT market was also a double-edged sword. On the negative side because of the fragmentation and one product, one process, limitations of MEMS, it can take a long time to develop novel sensors. "By the time you hit the market the price erosion is killing you. Hence startups going bust," he said.

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