Image sensor market ends long, steep growth to face more cyclic era

MOUNTAIN VIEW, USA: The market for image sensors will decline to $6.4 billion in 2009, a drop of 11 percent from 2008 and the first decline since Strategies Unlimited began tracking the market in 1997. But, the average growth rate will return to single-digits in coming years, following over a decade of 22 percent compound annual growth.

A new, more cyclic phase. The current global economic cycle is driving a temporary decline, but cycles will have a stronger effect going forward, now that the perfect convergence of forces leading to rapid growth in image sensor revenues for cameraphones is maturing.

There will still be growth in unit sales in coming years for image sensors overall, but short-term fluctuations in demand, periods of oversupply and shortage, and severe price pressure will make it more challenging to stay competitive than before.

Turmoil in Japan. Japan used to dominate world image sensor production, and still manufactures over 90 percent of the world’s CCDs. CCDs continue to dominate in digital still cameras and security cameras. Even so, Fujifilm stopped production of image sensors for its line of cameras in 2007. Sony is thinking of stopping its production of CMOS arrays for cameraphones, and Panasonic has already done so.

Koreans make huge strides. Meanwhile, Korean and Taiwanese suppliers are gaining market share, especially for cameraphones. Samsung grew 61 percent from 2006 to 2008, placing it among the top suppliers.

We are also seeing increased competition from other Korean and Taiwanese companies, such as SETi, SiliconFile Technologies, and PixArt Imaging. Hynix reentered the image sensor business in the second half of 2008. These companies are focusing on the China handset market.