Chip makers get moving with motion sensing chips
TAIPEI (Reuters) - Chip makers are convinced of the potential for motion sensing chips in portable gadgets, thanks to the success of Nintendo's Wii game consoles and Apple's iPhones.
The market for micro-electro-mechanical systems (MEMS) devices, which detect motion using acceleration sensors, could reach $7.3 billion this year and $11 billion by 2011, Taiwan chip maker TSMC has said, quoting independent research.
Sony Corp has also entered the motion chip market with its egg-shaped Rolly MP3 player, which lets users adjust volume by turning the player in their hand.
The chips work by incorporating tiny gyroscopes and accelerometers, which detect magnitude and direction of acceleration, allowing the Apple iPhone to spin a displayed photo and gamers to play by waving a controller attached to their Wii consoles.
MEMS chips, currently produced by the likes of STMicroelectronics, which supplies Apple and Nintendo, Freescale, Texas Instruments and Hewlett-Packard, came to the mass market in devices such as airbags.
In dollar terms, the MEMS market is still relatively small for firms that generate billions of dollars in revenue each year. But potential growth is triple that of the meager 4 percent rise that TSMC projected for the entire $280 billion semiconductor market this year.
But with chip manufacturers facing a downturn in demand for memory and logic chips, the growing use of motion sensing devices in mass market gadgets, such as phones and music players, offers a chance to boost sales.
At its annual technology symposium in May, Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world's top contract chip maker, featured MEMS as among the most promising new technologies.
"TSMC sat on the sidelines for several years but now appears convinced that MEMS is ready for prime time with consumer electronics and mobile applications," iSuppli analyst Richard Dixon said.
"Following iPhone's lead, which put motion sensing to the core of the stunning display, we expect to see (MEMS) mobile phones rapidly expand as manufacturers scramble to differentiate with similar functions."
TSMC, which has started making MEMS chips for Analog Devices , could see the business make up 10 percent of its total sales this year, with the ratio growing to 20 percent in the next 2-3 years, Taiwan's Topology Research said.
Rival United Microelectronics Corp (UMC) is also reportedly preparing to supply similar chips later this year or next, although the company declined to comment.
MEMS suppliers that traditionally made most of their revenue in the automotive sector have reached the limits of capacity, and many have chosen either to upgrade their manufacturing technology, like STMicro or Freescale, or to subcontract out production, iSuppli's Dixon said.
Global sales for MEMS sensors used in automotive electronic stability control (ESC), which helps steering control while turning sharp corners, is set to nearly double from 2006 to 2012, fuelled by a U.S. mandate requiring the technology in all vehicles weighing less than 10,000 pounds by 2012, iSuppli said.
That is a powerful incentive for sector specialists like VTI Technologies, Robert Bosch and Japan's car parts maker Omron
"Sensing and controlling technologies are the backbone of our businesses," said an Omron spokeswoman. "We expect MEMS can further fortify those strengths of ours."
Other new MEMS applications are also on the drawing board.
When someone drops a laptop or an electronic device with a hard drive, for example, a MEMS chip could tell the disk control to potentially save data before the device hits the ground.
Despite its potential, the MEMS market is still very fragmented in terms of products and integration of sensors and control electronics into one chip. More standardization will be crucial to the market's future success, analysts said.
"There's been a rule for MEMS, that is, one product and one process," Topology analyst Amigo Liu said.
"There is no one common platform, but bigger foundries like TSMC are trying to establish the platform," he said. "If more design houses join them to develop, we will see rapid growth."
(Additional reporting by Kiyoshi Takenaka in TOKYO)
(Editing by Doug Young and Louise Heavens)