2013: Beyond CMOS, steady growth and accelerating change across non-mainstream chip markets

By Jean-Christophe Eloy, President & CEO, Yole Développement

Sensors and optoelectronics will continue to grow faster than the mainstream semiconductor market. We currently expect 9%-13% growth in these sectors in 2013, accompanied by rapid changes in technology and  market structures as well, as the specialty markets become increasingly mature. 

MEMS and image sensors will continue to ride the smart phone and tablet wave, while declining LED bulb prices will start to push the technology towards wider adoption. Demand for power electronics will pick up after its 2012 plunge.

We expect the MEMS market to continue its steady double digit growth with an ~9-11% increase to around $12 billion in 2013, driven of course by increasing adoption of the sensors in the expanding smart phone and tablet business. We expect the penetration of accelerometers into mobile phones and tablets will approach 65% by the end of 2013, with magnetometers nearing 54% and gyroscopes flirting with 34%. Growth will begin to transition from discrete sensors to combinations of two sensors in one package with a single ASIC to reduce costs, and to increasingly sophisticated software solutions that translate the sensor data into usable functions.  These trends are driving changes in the competitive landscape, with a crowd of new players targeting the key 3-axis gyroscope market, others introducing other new MEMS applications for the mobile market, chipset and software suppliers taking over the sensor management tasks, and a diversification of business models as the industry evolves. Healthy increases in the smart phone applications—and in other consumer products increasingly enabled by these low cost, easy to integrate product—will be somewhat countered by slower growth in mature TV and printer applications.

The smart phone and tablet market is also driving healthy growth in CMOS image sensors.  We expect ~11-13% growth to $7.5B in 2013.  Backside illumination and 3D wafer-level packaging technologies will continue to rapidly gain market share, and new stacked sensor architectures will likely follow soon.  These technological changes are bringing changing business models as well, as IDMs who are not vertically integrated up through the systems level will increasingly turn to outsourcing production to foundries. 

In the high brightness LED market, the TV backlighting market has slowed and the solid state lighting market has yet to really take off, but we still expect respectable ~10% growth for packaged LED devices in 2013, as rapidly improving technology, and an excess supply of devices from the backlight side, will drive down LED bulb prices to start to drive wider adoption. We expect LED penetration of the lighting market across all segments  (residential, industrial, outdoor and commercial) to reach about 8% of all lamps sold in 2013, to occupy about 2% of all lamp sockets. As in most of these non CMOS chip sectors, however, demand for more die doesn’t necessarily translate into demand for more manufacturing equipment.  We expect sales of front end equipment in 2013 to recover about 30% from its 2012 dropoff, but not back to peak levels of the boom years. Companies will start adding capacity again in the second half of the year for the ramp up in wafer area needed for the volume lighting market.  But some of that capacity will come from stronger producers acquiring struggling suppliers and their underutilized equipment.

We expect recovering demand for discrete power devices to drive ~10%  growth in power electronics to some $20 billion in 2013, after what we estimate was a ~20% drop  in 2012 as China cut back on its big investments in railroad, solar power and wind power systems.  Going forward, green tech demand from hybrid/electric vehicles, wind and PV systems should again help spur sales in 2014-2015, and then support stable 6%-7% long term growth after 2016. 

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