Photo: Flickr Clive Darr
The $9 billion micro-electro-mechanical systems (MEMS) microchip market is expected to grow 15% a year, outpacing the semiconductor industry’s growth.MEMS which are currently used as motion sensors in smartphones and tablets are expected to get a huge boost thanks to the popularity of the devices.
Deutsche Bank analyst Kai Korschelt explains why he’s bullish on these particular semiconductors:
- Better performance and lower cost will see MEMS replace existing products in consumer, automotive and healthcare markets. MEMS can be made for cheap and typically enter the market quicker than competitors.
- In the automotive sector MEMS are expected to grow at 7% a yeas because of a rising demand for tyre pressure monitoring systems and other safety and convenience features.
- In healthcare it is expected to help improve diagnosis and drug delivery products.
- The operating profit margin for micro-electro-mechanical systems is expected to be in the 20% – 30% range while gross margins are expected to be as high as 50% – 60%.
- Deutsche Banks top picks among MEMS include STMicroelectronics in Europe which is the current market-leader in consumer MEMS. American Avago Technologies which is expected to gain from its exposure to smartphones and Freescale Semiconductor which is a leading automotive MEMS supplier.