Section 6

Mems/Microsystems Market Forecasts and Commercialization Trends

Market Forecasts: NEXUS

NEXUS Forecast: Background and Summary

NEXUS (The Network of Excellence in Multifunctional Microsystems – see Section 3 for a summary of its structure and activities) undertook a major market study for MEMS and microsystems, the results of which were published in fall 1998. The study, which was conducted by staff members from microParts (Reiner Wechsung and Nezih Unal), CEA-LETI (Henning Wicht), and YOLE Developpement (Jean Christophe Eloy) – takes as its point of departure earlier work done at LETI. While the definitions used to define what falls within the domain of MEMS/microsystems are European, the scope of the market survey and forecast are worldwide. In addition to the core team members listed above, consultants to the project participated from CSEM, CEA-LETI, SGT, and microParts.

The time period addressed by the NEXUS market study is 1996 – 2002. The definition of what constitutes a microsystem is broad, and, as it drives the conclusions of the study, is worth quoting at some length:

“Microstructure products have structures in the micron range and have their technical function provided by the shape of the microstructure. Microsystems combine several microcomponents, optimized as an entire system, to provide one or several functions, in many cases including microelectronics.”

The intent of this definition is to cover components and systems. Miniaturization is a must, but while the microelectronic function is an essential feature, as in accelerometers, pressure sensors, etc., in many cases, the combination of a system with an IC is not mandatory. To illustrate, an aerosol particle inhaler is a microsystem without an IC. System integration may be monolithic, hybrid, multichip module (MCM), or other. This broader definition better reflects industrial reality and the large potential of miniaturization (Market Analysis for Microsystems, NEXUS Task Force, p. 24).

Under this NEXUS definition, such device and component types as inkjet printheads and hard disk drive heads qualify as microsystems.

An interesting aspect of the NEXUS study and forecast is that it seeks to project growth for future MEMS and microsystems product types (“emerging” products), as well as to estimate future growth for existing products. Total worldwide market size for MEMS and microsystems in 2002 under the NEXUS definition is estimated at $38.5 billion.

Several of the high-level findings of the NEXUS Task Force study are as follows:

• The total world market for microsystems will increase from $14 billion in 1996 to $38 billion in 2002 (vs. approx. $300 billion for the world semiconductor market).
  
  
• The average annual market growth rate for product types reviewed in the NEXUS study will be 18 percent over this period.
  
  
• The automotive sector was the market driver in the first phase of MEMS commercialization, but has been supplanted by the IT peripherals sector (including HDD read/write heads and inkjet print heads).
  
  
  • – Biomedical applications are predicted to emerge as the next market driver.
    
    
  • – Telecom, mass storage, and display are also expected to grow in importance.
    
    

• Europe’s strength is in hybrid microstructure products where it has a good chance to win a leading position in actuator-enabled applications.
  
  
• A process is underway in Europe of transferring MST technologies from universities and research institutes to industry.

NEXUS Study: Market Estimates and Forecasts

Table 6.1 provides the NEXUS estimates of worldwide market size in 1996 and forecasts for 2002, for existing product types. As indicated, the two leading MEMS/MST product types by sales revenue in 1996 were hard disk drive heads and inkjet printheads, at $4.5 billion and $4.4 billion, respectively. These are followed by a grouping of medical product categories – in vitro diagnostics, heart pacemakers, and hearing aid mechanisms – which taken together total $2.6 billion. Accelerometers, including those used in automotive airbag sensors, which were perhaps the first viable commercial application for MEMS-based devices, represented only $240 million on a revenue basis in 1996.

According to the NEXUS forecasts for existing product types in 2002 (also see Table 6.1), hard disk drive heads and inkjet printheads will extend their predominance, becoming $12.0 billion and $10.0 billion market segments, respectively. The medical product categories of in vitro diagnostics, heart pacemakers, and hearing aid mechanisms are another big winner, moving over the six-year period from $2.6 billion to $8.5 billion, for a 226-percent increase. Accelerometers grow as a product type by 79 percent, but represent only $430 million in annual revenues in 2002.

Table 6.1
MST Markets for Established Product Types
Predicted Market Segment Sizes for 1996 and 2002 (in $US millions): Established Product Types

In the area of emerging MEMS/MST products, the NEXUS Task Force predicts that three product categories will advance from the research stage in 1996 to billion-dollar market segments in 2002. These three are drug delivery systems (microfluidic micro-dosing systems), MEMS-based optical switches, and lab-on-chip devices (for such applications as DNA analysis). Magneto optical drive heads ($500 million) and optical light valves ($300 million) are also predicted to emerge as significant market segments by 2002. See Table 6.2 for further detail on the market estimates and predictions for emerging product categories.

