Feature Article Think Small! issue 3, Volume 2:
Prospects for MEMS in the automotive industry
by Richard Dixon & Jérémie Bouchaud
The automotive sector has long been
a growth market for MEMS sensors. However, the industry continues
to change and face new opportunities and challenges—regulations,
saturation in some applications and price erosion issues, to name
a few.
Today’s high-end vehicles feature up to 100 different sensors. About
30 these are now MEMS (see figure). The market is made up of accelerometers,
gyroscopes and inclinometers (shown in green) and pressure and flow
sensors (blue). Emerging applications include IR sensors for air
quality, microscanners for displays, etc. (yellow) and further out,
MEMS oscillators and energy scavengers for TPMS (those shown in
red).
2nd biggest MEMS market
Our estimates show the automotive sector accounted for $1.6 billion, making this the second biggest opportunity after IT peripherals and inkjet print heads. By 2011 the market will top $2.2 billion, a cagr of around 7%. The main applications in revenues terms are, in order, pressure sensors, gyroscopes, accelerometers and flow sensors and this will remain so for the forseeable future.
Industry Quote: On sensor fusion: "There are so many new sensor
functions on the horizon that will continue to create need for MEMS
sensors." — Dr Peter Ernst, Robert Bosch
The total number of sensors will grow from over
430 million units in 2006 to 780 million in 2011, an annual growth
of 13%. This outstrips the dollar growth due to price erosion running
at 4-5% per year. It can be higher depending on the component (see
section on airbags).
Leading markets are ESP gyroscopes ($272 million), airbags
($260 million), followed by pressure with MAP and BAP (total $192
million), side airbags and tire pressure monitoring (TPMS). The
market for TPMS systems will grow at 50% this year due to a US mandate
(described later) before levelling off in 2008-2010 to under 10%.
Suppliers to this industry include 13 companies from the top 30
MEMS sensor producers (see last issue of Think Small! for full breakout).
Ten of these make considerably more than $100 million. Robert Bosch
leads the field and is the 4th biggest MEMS supplier overall with
$374 million, up there with giants like Hewlett Packard and Texas
Instruments.
Airbag sensors commodities
Contrary to our thinking 2 years ago,
the airbag market is not stagnating and continues to provide impressive
unit growth, driven for example by new markets in Asia.
In fact integrators like Autoliv expect airbag penetration to increase
from 40 to 60 million vehicles over the next five years (i.e. 80%
of cars worldwide).
We estimate this will equate to insertion from 200 million
accelerometers today to 350 million in 5 years, with as many as
8 accelerometers per electronic control unit (ECU). Major players
in this space include Bosch, Infineon, Analog Devices, Denso, and
Delphi.
More sophisticated solutions are being developed as
a result of passenger occupation detection and combined pressure/accelerometer
side airbags. However, in coming years the market will suffer from
price pressures reminiscent of consumer electronics (10% per year).
ESP to ride US regulation
Today ESP systems make up 2/3 of
the revenues for gyroscopes. This amounted to around 16 million
units in 2006. Systron Donner Automotive (part of Schneider Electric),
Robert Bosch, Silicon Sensing Systems and Panasonic dominate this
market space (see figure overpage). We have now updated our data
to take account of the mandatory introduction of such systems in
the USA in 2010. Penetration of ESP was below 20-25% in 2006 in
the US compared to over 40% in Europe. The US mandate
will rapidly accelerate the market for ESP. This is stimulating
interest from potential future suppliers; among these are Freescale,
Honeywell, Infineon, Sensor Dynamics-Fraunhofer, and Microcomponents,
a Swatch group company with a quartz gyroscope. While not all will
succeed we believe there is room for about 7-8 players in total.
On one hand, the market transparency brought on by
the mandate brings potential risks of commoditization and price
erosion. This will precipitate an interesting battleground as prices
are driven down by increased competition, and tier one suppliers
have more options.
However, gyroscopes are still challenging to manufacture
and remain relatively speaking expensive. They require 100% testing—
a major contributor to cost. 
We predict the number of ESP units will reach 28 million
in 2011 or 40% of cars worldwide. ASPs will drop at a rate of 3-4%
in the first few years and more sharply after the US law comes into
effect prior to 2010. Growth in ESP systems will continue to benefit
accelerometer companies like VTI, which supplies low g sensors needed
to measure lateral acceleration in a curve, or vertical acceleration
in roll detection systems.
The attractive market conditions for ESP systems will
affect the supply chain as integrators look for lower cost units.
We expect Panasonic, a company that currently dominates navigation
gyroscopes with well over 80% market share, to increase its share
in ESP.
Technology changes could be on the cards for Systron
Donner, which is not ruling out a silicon solution. The company
current has a quartz offering. Bosch is looking to reduce size and
cost through consolidation of ESP and roll over detection gyros
in the same package, either hybrid or single die.
Earlier this year Silicon Sensing Systems introduced
its 4th generation vibrating ring gyro, which has been changed from
an inductive to capacitive drive to reduce costs and size. The ASIC
is now on the same piece of silicon in this single axis design.
US mandate for TPMS in 2007
US regulations (TREAD) governing
tire pressure monitoring this year will accelerate the pressure
sensor market. Undergoing rapid technology iterations, TPMS systems
will eventually evolve into smaller, lighter batteryless “intelligent
tire” systems that attach to the tire, not the rim.
