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10 Apr 2006
Once again, an image sensor developer benefits from the global market's insatiable demand for higher resolution cameras in mobile handsets. Beyond the sales figures, optics.org asks OVT about the factors driving this sector.
OmniVision Technologies (OVT), Sunnyvale, CA, US, a developer of CMOS image sensors, has reported record financial results for its fiscal third quarter of 2006, to 31 January. Revenue for the quarter was a record $137 million, up from $127 million the previous quarter, and up 34% on the same period in 2005.
Revenue for the first nine months of fiscal 2006 was $360 million, compared with $285 million for the same period in 2005, a rise of 26%. These sales generated a net income of $67 million, a rise of 13% on last year's equivalent. OVT's largest market continues to be the mobile handset market; the company's range of image sensors designed specifically for camera phones has clearly benefited from the overall strength of this market.
Q3 2006 saw OmniVision increase its range of product shipments to multiple leading toy and video game console vendors. The company also began shipping to top-tier automotive parts suppliers, reaching a new market that the company anticipates will continue to grow through 2006 and beyond.
"We are pleased that OmniVision has delivered another quarter of revenue and earnings growth," said Shaw Hong, OmniVision's president and CEO. "Favorable market conditions, especially in mobile handsets, have helped us to achieve strong earnings growth."
"Looking ahead, we believe that our recent significant design wins will provide additional opportunities for us in the second half of 2006," continued Hong. "Beginning in the July quarter, our new 2.0M pixel sensor will begin shipping in volume to large handset clients and we anticipate significant demand for our ultra-thin VGA and 1.3M pixel sensors."
Based on current trends, OmniVision expects this year's fiscal fourth quarter revenue will be in the range of $120-$130 million and diluted earnings will be in the range of $0.35-$0.40 per share.
Handsets: the market is calling
"The majority - 75% - of our revenue comes from the phone handset market," says OVT's investor relations director Steven Horwitz. "About 10% comes from the digital stills camera sector and the remaining 15% from a range of markets including security and surveillance, automotive, toys and games and PC/laptops. However, we believe cell phones will continue to be the dominant market and our biggest revenue generator."
The company says the strength of its key market is based on growing demand for more sophisticated handsets. "Approximately 800 million handsets were sold in 2005 and about 50% of these had built-in cameras," says Horwitz. "In 2006, the market expects the total figure to rise to 900 million handsets, of which 55 to 58% will feature a built-in camera."
Another reason for OmniVision's extended spell of success is the handset market's increasing demand for higher resolution cameras. "Our VGA sensors [640x480 pixels and 256 colours] have typically represented a higher percentage of our product mix for the handset market, but during the fiscal third quarter we experienced a surge in sales of our 1.3M pixel sensors. We expect that the 2.0M pixel sensors will enter the mainstream in the second half of 2006."
One of the main reasons for the entrance of the 2.0M pixel sensors into the market is that they are available as 1/4inch modules. This form factor has become the de facto standard for sensors hitting the mainstream, Horwizt says, "simply because of real estate issues."
"We believe that 2.0M pixel performance at a 1/4inch size will really push such chips into this expanding market by providing handset manufacturers with a clean upgrade path from 1.3M pixel sensors. The 2.0M pixel module is exactly the same size as the 1.3M pixel module, allowing the manufacturers to keep the same board layout."
Horwitz cites another factor behind the popularity of the hi-res phone camera. "This market is most likely to pick up fastest in the large territories where people often do not have a standalone stills cameras of any type, such as in the developing Asian markets," he says.
Other CMOS sensor markets
Prior to the handset market taking off, OVT says it had enjoyed significant success in the digital stills camera market with its 3.0M to 5.0M pixel sensors. But that sector is not growing that fast any more, according to Horwitz. An exciting part of the camera market place now is in security and surveillance applications, which includes consumer devices such as "nanny cams" and commercial systems such as closed circuit television for apartments, gated communities and public transport.
While OVT has predominantly played in the consumer devices field, the company believes it can now increase its CMOS image sensor sales in commercial systems. Horwitz explains, "Overall, we can provide a more cost-effective solution than the CCD sensors currently used in commercial systems without compromising quality. CCD imaging sensors require four chips in silicon - image sensor; converter; amplifier; and signal processor - which we can do in just one integrated CMOS chip. Moreover CMOS is inherently easier to mass produce."
OVT has also started realising revenues from the automotive sector, such as with Hella the German vehicle component manufacturer. Applications here include rear-view camera systems which project on to the sat-nav screen; lane departure warning systems; rain sensors, auto-light dimmers; smart airbags; and camera system replacements for side-view mirrors.
A new vehicle market opportunity will arise in 2007, when a new EU standard will require all trucks and buses to have 360-degree visibility. Horwitz expects that this will mean at least eight vision sensors will need to be fitted around such vehicles - two on each side, front and back.
If this particular expectation comes to pass, it will undoubtedly mean a lot more sensor sales.
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