26 Jun 2007
Record growth in the image sensor market will steady over the next several years, says Strategies Unlimited’s Tom Hausken.
Image sensor sales passed the $6 billion mark in 2006, a jump of more than 30% on 2005, with sales expected to grow by another 14% in 2007, according to a market report from Strategies Unlimited. This market will gradually slow in the next few years, but year-on-year growth will still provide good opportunities for image sensor manufacturers.
”The biggest driver by far is the camera phone application,” Tom Hausken, director of components research at Strategies Unlimited, told optics.org. "This growth has been driven by the convergence of the migration to higher pixel count sensors, the growing penetration of cameras in handsets, on top of wider sales of handsets globally."
Even though camera phones were introduced only seven years ago, well over half of the 1 billion handsets manufactured in 2006 incorporated at least one camera. “That is phenomenal growth," said Hausken.
Sales of digital cameras also continue to exceed sales expectations, while strong growth is expected in security cameras and in digital radiography. Automotive applications are moving slowly but steadily into production, although this segment remains small for now.
"The big buyers are the camera phone makers, such as Nokia, Motorola, Sony Ericsson, Samsung, and LG Electronics, and the mainly Japanese digital camera makers Canon, Nikon, Sony and Kodak," said Hausken. "The biggest suppliers are the traditional CCD makers such as Sony, Sharp, and Matsushita, and larger CMOS array suppliers like Micron, Omnivision, and ST Microelectronics."
About 50 companies currently produce image sensors, but the top five suppliers hold about two-thirds of the total market. Sony and Micron are nearing $1 billion each in annual revenues, while Matsushita and Omnivision are also enjoying sales growth. Because the overall market is also growing, only Sony and Micron also grew in actual market share, while other suppliers saw their market share decline.
The other big trend is towards CMOS image sensors, which now dominate both unit and revenue share, mostly owing to the continued rise of the camera phone market. Micron has shot to the top position in CMOS arrays, with other semiconductor manufacturers such as ST and Samsung also showing strong gains. While CCDs continue to grow in dollar value, there is some consolidation in market share, with the possibility that Sanyo Electric will exit the business.
Other technical innovations are also in the pipeline. “A few of the developments that we are monitoring include 1.4-micron pitch pixels, 90 nm lithography, embedded laptop cameras, wider use of electronics to substitute for optics, and even cameras based on optic flow,” said Hausken.
Stabilization in prospect
Following a sales "peak", which will most likely occur in the 2007-2008 trading period, the sensor market is set to gradually slow in the next several years. "In short, this great run simply can't go on forever," said Hausken.
"There is a limit on how many digital cameras the world will buy in a year, and the market is starting to settle on a range of pixel counts that are appropriate for this category. In camera phones, the point of saturation in both handsets and in camera penetration in handsets is less clear, and it may be spread over many years, but inevitably it will come."
Hausken also believes that companies competing at the low end of the market will face increasing pricing pressure. "Image sensors are not commodities, because each supplier puts a lot of intellectual property into their products," said Hausken. "However, in large-volume applications such as camera phones and optical mice, the price of the chips can be below $1, which makes it difficult for the suppliers of lower end arrays."
"While there is a lot of volume in the lower value arrays, the prices tend to fall and don't rise again. The companies that are under the most pressure are the ones that are trapped at the low end and/or are falling behind in volume," he said.
Image Sensor Market Review and Forecast—2007 is available now from Strategies Unlimited.