SiTime, a market leader in MEMS timing devices, announced last week that it has publicly filed a registration statement with the U.S. Securities and Exchange Commission (SEC) relating to a proposed initial public offering (IPO) of its common stock. SiTime had revenues of $101 million in 2017 and $85 million in 2018. For the nine months ended on September 30, 2019, the company reported revenues of $56 million, compared to $62 million for the same period in 2018. Barclays and Stifel are acting as book-running managers for the proposed offering. Needham & Company, Raymond James, and Roth Capital Partners are acting as co-managers for the proposed offering. The number of shares to be offered and the price range for the offering have not yet been determined. SiTime has applied to list its common stock on Nasdaq under the ticker symbol "SITM".
SiTime believes that its operating results for the foreseeable future will continue to depend to a significant extent on revenue attributable to Apple, its largest end customer. Sales attributable to Apple have historically accounted for a large portion of SiTime's revenue and were approximately 61%, 40%, 33%, and 35% of the company's revenue for the years ended December 31, 2017 and 2018, and the nine months ended September 30, 2018 and 2019, respectively.
With over 1.5 billion devices shipped, SiTime is a wholly owned subsidiary of MegaChips Corporation (Tokyo Stock Exchange: 6875), and offers MEMS based configurable timing solutions which offer a feature set that enables customers to differentiate their products with high performance, small size, low power, and high reliability. The company's other top customers by revenue for the six months ended June 30, 2019 include Apple, Fitbit, Garmin, Hangzhou Hikvision Digital Technology (or HiKVision), Samsung Electronics, Google, Microsoft, Dell, and Huami Corporation.
The following text includes a few edited excerps from the company's IPO prospectus:
For over 250 years, timing solutions have focused on providing increased accuracy under harsh environmental conditions, while also accommodating the increasing need for smaller sizes, greater portability, and lower cost. As electronics continue to evolve at a rapid pace, suppliers require increasingly advanced timing solutions to solve performance, reliability, power, and size challenges in applications ranging from large high-power equipment to small low-power battery-operated devices.
The ability to accurately measure and reference time has been essential to humankind’s greatest inventions and technological progress. For example, the invention of the marine chronometer in the 18th century, which accurately measured time and geographic longitude for seafaring vessels, ushered in an era of unprecedented exploration and innovation that continues to this day. Timing is the heartbeat of every electronic system, ensuring that the system runs smoothly and reliably by providing and distributing clock signals to various critical components such as central processing units, or CPUs, communication and interface chips, and radio frequency components. As electronics are expected to operate at higher performance levels in increasingly challenging environments, while also being more complex and footprint-constrained, SiTime believes they will require more sophisticated timing solutions. For example, as 5G communications networks mature, the company expects that they will require higher precision from a greater number of oscillators and timing systems.
There are currently opportunity for advanced solutions in applications where SiTime believed their MEMS based timing solutions are enabling greater functionality than legacy solutions:
Telecommunications, enterprise, and cloud infrastructure
Communications infrastructure equipment used in wireless base stations, wired infrastructure equipment, enterprise networks, and cloud data centers must provide high performance and stability in demanding environments, which may include temperature fluctuations, mechanical shocks, and vibration. According to Gartner, "Recent reports on 5G pilots and testing have identified a wide range of projected data throughput speeds ranging from 10 times up to 1,000 times faster than 4G. Other reports estimate ranges of one to 10 gigabytes per second."
Industrial
Industrial equipment, ranging from factory machinery to medical devices, is often exposed to environments characterized by temperature fluctuation, mechanical shocks, and vibration. SiTime believed MEMS based timing solutions can perform better than legacy quartz-based solutions in demanding industrial environments at comparable cost and with lower power consumption.
Automotive
For automotive applications, timing technology must perform well and be reliable over the life of an automobile in an environment characterized by vibration, mechanical shocks, electromagnetic interference, wide temperature ranges, and rapid temperature change. Toyota estimates that the "data volume between vehicles and the cloud will reach 10 exabytes per month around 2025, approximately 10,000 times larger than the present volume." These communication systems will require precise timing. SiTime believes MEMS based timing can address many of the challenges associated with these demanding automotive applications.
IoT and mobile
The IoT revolution will enable the proliferation of billions of internet-connected devices in industrial and consumer applications. According to IHS Markit, the global installed base of IoT devices will increase from 27 billion in 2017 to 73 billion in 2025. Many of these devices need to package a significant amount of electronics in a limited battery-powered and size-constrained envelope, while still requiring high performance and high accuracy. Due to the ability to integrate with ICs, SiTime believes MEMS based timing solutions are well-suited to optimize footprint, reliability, and power consumption of the overall system within IoT and mobile devices.
Aerospace and defense
Timing devices used in aerospace and defense applications such as rockets and satellites need to withstand extreme vibration forces and temperature gradients during operation. MEMS timing devices are well-suited for these applications, as they provide up to 40 times better stability under vibration than comparable quartz-based solutions.
According to Dedalus Consulting and SiTime's estimates, the global timing market is over $7.7 billion as of 2018 and is expected to grow to $10.1 billion by 2024. To date, SiTime has generated substantially all of its revenue from sales of oscillator systems, which represent approximately $3.8 billion of this $7.7 billion market. SiTime's current products also include resonators and clock ICs, which represent approximately $2.9 billion and $1.0 billion of this market, respectively. SiTime has generated modest revenue to date from sales of resonators and de minimis revenue from sales of clock ICs, which they began sampling in the second quarter of 2019.
SiTime believes it's disrupting this market from a technological perspective since they are focused on designing system-level timing solutions based entirely on silicon, in contrast to legacy quartz-based timing solutions, and believe they are currently the only company focused on designing and producing all components of a timing solution, in contrast to other companies which typically design only one or two components.
The company believes they are also disrupting this market because they offer products differentiated by high performance and reliability, programmability, small size, low power consumption, temperature stability, and resilience to mechanical shock and vibration, at an optimum price.
SiTime claims that its solutions have been designed into over 200 applications across their target markets, including enterprise and telecommunications infrastructure, automotive, industrial, Internet of Things (IoT), and mobile, aerospace, and defense. As of September 30, 2019, SiTime says they have shipped over 1.5 billion units to over 10,000 end customers, which they believe is a substantially greater number of units shipped than any other MEMS timing company.
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This article is a part of MEMS Journal's ongoing market research project in the area of MEMS based timing devices. If you would like to receive our comprehensive market research report on this topic, please contact Dr. Mike Pinelis at [email protected] for more information about rates and report contents.
Copyright 2019 MEMS Journal, Inc.
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