Vision & Sensors

Sensors Market Analysis: Growth Challenges in World Image-Sensors Market

November 30, 2011
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The competition in the image sensor market is at its highest, with manufacturers constantly striving to outperform their rivals and growing competition between the established CCD and newer CMOS image sensors.



Some of the key challenges facing the image sensors market include reduced time-to-market, price-level sensitivity and miniaturization of image sensor chips. Source: Frost & Sullivan


An image sensor is a device that converts a visual image into an electric signal. The image sensors are used primarily in digital cameras and a large number of imaging devices used for diverse applications. The image sensors are an array of:



Charge-coupled device (CCD) image sensors

Complementary metal oxide semiconductor (CMOS) sensors



CCD image was designed and developed to be used in computer memory circuit applications. As technology developed, the potential of emerging applications, such as imaging and signal processing, was achieved. Imaging applications have been gaining importance since CCD was manufactured from silicon, which is highly sensitive to light. CCDs collect light by the tiny photosites on their surface. Micro-electro-mechanical-systems (MEMS) accelerometers are used for tilt-sensing in digital still cameras in order to change the camera view from portrait to landscape automatically. At the same time, the demand for image stabilization has increased with the proliferation of camcorders and digital still cameras. Dual-axis MEMS gyroscopes are used for this purpose. They also serve to cancel jitter in video and still cameras.

The research efforts that took place in various countries resulted in the development of CMOS image sensors to compete against the conventional image sensors. Many traditional CCD manufacturers have been skeptical about CMOSs capabilities, especially in high-end applications. The CMOS image sensor is experiencing penetration in the image sensors market, with both the established manufacturers as well as startups competing for a greater market share.

The CMOS sensor production process is simple. CMOS is named after its manufacturing method. CMOS incorporates camera-on-chip technology, which allows customized multiple circuitry to be added to the single chip without any supporting chips.

The image sensors meet the need of high-end applications for entertainment purposes, from digital still and camcorder cameras to medicinal applications such as spectroscopy.



As of 2011, the key applications for the image sensors market include automotive, medical equipment and aerospace. Source: Frost & Sullivan

Existing Scenario

Image sensors have replaced film-based video data in almost every field. The development of electronic device technology, such as mobile phone cameras, has accelerated the growth of image sensors over the past decade. Not only are developers catering to customer needs, but they also are creating a market for new technology by integrating image sensors in devices where such a thing was not possible until recently due to various reasons, such as cost and complexity of implementation.

Currently, there are dramatic changes being witnessed in the image sensor market. This is primarily due to the growth in demand for devices such as cameras, camcorders, multimedia mobile phones and security cameras. The competition in the image sensor market is at its highest, with manufacturers constantly striving to outperform their rivals with respect to pixel count, resolution and performance. There also is growing competition between the established CCD image sensors and newer CMOS image sensors, with CMOS image sensors improving gradually and moving toward CMOS-like performance with better integration capabilities and cost advantages. Although there has been an explosive growth in the image sensor market, saturation is also setting into certain industries due to aspects such as penetration.

Manufacturers are banking on advances in packaging technology to continue the push higher resolution sensors into mainstream application markets to keep high margins and volumes.



Application Impact

A wide range of applications have been impacted by the developments in image sensors and associated imaging solutions. Consumer electronics, automotive, medical equipment and aerospace applications have all benefitted from rapid advancements in image sensor technology. Apart from this, the developments in these fields also have resulted in driving improvements in image sensors.

The most popular sensors are CCD and CMOS, and they dominate the majority of the applications. CMOS sensors are commonly seen in most low-end imaging applications, such as portable electronics and digital cameras, while CCD image sensors have typically targeted high-end applications such as machine vision. The type of image sensors also depends on the application requirement, integration, cost and other issues. CCD sensors have traditionally provided better imaging results, but CMOS image sensors are gradually catching up through innovations in electronics and materials.

The electronic component count in devices is rising day-by-day and many devices perform multiple functions, so they require seamless integration. Today’s automobiles, for example, are packed with modules to offer better driving experiences along with increased safety and comfort. Image sensors are vital even in simple functions, such as lane parking and reversing. Image sensors, combined with other electronics, provide auditory and visual data to the driver on various parameters, such as proximity and vehicle direction.

While many applications are benefiting from improvements in imaging technology, manufacturers of these sensors are striving to improve performance in the competitive market. An explosion in many markets has helped image sensors grow while also causing saturation at some points, making it more challenging for manufacturers to develop products that have a competitive edge over others.



Image sensors are penetrating diverse end-user markets with multiple applications. In pursuit of this market growth, there are certain challenges the market participants face. Image sensors companies need to have strategies in place to meet such challenges effectively to ensure continuous growth. Some of key challenges are discussed here.



