As average selling prices (ASPs) for sensors used in consumer electronics applications continue to drop, the competition among the top MEMS makers has intensified tremendously. One of the most recent examples of this trend has been the intellectual property dispute between ST and InvenSense, which the latter company agreed to settle with a payment of $15 million. Additionally, most of the industry analysts now project that while the number of motion sensors shipped for consumer electronics will continue to grow significantly, the revenues coming from these applications will essentially stay flat in 2014. We recently spoke with Behrooz Abdi, the CEO of InvenSense, about his perspectives on the recent industry trends, as well as his vision for the company, their recent market and financial results, and how they plan to stay competitive in the future.
MEMS Journal: What's your long term vision for InvenSense? How do you see the company in five years?
BA: My vision is to be a key player in the Internet of Things which for us means interconnected sensors. Sensors, together with the ever increasing bandwidth and computing power in our devices and in the cloud, will have an amazing impact on every aspect of our lives. New applications and services are being enabled that are otherwise unattainable without sensors, such as indoor navigation, health and fitness tracking, driverless cars, augmented reality, immersive gaming, and so on. As a result, sensors are proliferating inside the home, car, and the person, generating massive amounts of data which can mined and analyzed. We want to deliver complete solutions that make it easier for our customers to integrate into their products.
MEMS Journal: What are some of the IoT initiatives or industry groups that InvenSense is a part of?
BA: We are working with a number of partners on various initiatives that will be announced in due time.
MEMS Journal: The consumer electronics motion sensing business is getting even more competitive with three-axis accelerometers now selling for $0.20 or even less. How do you plan to stay competitive with such low ASPs? What's your strategy to maintain and increase profitability?
BA: Discrete motion sensors might get commoditized, but integrating multiple sensors, including gyroscope, pressure, compass, and others is a very complex challenge. We deliver a complete sensor system on chip (SoC), combining multiple sensors, signal processing, and software algorithms. We get value by focusing on end customer features.
MEMS Journal: End customer features such as?
BA: Motion sensors are critical for enhancing navigation, imaging, health and fitness apps such as pedometers, and gesture based user interface.
MEMS Journal: Last year you acquired the MEMS microphone business from Analog Devices. Why was that move made?
BA: We see tremendous synergy between sound and motion in how we interact with devices around us. Examples are smartphones and wearable computing devices such as Google Glass. We see the microphone as another sensor that will enable a much more comprehensive motion tracking and interactive experience. We were already developing a MEMS microphone, and with this acquisition we brought in a very talented and experienced team and tremendous know-how and IP, as well as existing products that will accelerate our roadmap.
MEMS Journal: Can you provide a few use cases where microphones and motion sensors can be creatively combined for new types of applications?
BA: One example is the Google Glass where you tap, and talk into the device. Another example is simply picking up a phone to make a call whereby motion, combined with voice command, without pushing any buttons, can enable a more natural interaction.
MEMS Journal: Are you planning to acquire more companies or product lines in the near future? If you were to acquire a company or a product line this year, what type of sensor would it be?
BA: We’re always looking to strategic acquisitions to strengthen our solutions, but we’re not prepared to openly discuss those at this time.
MEMS Journal: What are your plans for 2014? What are the major milestones on the agenda?
BA: We are gaining share in mobile with new and existing customers. We need to execute and deliver to these customers, while we build out our next generation products. We’re also expanding into wearable devices and enabling new solutions with higher integration of motion and audio, plus software algorithms. Finally, we continue to add capacity to serve our growing market.
MEMS Journal: In 2012, Nintendo was your largest customer at 23-24% of total sales. In 2013, they are not even in the top three. Also, the percentage of your sales into gaming applications is down significantly. What happened?
BA: Gaming sector in general has been challenged by many games moving into mobile phones. Also, our mobile phone revenue has grown substantially over the past couple of years, further reducing the gaming percentage of our business.
MEMS Journal: What's the main threat to InvenSense's current business?
BA: Lack of execution. There’s a lot of competition and everyone sees the same opportunities; it comes down to who executes faster.
MEMS Journal: InvenSense got into an intellectual properly legal dispute with ST and recently settled it. As part of the settlement, InvenSense agreed to pay ST a fee of $15 million. ST has its own fabrication facilities and larger volume. How will you continue to compete with them? What’s unique about InvenSense compared to the other MEMS motions sensor makers such as ST, Bosch, and Kionix?
BA: In the last two decades the fabless companies have outgrown the large IDMs who own their fab. Fab ownership is simply an outdated model and is does not promote innovation. We’re simply applying that same successful model here. We are innovating and differentiating at the technology level, as well as system and software level.
MEMS Journal: What's your opinion on the market for MEMS based motion sensors in China? What are the main challenges that you are facing there?
BA: With the penetration of LTE and increased content, we see high-end smartphones increasing in volume, which means increased attach rate for motion tracking, so we’re very excited about it. We are very excited about this trend. The main challenge is supporting the quickly increasing number of customer opportunities.
MEMS Journal: In 2013, your sales in Japan, the US, and Taiwan dropped significantly (chart below). On the other hand, Korea and China saw significant growth due to Samsung and Xiaomi, respectively. Since China is now your highest revenue growth region, do you anticipate problems with lower ASPs because of the cheaper smartphone handsets that are more popular in China?
BA: ASP erosion is a fundamental element in the consumer semiconductors market segment and not unique to any geography. We have competed effectively by adding value such as lower power, and additional features, while driving down cost.
Figure 1. InvenSense net revenue by geographic region (source: InvenSense).
MEMS Journal: Which industry events did you personally attend in the past year? Which one was your favorite and why?
BA: CES and the Mobile World Congress are always the most exciting events, as our message of AlwaysOn and Audio+Motion not only resonated with many customers and eco-system partners, but was copied by many competitors, which further validated our strategic focus.
This article is a part of MEMS Journal's ongoing market research project in the area of MEMS and sensors for consumer electronics applications. If you would like to receive our comprehensive market research report on this topic, please contact Dr. Mike Pinelis at firstname.lastname@example.org for more information about rates and report contents.
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