Tuesday, August 28, 2007

Image Sensors in 2007

EETimes: "The first half of 2007 has been a disaster for CMOS image sensor suppliers," said Robert Lineback, an analyst with IC Insights Inc. "This is mostly due to the decline of orders from the cellular phone segment. This correction continued in the second quarter, but market conditions should improve in the second half of 2007."

In 2006, CMOS image sensor sales totaled $4.2 billion, up more than 30 percent from about $3.2 billon in 2005, according to IC Insights. The current outlook for CMOS image sensors is for only 4 percent growth in 2007 to $3.4 billion, after a year-over-year decline in the first half of this year, according to the firm.

Overall, worldwide revenues for image sensors -- including both CCDs and CMOS image products -- fell about 4 percent in the first six months of 2007, according to the firm.

"CCD sales have been down just slightly compared to the steeper drop in CMOS imagers, which have been clobbered with lower unit volumes and the erosion of average selling prices (ASPs) in the first two quarters this year," Lineback said. "Both CCD and CMOS image sensor segments are expected to improve in the Q3 and 4Q periods."

Compounding the problem are some transitional issues in the market. "One major problem facing CMOS imager suppliers has been the slower-than-expected migration to higher resolution embedded cameras in handsets," IC Insights' Lineback said.

"Micron continues to struggle with sensors and has not seen a rebound in orders from Motorola," said analyst Doug Freedman of American Technology Research Inc.

"We expect Micron to actively pursue strategic alternatives for its image sensor business," Freedman said. "While we don't expect Micron to exit the business entirely, we do believe the company is looking for ways to separate the image sensor results from its core NAND/DRAM business."

Doug says that Omnivision ramps up a new tier one design win. "We suspect OmniVision's design win is with Motorola," he said. "Based on ASPs and volumes needed to generate the incremental revenue in OmniVision's guidance for the July quarter, we believe the company could be designed into the new Motorola Razr2 handset, which has the potential to be a key platform for Motorola in the coming quarters based on early user/industry reviews."

Other CMOS image suppliers are seeing mixed results. "We believe pricing pressure in the low-end is still an issue with Samsung pushing for share gains," Freedman said.

Like Lineback, Freedman also sees a better picture in the second half for suppliers. "Handset unit growth remains robust," Freedman said. "2-Mpixel sensors are becoming more mainstream with the industry moving from VGA straight to 2MP. We believe 2-Mpixel sensors carry a 2-to-3 times ASP advantage over VGA sensors and that advances in packaging technology will continue to push higher resolution sensors into mainstream phones and boost margins and volumes."

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