Image sensor prices to fall
By James Carbone -- Purchasing, 11/15/2007 2:00:00 AM
Buyers can expect prices for image sensors to fall over the next several years, despite strong demand from cell phone and digital camera manufacturers and growing demand from the automotive industry.
Inventory corrections in camera phones and price erosion due to competition and increased production capacity have undermined the image sensor market in 2007, according to Rob Linebeck, senior analyst for market researcher IC Insights. As a result, the image sensor market will grow only 1% in 2007 to about $7.5 billion in 2007.
"Growth rates in image sensors sales are slowing as key market-driving applications mature and competition intensifies," says Linebeck. In the 2001-2006 period, total image sensor revenue grew at a compound annual growth rate of 46% per year. With the emergence of camera phones and digital still cameras, image sensor sales surged from $1.1 billion in 2001 to $7.4 billion in 2006.
But growth has cooled and image sensor revenue will only grow about 10% per year through 2011 when sales will total $12.1 billion, says IC Insights.
While the image sensor market will grow, prices will fall. Suppliers have moved manufacturing of image sensors from six to eight inch wafers resulting in more chips per wafer. In addition there is strong competition among manufacturers for market share.
"We have seen a lot of price pressure in the mobile phone space," says Philippe Quinio, director of partnerships in external programs for imaging division of STMicroelectronics in Paris. "The average price for image sensors is going down."
Indeed it is. The average price will drop from $6.46 in 2006 to $4.40 in 2007, according to researcher iSuppli. The price will continue to fall through 2011 when it averages $2.45.
Stiff competition is driving down tags. "We see increased competition in CMOS (complementary metal oxide semiconductor) image sensors with a number of DRAM makers in the Far East aiming to follow Micron's strategy of using older, depreciated memory fab lines to make imagers," says Linebeck. Hynix has indicated it would make CMOS image sensors on mature DRAM fab lines, he says. "Winbond and ProMOS are moving into image sensors, and PowerChip as well as Macronix both already produce CMOS imagers for foundry customers," says Linebeck.
Some foundry customers such as OmniVision are looking to Taiwan memory makers to produce products on 300mm wafers when CMOS imager foundry services become available.
"With all the companies jockeying for market share and the appearance of the new entries in Asia, we can expect consolidation in the coming years," says Linebeck.
Until then there will be stiff competition for image sensors, which are mostly used in consumer electronics equipment, especially cell phones and digital cameras, says Shri Sundaram, business development manager of Toshiba America Electronic Components. Image sensors are also used in back of car cameras.
Ninety percent of cell phones come with cameras and some phones now have two cameras. Quinio says more cell phones will be equipped with two cameras, which will further drive the market.
He says about 1.1 billion cell phones will ship this year and about 100 million will have two cameras and two image sensors as well.
There are two types of image sensors used in cell phones: Charge coupled devices (CCD) and CMOS. Both types capture light and convert it into electrical signals. Extra circuitry next to each photo sensor converts the light energy to a voltage. Additional circuitry on the chip converts the voltage to digital data.
Image sensor manufacturers say the biggest challenge they face is miniaturization. Cell phone makers keep shrinking the size of cell phones while trying to boost functionality. The smaller the size of an image sensor the harder it is to capture light. Without the proper amount of light, image quality diminishes.
"They want pixels to be smaller and image quality higher and this is contradictory," says Quinio. "The smaller the pixel, the less light and the worse signal-to-noise ratio. But we are working to try to mitigate these two objectives while trying to keep the price down."
Sandaram says about three or four years ago, the total area of pixel size was 25 micron square. "Now it is four to five square microns. The challenge is how to capture more and more light when the bucket is becoming smaller and smaller."
One way is through use of different transistors than have been used and enhanced fabrication processes that maximize light capture. Manufacturers are capturing more light by using micro lenses on each pixel.
"On top of the image sensor on each pixel there is a tiny lens, says Sundaram. "Advances have been made on the design of the lens so it captures more light."
Quinio says each pixel has a lens about 2 microns square. "We have 3 million of them on the sensor. These tiny lenses concentrate light on each pixel. We have to improve the optical performance of these micro lenses so we can capture more light."
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