IHS Inc. : Booming iPad Sales Help Apple to Become Largest Consumer of MEMS Microphones in 2011

Dateline:

"MEMS Suppliers Cash InAmong suppliers, Illinois-based Knowles Electronics continues to dominate the market, although its share of MEMS microphone shipments has fallen from 88 percent in 2010 to 75 percent last year. Knowles supplies to Apple, Samsung, LG and Motorola. Also figuring prominently in the supply chain..."

Apple Inc. in 2011 became the world's largest purchaser of following the tremendous sales growth of iPhones, headsets and most notably iPads, causing the company to surpass Samsung Electronics Co. Ltd. to take the top spot.

Apple in 2011 increased its procurement of MEMS microphones by 173 percent to reach 349 million units, up from 128 million in 2010, according to an from information and analysis provider IHS (NYSE: IHS). This represented the strongest growth among the major MEMS microphone buyers, allowing Apple to move up one position to take the No. 1 spot in purchases. Apple's share of MEMS buying amounted to 27 percent for the year, compared to 20 percent for Samsung, as presented in the table below.

MEMS Microphones Defined
MEMS microphones are very small devices that employ a pressure-sensitive diaphragm etched on a semiconductor. The microphones are commonly employed in cellphones, headsets, notebook PCs and video cameras, replacing conventional electret condenser microphones (ECM) while providing greater clarity and reception of sound for the commands spoken by users into their devices.

Although they are significantly more expensive than ECM devices, MEMS microphones provide a host of advantages in terms of size, scalability, temperature stability and sound quality. These attributes have spurred the adoption of MEMS microphones among major brand names like Apple and Samsung, resulting in rapid sales growth.

"Apple in 2010 sounded the starting gun for the current boom in MEMS microphone sales when it adopted the devices in its iPhone 4," said Jérémie Bouchaud, director and principal analyst, MEMS and sensors, for IHS. "However, with the addition of MEMS microphones into the highly successful iPad 2 in 2011, Apple's purchasing of the tiny devices went into overdrive. When combined with strong increases in its buys of MEMS microphones for iPhone headsets, Apple outstripped all other rivals to become the largest consumer of the devices, helping the drive the growth of the overall market."

Multitudes of MEMS Microphones
Apple uses two analog MEMS microphones in its iPhone 4 and 4S phones, one analog MEMS microphone in the headset sold with the iPhone, and one digital MEMS microphone for Pad 2 tablets.

Samsung uses dual MEMS microphones for its smartphones, and the microphones are also utilized in the company's Galaxy 10.1 tablet. Samsung's share in 2011 was roughly the same as it was in 2010, hovering in the 20 percent range, allowing Apple to jump ahead of the South Korean electronics giant.

Other notable MEMS microphones buyers include LG Electronics for its phones and G-Slate tablet; as well as Motorola Inc., an early adopter via its Razr phones as early as 2003.

MEMS Microphones Break the Billion Unit Barrier
Overall global shipments of MEMS microphones rose to 1.3 billion units in 2011, up 82 percent from 704 million in 2010. MEMS microphone revenue in 2012 is projected to reach $493.5 million, up a solid 32 percent from $373.2 million in 2011.

This year's revenue expansion continues last year's remarkable 64 percent increase, and the next few years also will see healthy prospects for the space. By 2015, MEMS microphone revenue will hit approximately $667.0 million, equivalent to a five-year compound annual growth rate of 24 percent starting from 2010, as shown in the figure below. Shipments in 2015 will amount to some 2.9 billion units.

"The rapid growth of the market is due to a combination of three factors," Bouchaud said. "First, MEMS penetration in handsets continues unabated, with 50 percent of mobile phones using the devices in 2011, up from 38 percent in 2010. Handsets, in fact, make up the top application device for MEMS microphones.

"Second, there has been a rapid adoption of multiple microphones in smartphone devices for noise compression-particularly important for voice commands such as those used in the Siri speech-recognition feature of the iPhone 4S. Third, MEMS microphones are becoming more widely used in a growing number of devices, including laptops, tablets, gaming consoles and cameras."

MEMS Suppliers Cash In
Among suppliers, Illinois-based Knowles Electronics continues to dominate the market, although its share of MEMS microphone shipments has fallen from 88 percent in 2010 to 75 percent last year. Knowles supplies to Apple, Samsung, LG and Motorola.

Also figuring prominently in the supply chain are ECM suppliers that now have begun to expand their portfolios by including MEMS microphones. Within this group, AAC Inc. from Hong Kong is the most successful to date with 11 percent market share in 2011, functioning also as a second source to Knowles for the iPhone 4 and 4S. AAC, together with Chinese-based ECM makers GoerTek Inc., Japanese-based Hosiden and South Korean BSE Co. Ltd, shipped more than 200 million MEMS microphones in 2011, with each buying MEMS dies from German outfit Infineon Technologies AG.

The No. 3 supplier in 2011 was Analog Devices Inc. of Massachusetts, thanks to its design win with the digital MEMS microphone in the Apple iPad 2. The company also sells into some niche applications, including teleconference equipment.

Other important MEMS microphone suppliers are Bosch-acquired company Akustica Inc. from Pennsylvania, which in 2011 sold tens of millions of digital MEMS microphones for use in laptops, up from less than 4 million in 2010; and Italian-French entity STMicroelectronics, a top supplier also of digital MEMS microphones.

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