There’s no rule that says when a technology becomes mature, but one might think that image sensors would be by now, 40 years after their conception. Nothing could be further from the truth. After decades of use in fax machines, scanners, and camcorders, image sensors are now in the largest growth period in their history, and much of the innovation is still happening.
Let’s step back and look at the overall growth in the business over several years. The accompanying chart shows the total revenues in this market since 1996, with a forecast out to 2011. We count here the value of all image sensors manufactured in the year, whether for the merchant market or for an internal customer. Commercial image sensors were in the market for 26 years before the revenues passed the $1 billion mark. Now they are approaching $7 billion. How did it happen? Why now?
The Road to Success
Many readers may be surprised to find out that CMOS image sensors were actually conceived before CCDs. CMOS dates to 1967; CCDs to 1969. There have always been applications for these early CMOS arrays, but for the most part, the lithography of the time was too coarse to take full advantage of the design. CCDs offered a simple and robust alternative, and were the dominant design from the 1970s until recently. CCDs are still very good for video frame rates, specialty designs like astronomy, and as general purpose designs. There will always be a market for CCDs.
From the 1970s through the 1990s, the resolution of lithography improved by orders of magnitude, thanks to investments in the semiconductor industry. The designers of CMOS image sensors also got more clever and were able to improve the fill factor (the percentage of pixel area used for photon capture) and reduce the noise. Today, the minimum pixel pitch of CMOS arrays is nearly the same as for CCDs.
But the improvement in CMOS arrays by itself was not enough, because the image sensor applications had not grown much beyond early applications like camcorders, security cameras, scanners and fax machines, and machine vision. What helped was that CMOS arrays improved at about the same time that digital cameras and mobile phones were taking off.
The CMOS arrays had two advantages that fit the new applications. Technologywise, CMOS has lower power consumption and can integrate more features on one chip than CCDs can, and are therefore better suited for portable appliances like camera phones that always need to extend battery life and minimize module size.
Market-wise, CMOS suppliers were able to get their arrays designed into new products before CCDs became too entrenched. Moreover, handset makers are a different breed from traditional imaging or electronics vendors, and product models have a short lifetime. This makes for a very dynamic market, open to new competitors. Thus, unlike digital camera makers, most of the leading names in mobile phones are not from Japan and haven’t made their own image sensors: LG Electronics, Motorola, Nokia, and Samsung (although Samsung is now also making image sensors).
The challenge now is to make a transition to slower growth in the camera phone business without significant disruption to the suppliers. Handset sales have passed 1 billion units per year and are still growing, but at a slower rate. The adoption of cameras in handsets is also growing, oftentimes including a secondary camera, but that too is slowing. At the same time, the migration to higher pixel counts is slowing. Meanwhile prices continue to decline, so the revenue growth will be slower.
The same slowing trend is seen in other applications. Digital cameras are now reaching market saturation, with the remaining growth coming mainly from expansion of the digital SLR segment. And while image sensors for optical mice were an overnight success for Avago (then Agilent) and STMicroelectronics, that market is now saturated.