MEMS Microphone Will Be Hurt by Downturn in Smartphone Market

Excuse me if I yawn at the announcement that MEMS microphone manufacturer Akustica Inc. has been acquired by Robert Bosch North America and will become part of its MEMS division, Bosch Sensortec GmbH (Reutlingen, Germany).

The company was started in 2001 and has sold over 5 million CMOS microphones for consumer devices like PCs and cell phones.

Competitor Knowles Acoustics, which shipped its first MEMS Microphone two years later, announced that it sold its ONE BILLIONTH microphone this past week. Knowles was acquired by the Dover Corporation (DOV) a few years ago.

So why would Robert Bosch acquire a MEMS microphone company with market share in the noise level with 36 employees, even though it is one of the oldest entrants in the market? X-Fab provides foundry services for Akustica's microphone chips, so Bosch is only buying IP.

Akustica's products employ standard complementary metal oxide (CMOS) semiconductor processes and microelectromechanical systems (MEMS) to fabricate acoustic membranes and other sensor structures in the same chip with analog and digital circuitry.

However, many MEMS manufacturers prefer to use a hybrid approach to make cost-effective devices rather than a pure monolithic method. Often, the MEMS element is on one chip while the signal-conditioning circuitry is on another, usually an ASIC. Interconnecting the two requires a very careful approach to ensure that acceptable yield and reliability levels are achieved.

Clearly Bosch is not positioning itself in the MEMS microphone sector but in Akustika’s patents for integrated CMOS and MEMS technology. With Bosch’s expertise in the MEMS marketplace, we suspect they will be successful in using Akustika’s technology in all of their MEMS sensor applications, which has the potential for reduced size and production cost.

Bosch is the market leader in automotive MEMS, with revenues of $430 million in 2009, double the revenues of its nearest competitor Denso (DNZOY.PK) of Japan. More than 80 percent of Bosch's MEMS production is sold internally to its automotive subsystems for stability control and tire pressure monitoring. In the automotive MEMS market, Bosch also competes against Analog Devices (ADI), Freescale Semiconductor, Infineon (IFX), and VTI of Finland. If the integrated technology can be applied Bosch’s products, it will impact market share of its competitors.

By way of background, we started analyzing the silicon MEMs microphone market in 2003. Since that time the market has grown from 2 million units sold in 2003 to nearly 300 million sold in 2008.

The market, which included initial entrants Knowles Acoustics, Akustika, and Sonion (Denmark), has grown to include Analog Devices, NXP Semiconductors, Wolfson Microelectronics (WLFMF.PK), Freescale Semiconductors, STMicroelectronics (STM), and Infineon. China suppliers entered the market in recent years and include Shangdong Goer Acoustics Technology Co. Ltd, Suzhou MEMSensing Microsystems Co. Ltd., and AAC Acoustic Technologies (Shenzhen) Co. Ltd.


Cellular is the major market for MEMS silicon microphones Handsets with dual MEMS (micro electro-mechanical systems) microphones from the world's top-five handset vendors are expected to hit the market in the first quarter of 2009.

The dual MEMS microphones will enter the handset development design-in stage at all top-tier handset vendors in the third quarter of this year, allowing the vendors to launch handsets at the end of the first quarter, or early in the second quarter, of 2009.

For 2009 we forecast a 5% downturn in the cellphone market, from 1,216 million units in 2008 to 1,156 million units in 2009. The smartphone market, which includes the iPhone, will grow 21% from 175 million units in 2008 to 191 million units in 2009. This sector is the key growth area for the MEMS microphone.

For Q2 2009, (NOK) let the smartphone market with a 44% share, followed by RIM (RIMM) with a 21% share and Apple (AAPL) with nearly a 14% share. Competitors such as Sharp (SHCAY.PK), Fujitsu (FJTSY.PK), and HTC held the other 21%.

Comments

[mollytjm:]

I think you're going to see a bigger jump than that in smartphones, though you're spot on about cellphones in general. I have an iPhone, which i never thought i'd use for games and books, but i do, all the time...and anytime i use it now, someone stops me and says 'i have to get one of those'... and it's all sorts of people of all ages. I've never had this happen with anything else i've ever owned. Pent up demand that has so far been tracked is just the tip of the iceberg. Rim and Apple stocks will do very well and whatever companies supply the parts will go along for the very nice ride.

Aug 24 10:45 AM

[mems8888:]

Ive read several articles on this acquisition....and it seems like all the analysis bought the snow job story from Bosch that they are supposedly only buying Akustica for the CMOS/MEMS integration IP that they can use in their automotive MEMS business. Like they are just going to dump the MEMS mic pursuit when there is a very large upside potential in a new market for them after this acquisition. Seems laughable that nobody is calling Bosch to the carpet on their smoke screen story.

Aug 28 01:10 AM

[ceuser:]

Bosch Sensortec is in consumer market. The single chip vs 2 chip solution is an age old debate in the MEMS industry. Interconnection between these two chips in the semi conductor industry is a no brainer and in fact many companies currently achieve 100% yield. Not 99.9% but 100%. So, clearly the argument of interconnection yield and reliability may appeal to audiences with common sense it clearly does not cut the mustard with the people practicing the trade.

It is very clear that Bosch's intention is to expand their MEMS footprint in the consumer electronics space. It is a private company unencumbered with the wall street's short term focus so that they can focus on long term growth markets like smart phones, laptops etc where the microphone growth is exploding. Bosch's current MEMS products does not enjoy this kind of growth and therefore stating that Bosch bought Akustica to ride their integration technology IP does not make sense at all.

Aug 28 08:07 AM

[softwaresod...:]

It's a obvious matter.

Sep 09 04:01 AM