1. Reduced Time-to-Market

The market for image sensors is very demanding and there is a constant demand for newer and upgraded technologies with market participants such as Sony, Eastman Kodak, Atmel, Sharp, Matsushita, Hamamatsu, Agilent, Foveon and Mitsubishi making large investments every year in modification and new product development activities. Most digital cameras that use image sensors are sold in the consumer market and this market is considerably challenging, as there is always reduced time to market for the new and improved version. These ongoing short product life-cycles require constant enhancements in the product line. Hence, shortening the development time is also a significant challenge, considering that the company that is first to market the new or improved version can attain considerable competitive advantage.



2. Price-Level Sensitivity Most companies compete with each other and one of the important factors is the price point. The CMOS image sensors are MEMS-based and average prices range from $6.50 to $10. This price range is for the base CMOS sensors and the add-on attributes involve higher input costs. Manufacturing CMOS products at a competitive cost without compromising on customer expectations is important. At the same time, the fact is that not all MEMS companies have the capabilities for volume manufacturing required to meet these demands. Based on the price ranges given, the price points available are relatively limited and, therefore, the customer base is limited in the quality of products offered. On the other hand, the price of CCDs ranges from $10 to $1,000, which offers a broad range of products. The average price is an important challenge that the market participants must overcome, which has to be done in a short time to market the products.



3. Miniaturization of Image Sensor Chips

The end-user applications of the image sensors are increasing. Over the years, handheld device manufacturers have reduced the size of mobile phones, personal digital assistants (PDAs) and digital still cameras, among other portable devices, to make them more attractive to consumers. With existing products getting smaller, this trend continues for a host of new products using image sensors. However, this trend presents a crucial challenge to the image sensor manufacturers, because they have to design very small image sensor chips that can be incorporated into a mobile phone and/or a PDA.

The main difficulty in reducing the size of an image sensor is the optics. As manufacturers diminish the size of the optics they must ensure the sensor still provides ample coverage of light over the pixel area.

Another important factor to consider before reducing the size of the image sensor is the shrinking of the pixels to the point where they are extremely small and are able to be incorporated into other handheld devices. This procedure is very difficult because image sensor manufacturers need to diminish the pixel array. Therefore, it is harder to obtain the correct amount of light for a new image by using a very small camera.



4. Strong Brand Images and Product Life Cycle

The image sensors market comprises two main product technologies. One is CCD that operates at a mature market stage. The other is CMOS, which is in the early growth stage of its life cycle.

In the CCD market, the main challenge is to ensure growth through product developments and develop new methods and strategies to continue growth. It is difficult to develop innovative methods and strategies specifically in sales, marketing and research and development on a continuous basis.

The barriers to new entrants, and growth of the existing ones, are further compounded in the European and North American CCD image sensors market, since a number of competitors over the years have built a strong brand image and customer loyalty.

The challenge for CMOS image sensors that are in their early growth stages of the life cycle is to enhance the product development and modification activities, while competing with established technology. The impediments for new entrants are low, and the growth of existing market participants is a result of carefully drawn strategies. Moreover, the existing market participants are also positioning their image sensors to ensure both deeper market penetration as well as establish their brand image.

Hence, with this peculiar situation, where one technology is mature and the other in its infancy, the market age becomes a major challenge. The impact of this challenge is anticipated to be high during the short- and medium-terms of the forecast period. As the acceptance of the newer technology CMOS increases and the older ones, such as CCD, consolidate, the impact of this challenge is likely to reduce to medium.



5. Demand for Cost Optimization

The proponents of CMOS cited this technology as having many advantages over the CCD image sensors. Lithography techniques and process control in CMOS fabrication have developed rapidly to enable the creation of CMOS image sensors that could compete with the output and performance characteristics of CCD image sensors. The integration of various functions on a single die has made the fabrication process simple. CMOS image sensors are traditionally known to consume less power and also consist of smaller systems due to the integration of various components. Finally, the production process of CMOS image sensors is similar to the standard production processes of mainstream devices, which economizes the manufacturing scale.

Over the years, advances in CMOS image sensors have brought them closer to the performance levels seen in CCD image sensors. In a digital camera, all the circuitry and logic required for image process are integrated on the chip and they can be produced on a very large scale, thereby resulting in lower costs.

This allows smaller and thinner cameras to be manufactured using CMOS technology. Despite all the improvements, CMOS sensors are still not as sensitive to low-light conditions as the CCD sensors.

Hence, the demand for technological improvements, coupled with cost optimization, poses a daunting challenge to the image sensors market.



