Leading MEMS microphone suppliers ride Apple’s gravy train to the top Once again demonstrating Apple’s power to ordain winners in the electronics supply chain, the top suppliers last year of microelectromechanical systems microphones were those that provided devices for iPhones and iPads. Suppliers that had significant sales to Apple occupied the Top 4 MEMS microphone ranks in 2012, according to an IHS iSuppli MEMS and Sensors Special Report from information and analytics provider IHS. These companies were No. 1 Knowles Electronics from Illinois, AAC of China in second place, Massachusetts-based Analog Devices in the third spot, and Goertek of China in fourth. Together the Top 4 players last year commanded combined revenue of $513 million, equivalent to 88 percent of total MEMS microphone industry revenue of $583 million, as shown in the table below. Apple gets on the mic “Microphones continue to be one of the best success stories in MEMS, with mobile device manufacturers adding increasing numbers of these devices to their phones to support advanced features, such as voice command and noise suppression,” said Jérémie Bouchaud, director and senior principal analyst for MEMS and sensors at IHS. “Multiple microphones now are being adopted in smartphones to cancel ambient sounds—crucial for handsets when carrying out voice command systems, such as Apple’s Siri. Apple has led the way in the adoption of MEMS microphone technology and has steadily added the number of devices used in each of its mobile products, compelling competitors to follow suit.” While midrange to high-end smartphones mostly used two microphones in 2010 and 2011, three microphones are fast becoming standard ever since Apple introduced a third device on the back of the iPhone 5 for high-definition video recording, Bouchaud noted. Noise suppression and voice commands also are seeing increased adoption in tablets and Ultrabooks, resulting in the use of multiple microphones as ultrasonic transducers for hand-gesture commands. Aside from handsets, MEMS microphones are used in other important applications such as headsets, gaming, cameras, televisions and hearing aids. The top suppliers, in a nutshell Knowles continued to dominate the MEMS microphone sphere, outflanking all other suppliers with revenue last year of $291 million—practically half of the industry total. But while it has the most comprehensive product portfolio and ships to virtually every original equipment manufacturer, Knowles has seen its MEMS microphone market share tumble by 16 percentage points from 2011 to 2012 because of erosion in its business with Apple. Knowles is still the first supplier for the iPad mini, but has slipped to second place behind AAC in providing MEMS microphones for the iPhone. Knowles, however, has exerted efforts to remain competitive, reducing the size of its MEMS die and most likely migrating soon to larger wafer sizes from 6 to 8 inches as it engages with new foundry partners. No. 2 and No. 4 AAC and Goertek share similar profiles, both being Chinese electret condenser microphone (ECM) suppliers that now rely almost exclusively on MEMS die technology from Germany’s Infineon Technologies. AAC is the top source for the iPhone and iPad 3 with revenue last year of $98 million, while Goertek is No. 1 for iPhone headsets with $46 million in revenue. Apple was the biggest client in both cases, supplying more than 40 percent of MEMS microphone revenue in 2012 for each company. Third-ranked Analog Devices basked in revenue of approximately $78 million, thanks to its role as lone supplier of the third microphone for the iPhone 5 and the iPad. The company focuses on high-performance parts and sells at significantly higher prices than other suppliers, accounting for its third-place finish overall. Infineon’s strategy Also in a notable development, Infineon has hit upon a successful formula for operating in the market. The German manufacturer focuses only on silicon, developing and then selling MEMS microphone dies as well as application-specific integrated circuits to traditional ECM companies, which then package the chips into MEMS microphones that are sold afterward under their individual brands. Infineon’s customers include AAC and Goertek, as well as two other Top 12 MEMS microphone suppliers—sixth-ranked Hosiden of Japan; and No. 7 BSE of South Korea. STMicroelectronics on the rise Rounding out the Top 5 and becoming a serious challenger last year to the incumbents was French-Italian manufacturer STMicroelectronics, which sold 60 million MEMS microphone units in 2012, up from zero in 2010. Unlike AAC and Goertek that buy their MEMS dies from Infineon, STM sources from Omron Electronics in Japan and also relies on its own application-specific integrated circuit, producing innovatively assembled MEMS microphones that enable a high signal-to-noise ratio. Nokia is STM’s top customer, but STM also supplies product to HTC, Amazon’s Kindle tablet as well as laptops from HP, Dell, Lenovo and Asus. The other ranking suppliers in the Top 12 provided MEMS microphones for a range of other electronic devices made by companies besides Apple. Hosiden supplied to Nintendo handheld game players and Sony handsets; BSE provided for Samsung and LG smartphones; Germany’s Bosch played mostly in the laptop segment for HP and Dell; and Scotland-based Wolfson Microelectronics broke through at the end of last year by supplying to the Microsoft Surface tablet. New kids on the MEMS block The newcomers to watch included a clutch of Chinese companies. Among them were startups NeoMEMS and MEMSensing, as well as ECM manufacturers Gettop, XingGang and Kingstate. Other new entrants of note besides the Chinese included TDK-EPC from Germany, Solid State Systems from Taiwan, and Tokyo-based New Japan Radio. Panasonic of Japan shipped MEMS microphones in 2007 for a limited time like fellow Japanese maker Yamaha, but then exited the market due to high costs. While the company had planned to return in 2011 with new product offerings, IHS believes that Panasonic has given up altogether on the MEMS microphone market.