China has become a global powerhouse for manufacturing every imaginable kind of product -- from motherboards, smartphones, and PCs to textiles and toys. But what of MEMS in China?
I recently traveled to Shanghai, and did my level best to explore that question while taking a closer peek into the Chinese MEMS industry. I was definitely impressed. Though the current MEMS industry in China is at a nascent stage -- and there are only a few players on the field (including SMIC and MEMSIC) -- the seeds are being planted for a fruitful future.
What struck me the most when I went to Shanghai is the energy of entrepreneurism. I saw it everywhere: There are the vendors in the French Concession where you can find competitors selling hand-painted scarves just doors away from each other. Competitive differentiation came in the form of each seller showcasing their advantage/uniqueness either in price or in quality. I could see the wheels churning as sellers realized that folks (in this case, foreign as well as domestic tourists) were willing to pay big money for high quality.
Soon the same will be true for MEMS in China. There are several initiatives currently underway in China to catapult the current MEMS industry into the world arena. While we now have the dominance of ST and Bosch as they battle for the number one spot in MEMS, itís just like in any horse race: You gotta look out for the competitor who is sneaking up from the outside. Bosch and ST have benefitted from a mature supply chain that they have honed and refined to leverage each of their advantages. This fierce competition has driven down the price of MEMS so that revenue-per-device is minimal, compelling suppliers to make profit in the margins.
What I see happening in China is that there is and will continue to be a huge influx of government dollars into initiatives focused on the Internet of Things (IoT). And since MEMS is a cornerstone of IoT, China is now heavily investing in MEMS and especially, into its supply chain. China is investing in MEMS to build up its industrial capabilities, to build a domestic supply base for domestic demand, and to maintain its competitiveness on the worldwide stage. The lessons of the past five years (theyíve been watching and learning from all of our mistakes) has taught the Chinese that you canít just take IC fabs and magically turn them into MEMS. For MEMS, the knowledge base (and learning curve) is different, the expertise is different, and the path from idea to volume production is different. China is now turning its attention to the infrastructure pieces that are vital to a healthy industry, and this is what gives so much weight to their efforts.
I did a full-bunny-suit tour of a MEMS manufacturer in China and was blown away by the masses of people in their 100,000-sq-ft fab. And not just tons of people (seemingly), but lots of IC and MEMS equipment nestled up against each other, competing for space. I have never seen anything like it in my life.
What will this mean for MEMS? Clearly it means a continued uptick in its current double-digit growth. It also means that with Chinaís plan to invest billions of dollars in MEMS, advanced sensors, new materials, green tech, and IoT (through organizations like SIMIT) -- the rest of the world better pay attention. They are investing in the people and the infrastructure that will make the Chinese MEMS industry competitive in the world economy. And yes -- with hopes of being the best.