6. Product Differentiation and Technology Improvements

The image sensors have gained significance at a faster pace in more applications. To combat competition, most of the manufacturers are following product differentiation to improve price realizations. Since the introduction of the image sensors, the manufacturers have constantly faced the challenge of intense price competition, especially in high-volume markets such as digital still cameras, mobile phones and optical mouses. In this price-sensitive market, it has been a difficult task for these manufacturers to differentiate their products with any factor other than price.

The price analysis reveals that the manufacturing cost for the two types of sensors is very similar at the chip level. CMOS image sensor technology is found to have a low cost due to high-volume processing like other chip-level technologies. However, there exist trade-offs between the manufacturing costs on one side and the quality of resultant image on the other.

To improve the quality of CMOS image sensors to match that of the CCD image sensors, additional fabrication processes and components were added, which resulted in an increase in the cost. With the increasing complexity of CMOS devices, CCD image sensors that are less complex can have low costs. This is likely to affect the whole purpose of CMOS image sensor development. The lithographic process technologies for manufacturing CMOS sensors have only been recently developed to enable complex circuit integration. The fabrication process of both the image sensors depends on type and size of the wafer and the yield that can be obtained at the lowest possible costs. Over the years, CCD devices have been less complex to manufacture.

This challenge deters entry into the market for smaller image sensor companies, which are trying to enter high-volume application markets. This challenge is projected to have a high impact during the short and medium terms of the forecast period. As manufacturers find ways to implement cost-effective processes to manufacture image sensors, it gives them the flexibility to compete both on the price and differentiated CMOS and/or CCD image sensor products.



7. Integration with Other Systems

Image sensor devices such as cameras and scanners have facilitated a large number of industrial and commercial applications. Further integration of image sensor devices not only will improve the value of its functioning, but also will help process such image data for higher end uses. One such frequent application includes machine vision. This machine vision application uses digital cameras to capture data, while the image processing is performed through the use of external computers. Typical industrial applications using camera image processing are limited to the generation of color images processing from sampled images and timing and control signals. Certain applications using complex manipulations can be done within the digital camera, depending on the type of application and the hardware. Processing is performed by the digital camera at the smallest frame-grabbing rate. The transmission of unprocessed digital images can be a difficult task and, hence, most processing and reduction processes take place in the camera itself.

A majority of the image sensors used in machine systems must be integrated with portable systems, while conserving costs. These image sensors have to be low-power sensors that support a variety of functions such as panning and zooming. CMOS image sensors allow for more advanced digital processing components to be integrated into the devices.

By undertaking similar complex integration, these cameras can be used as intelligent systems with minimum user interference and are cost-effective machine vision solutions.



8. Expansion of Molecular Imaging

Molecular imaging is the most recent technique, especially in medical applications. Though molecular imaging technology is found to be fully developed, it is likely to encompass the concepts of functional imaging, personalized medicine, early detection and the potential blending of imaging technologies with customized or gene-based pharmaceuticals in the future.

The development of novel contrast agents and radiopharmaceuticals is expected to drive new procedure applications and is likely to pave the way for earlier diagnosis and the use of imaging to gauge therapeutic efficacy. Therefore, many partnerships, alliances and acquisitions between imaging equipment manufacturers and imaging agent developers are expected to continue to be instrumental in the future progress of molecular imaging.



9. Emphasis on Expansion

The early part of the last decade marked an intense period of merger and acquisition activity within the imaging industry. Competitors were focused on acquiring companies in order to present their customers with a full product line of imaging products and services, including imaging IT. While acquisitions often bring about rapid top-line growth, it does take some amount of planning and implementation in order to simultaneously drive bottom-line growth. As a result, many market competitors currently have started focusing on organic growth and profitability. Many manufacturers have shifted manufacturing operations globally to help reduce costs and have spent more time focusing on integrating their acquisitions to create economies of scale.

They have also found global expansion to be an important growth strategy. As a number of countries around the world have raised their standard of living and represent burgeoning world economies, they have been transformed from “third world” countries to active participants in the world market. Currently, two of the leading examples of such countries are China and India. Large populations, a growing middle class with disposable income, a focus on technology, and trade agreements have opened up these multi-million dollar markets to imaging products. As a result, imaging vendors are tapping into these areas in order to drive both revenues as well as profitability.



Conclusion

Image sensor manufacturers are meeting diverse applications, which keep its demand pull continuous. Image sensors, especially CMOS sensors, continue to make inroads into newer applications, which have prompted newer manufacturers to compete in this market. Companies are constantly devising strategies to battle challenges to ensure their long-term presence. V&S





Tech Tips

CCD and CMOS dominate the majority of the image sensor applications.

CMOS image sensors are MEMS-based and average prices range from $6.50 to $10.

CCD image sensors range from $10 to $1,000.



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