Image Sensor Market Update

Electronic Business: Micron’s sales of sensor chips more than doubled during 2005, according to research firm IC Insights. The Idaho-based chip maker’s $439 million in sensor sales boosted it from the eighth-ranked vendor during 2004 into second place last year, just $11 million behind longtime industry leader OmniVision Technologies.
Research firm InfoTrends estimates that half of the 741 million cell phones shipped in 2005 were equipped with cameras, and forecasts that nearly 90 percent of handsets will contain cameras by 2010.
Yet most of the market’s recent growth is occurring among the industry’s largest suppliers, and especially Micron and STMicroelectronics, which supplies sensors to handset maker Nokia. IC Insights estimates the top five sensor companies’ combined sales grew 38 percent during 2005, compared with just 6 percent for the remaining 30-plus vendors (see chart). “The big companies are getting bigger,” says IC Insights analyst Rob Lineback.
Analyst Tom Hausken of research firm Strategies Unlimited says he expects that trend to continue, as the top companies gain economies of scale, allowing them to produce sensors even more efficiently. “The industry is at the point now where a few companies get to consolidate market share,” says Hausken.

OmniVision kept its No. 1 ranking during 2005 by adding almost $80 million in new sales. But Satya Chillara, an analyst with American Technology Research, notes that Micron pulled ahead of OmniVision with $20 million more in sensor sales during the companies’ latest financial quarters. Chillara says OmniVision, which is making 40-percent gross profit margins on annual sales approaching $500 million, will keep doing well if its new products meet the market’s evolving needs.
Avago Technologies, which ranked No. 3 in 2004 when it was still the chip subsidiary of Agilent, dropped to No. 6 in IC Insights’ 2005 rankings. Its sensor sales declined from about $300 million to $250 million following the 2004 sale to Flextronics of its camera modules business.
Avago’s setback left OmniVision as the only top-five sensor maker without its own in-house chip manufacturing.
Steve Noble, worldwide marketing manager for Eastman Kodak, which bought National Semiconductor’s image sensor business in 2004, predicts “huge” growth for auto sensor sales. He says Volvo and others already use Kodak image sensors for rear-view cameras. The industry also is testing sensors for blind-spot detection, lane-change warning and night-vision systems.
Although unlikely to rival cellphone sensor sales, Noble says auto makers could be buying 30 million sensors, worth perhaps $100 million annually, by 2009. Says Noble: “It’s got great growth potential.”