MEMS revenue weak despite strong shipment growth

Worldwide revenue growth for sales of microelectromechanical systems (MEMS) devices slowed dramatically in 2005, despite “very strong” unit shipments, according to a report from In-Stat. The firm reports that nearly 1.8 billion MEMS devices were shipped in 2005, generating revenues just under $7 billion.

The firm contends that inventory backlogs, weakness in key markets, and lower average selling prices all had a clear effect on the market. Despite projected unit shipment growth exceeding 11% over the next five years, revenues for MEMS are forecasted to increase at a CAGR of just 6.8% through 2010 due to continued price reductions and owing to the introduction of new MEMS devices with commodity-like pricing.

According to the firm, the top 20 suppliers of MEMS devices maintained their dominance of the industry, accounting for more than 86% of total revenues in 2005. However, the automotive and computing segments, the traditional mainstays of the industry in both unit shipments and revenues, are projected to be displaced by the communications and industrial markets within the next five years.

The firm predicts that, with optical networking finally emerging as a growth segment, and with the rapid integration of RF MEMS and microphones in cell phones, the communications market will eventually emerge as a key driver of overall growth.