Micralyne Newslyne - June 2007

Message from the CEO

Mr. Chris Lumb, President & CEO, Micralyne
Mr. Chris Lumb, President & CEO, Micralyne
This issue contains a guest column from Jean-Christophe Eloy, founder of Yole Développement, a MEMS industry analyst. Yole suggests that the MEMS industry will continue to grow at a healthy pace for the next 10 years, and at Micralyne we concur with this assessment.

Yole also poses the question of whether a fab 'gorilla' will emerge. If this is to happen, a major manufacturer could have more than 50% of the outsourced manufacturing market, and generate over $1 billion in revenue.

At Micralyne, our view is that the emergence of a MEMS industry gorilla is possible but unlikely. Also, we believe that if it happens, it will not lead to a lack of opportunity for other suppliers. It is not likely because MEMS products all have significantly different manufacturing processes. Yole has coined the term "The MEMS Law". This states that in general, every MEMS product has to be made with unique processes. Thus a substantial amount of development goes into every new MEMS product: this means that - at this time - most MEMS products are tied strongly to specific processes and even further, to specific fabs.

Second, growth in the MEMS industry continues to be diverse. Although there are major application areas that drive growth (DLP devices, accelerometers, and more recently microphones), much of the industry growth is still coming from new and medium size application areas. Large fabs, if they exist, will not have the responsiveness and cost structure to meet the requirements of smaller application areas, where much of the industry growth is coming from.

What does all this mean if you are a MEMS product developer? It means that:
In-house manufacturing, unless you have huge volumes, is not economically feasible. Capital costs, skills acquisition, and the distractions of operating a fab will continue to drive outsourcing of MEMS development and manufacturing.
Developing a long-term relationship with a fab partner will be a critical requirement.
You will not have a 'commodity' fab supplier: product development and optimization will continue be a cooperative effort between you and your fab partner.
You should select a fab that has a capacity and capability roadmap that meets your long term requirements. You should also select a fab that has economic stability. Changing fab suppliers, although it can be done, is expensive and risky.
While more standard processes will emerge, we expect a large amount of customization will be the norm in the MEMS industry for the next few years.

The promise of MEMS continues to unfold, as the MEMS industry grows strongly, and new application areas continue to develop. However, there will not be a "silver bullet" for development and manufacturing any time soon - working with a reliable fab partner and managing your fab supply chain with rigor will continue to be a critical success factor for MEMS product companies.

- By Chris Lumb, President & CEO, Micralyne -

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