Tires provide a high vibration environment that allows
sensor engineers to consider energy harvesting solutions. At the
same time this gives tire makers a chance to add intelligence and
move up the value chain. Intelligent tire systems could conceivably
add new functionalities such as force, friction/grip, ID and wheel
speed to feed ESP systems and other sensor fusion scenarios. We
expece intelligent tires with a battery in 2010 and from 2012, intelligent
tires powered by MEMS vibration energy scavengers. Such systems
will probably start with ID functionality.
The new regulations will also commoditize the market
as many players try to gain entry and challenge the likes of Infineon,
Freescale, Texas Instruments and GE NovaSensor. Contrary to ESP,
TPMS is a technically easier challenge that—at least in current
generations—is a question of integration of a range of different
technologies into a compact low-power system.
As a result, many new suppliers including Melexis,
Bosch, VTI, Kavlico, Continental... target the estimated $190 million
market expected in 2011 (based on sales of 90 million units). Therefore
some will fall by the wayside.
Other solutions could also come to the fore
and indirect systems should not be completely discounted. Common
to Europe, these systems make up by far the smallest part of the
current market. Indirect sensor solutions use sensor fusion from
existing ABS and speed sensors to extrapolate tire pressure, although
would not provide additional information such as ID.
Data clusters = less sensors ?
Clustering of sensors is a buzz word
in the industry now. Broadly speaking the issue is that additional
functionality leads to higher numbers of more complex electronic
control units (ECUs), increased bus load and adding more wiring.
One approach is to incorporate more types of sensors in the ECU,
thereby reducing the overall number of such units. This does not
affect the overall number of say, inertial sensors, but influences
the bus load and weight.
Currently there appears to be no concensus on how
best to integrate disparate sensor elements for no loss in performance
or reliability, which requires a full view of architecture. Sensor
suppliers like Honeywell and Systron Donner Automotive integrate
accelerometers into IMU modules. However, we believe that tier 1
suppliers like Bosch, Denso and Siemens VDO will find this activtiy
easier due to inherent systems-level knowledge. Systron Donner Automotive,
which integrates VTI accelerometers into an IMU, could find itself
competing with its major customer Continental Automotive at module
level.
So far, Analog Devices has combined roll-over detection and ESP
functions (which feature gyros with significant resolution differences)
used in TRW’s systems employed for SUVs. Bosch is accommodating
ESP active safety systems with passive roll-over sensing with a
new gyro with increased measurement of 240°/s. This ultimately leads
to fewer gyroscopes.
The role of R&D
One of the major challenges is the continued pressure
on prices. Suppliers generally agree that a healthy rate of R&D
investment (typically 12-15%) is needed to maintain and innovate
in order to keep their margins. This is being achieved as follows:
• in the back-end through smart packaging as well as wafer level
test instead of component testing • at the front-end to increase
process stability, e.g to relax effort on test, gain on yield and
to ensure long-term product reliability
• through new front-end
processes such as a shift away from bulk to surface micromachining
to lower costs.
• new or larger (8”) substrates.
Limited foundry outsourcing
We belive, contrary to the view given
by other analysts, that there is no obvious trend to outsource manufacturing
to big CMOS foundries such as TSMC. An exception is the relationship
of Freescale with the Dalsa foundry, although this is confined to
lower value devices like some types of pressure sensor. Freescale
retains in house manufacturing of high-value technologies such as
accelerometers and gyroscopes.
In fact the requirement of an “in house” capability
is still perceived as critical in MEMS. Bosch provided a clear demonstration
of the “make or buy” decision with the recent investment in a new
8” fab in Reutlingen.
In some cases MEMS foundries could play a role after acquistions
or restructuring or new products needing 8” fabs. One such foundry
betting on automotive is Silex. Also tMt is currently cooperating
with a well-known automotive MEMS manufacturer wanting 8’’ for a
new product, though most others look to higher volume CE opportunities.
Consolidation
As the automotive MEMS branch is
maturing, it is also consolidating. Continental Automotive Systems
(CAS) is the most active player in this process, having acquired
Motorola’s automotive group (pressure sensors and Telematics) and
subsequently VTI’s module business. We also know that Siemens VDO
turned down Continental’s recent overtures.
CAS is clearly a Tier 1 integrator of MEMS. This situation
changed with the Motorola acquisition, which now adds now in-house
production of pressure sensors. However, this does not fit the company’s
business model and it is not yet clear if the pressure sensor fabrication
will remain in house.
Worthy of note is Delphi. Although it filed for chapter 11 (bankruptcy)
in October 2005, it remain a very active MEMS supplier, even investing
in new products.
Opportunities for newcomers
We believe that the automotive sensor
market will prove too tough for many startups or consumer-market
oriented companies looking to enter this space. Opportunities will
exist but largely for non-safety critical sensors used in GPS navigation
or infrared sensors. STMicroelectronics is an exception, leveraging
strong connections in the industry through its existing ic business.
We know that several suppliers of asic to the automotive market
are also looking at widening their offering to include sensors.
It remains to be seen what effect companies like STMicroelectronics,
Kionix and MEMSIC will have on the market. While each acknowledges
the challenging automotive specifications, they point to the stable
process that comes from high volume manufacturing for CE applications.
Conclusion
In the automotive industry, companies are forced to innovate as a result of competition and price pressures. New regulations drive new markets and precipitate competition for existing suppliers, potentially producing excellent opportunities for a few newcomers to the supply chain.