What goes up must come down, even the booming market for micro electromechanical systems (MEMS). Incorporated in automotive and biomedical applications, MEMS have become increasingly popular over the last few years. But now reality has set in. Last week, Jean Christophe Eloy, an analyst for Yole Development, a Paris-based research and consulting firm, revised his estimates downward for the MEMS market through 2011. He believes that an estimated $500 million of business will disappear in 2008 and $1.5 billion in 2009. He specifically linked a chunk of the revised estimates to the economic challenges facing the U.S. automotive industry.
“It is very clear that the current economic crisis is already having a strong impact on the automotive business,” Eloy said in a November 28th webcast. “The fragile players with limited cash will be severely impacted,” Eloy said. “Most planned investments for 2009 are cancelled or postponed at the moment, with no vision on when they will restart.” As such, he believes the MEMS automotive business will remain flat in 2008 compared to 2007.
For example, he noted that Yole anticipated unit sales of 238 million pressure sensors and 224 million accelerometers in 2008. Those numbers have been downgraded to 204 million pressure sensors and 166 million accelerometers in 2008 and 190 million pressure sensors and 157million accelerometers in 2009. The impact on the consumer business is less clear, Eloy said, adding that Yole is currently working on a new forecast for that specific market.
Eloy believes that Christmas inventories have already been manufactured and shipped, along with some Q1 orders as well. “With an expected drop in sales for the Christmas period, inventories will grow resulting in a slow start for 2009,” he said. “Yole expects that consumer-related MEMS sales in 2008 will reach $3.26 billion compared to an expected $ 3.6 billion.” That represents 8% growth rather than the 16% growth previously expected. Eloy also believes that revenues from the use of MEMS in telecom will decrease as well, what “with Nokia announcing that it will miss its 2008 target with 1.24 billion mobile phones instead of 1.26 billion units. Even if innovation and new products will keep a good level of activity, the slowdown will certainly affect the volumes and could impact prices.”
The future, Eloy added, is brighter. He believes that the MEMS business will be able to recover between now and 2012 to reach $15 billion to $16 billion worldwide. “The number of new applications remains very important. These are mainly gaining market share on existing technologies, bringing lower costs, more integration, more and new functions. As always in a downturn, the winners at the end will be the companies that have been able to invest in innovative devices, deliver new functions and new applications. The race for innovation will just increase.”
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