Table 6.2
MST Markets for Emerging Product Types
Predicted Market Segment Sizes for 1996 and 2002 ($US millions): Emerging Product Types

Tables 6.3 and 6.4 provide market estimates and forecasts for the MEMS/MST marketplace for the years 1996 and 2002, respectively, broken down by six industrial application domains: IT peripherals, medical and biochemical, industry and automation, telecommunications, automotive, and environmental monitoring. Given the success of the hard disk read/write head and inkjet printhead product types, the IT peripherals domain is predominant across this time span, with $8.6 billion in 1996 and a prediction of $21.7 billion in revenues for 2002. According to the NEXUS Task Force, however, the medical and biochemical domain will increase very rapidly, moving from approximately $2.8 billion in revenues in 1996 to $10.7 billion in 2002. Also predicted to increase rapidly, albeit at a smaller scale, are telecommunications (increasing from $450 million in 1996 to $2.0 billion in 2002) and environmental monitoring (increasing from $150 million to $800 million). The industry and automation sector shows a more gradual growth rate, increasing from $785 million to $1.6 billion, while automotive products move from $300 million to $860 million.

Table 6.3
MST Markets by Product and App.: 1996
Actual Market Segment Sizes for 1996 (in $US millions) — Existing Products

Table 6.4
MST Markets by Product and App.: 2002
Predicted Market Segment Sizes for 2002 (in $US millions) — Existing and Future Products

The executive summary of the NEXUS report Market Analysis for Microsystems: 1996–2002 is available on the NEXUS Web site at: www.emsto.com/market-analysis/index.html.

Copies of the full report may be ordered through the same source.

Europe: MEMS/MST Commercialization Trends

As in North America, the first wave of successful commercialization of MEMS and microsystems technology in Europe took place in accelerometers and gyroscopes, for applications in the automotive sector and in navigation. European firms such as Bosch, Temic, and Sextant Avionique are major players in these domains. In the second commercialization wave, the emphasis has been on components for what are called “IT peripherals” in the study conducted by the NEXUS Task Force, including principally hard disk drive heads and inkjet print heads. Here, the U.S. and Japan have been the major players, with Europe having a minor presence.

In discussions with the hosts the MCC/WTEC team met in Europe, a frequent concern was expressed that the third wave of MEMS/MST commercialization has not yet taken clear shape, but must be correctly identified when it does.

• There is a high level of expectation among many players in the microsystems arena in Europe – both in industry and in the universities – that medical and bio-medical applications of MEMS will become a dominant growth field. Many of the research institutes we visited are engaged in microfluidics research for such applications as micro-dosing, the mixing and analysis of fluids (such as blood), and DNA testing. In addition to representing a growth field, industry players hope that the medical domain will prove less cost sensitive than, say, automotive.
  
  
• The emergence of fabrication and design centers, such as those being organized through Europractice, begins to make microsystems component technology available to firms which do not have their own in-house capabilities. This will increase the willingness of European industry to consider the integration of MEMS and microsystems into future product lines. The creation of process-specific design kits based on widely used CAD tools is an essential element to making these fabrication facilities capable of meeting industry requirements.
  
  
• In addition to the Europractice infrastructure, a number of start-ups have been established to leverage and rationalize access to existing fabrication capabilities. These new ventures range from Tronics (which emerged from LETI in Grenoble, France), to Auxitrol (which concentrates on sensors, particularly for aerospace applications), to Twente Microproducts in the Netherlands, which provides access to fabrication capabilities at both the Mesa Research Institute and at Philips in Eindoven.
  
  
• There is considerable activity in Europe aimed toward the commercialization of MST-based gyroscopes, particularly for automotive applications such as anti-skid, roll-over prevention, and GPS systems, as well as in stabilization components for cameras. The dominant technology for gyroscopes is silicon micromachining, with aggressive unit price targets between $1 and $20.
  
  
• In certain niche applications where requirements are well defined, there is also considerable progress toward commercial applications. Down-hole sensing in harsh environments such as oil wells would be an example, with Schlumberger a lead user of microsystems technology in this field.
  
  
• Europe is stronger in CMOS-based image sensors than in CCD (charge-coupled device) technology. Leaders in CMOS image sensors are STM/Vision, Thomson Csf, VLSI Vision, and Tower Microelectronics (of Israel). There is also considerable activity in infra-red image sensors.
  
  
• The concept of “modular microsystems” has begun to appear as a mechanism to allow product development groups to initiate work with MEMS or microsystem modules for incorporation into promising applications.

One of the ironies of the commercialization of MEMS and microsystems in Europe, from the perspective of our group, is that some of the largest players with the greatest IC manufacturing capacity – Philips and Siemens for instance – are not pressing aggressively forward with the commercialization of these technologies. It appears that they are rather waiting to see which applications grow most rapidly in commercial markets so that they can then bring their manufacturing capabilities to bear in these areas.