The semiconductor industry can, on a basic level, be split into parts based on function — sense, transmission, computing, and storage. We tend to focus on news and developments on the latest processor, CPU, or communications chip, but what about the simpler chips at the very edge like MEMS (Micro-Electro-Mechanical Systems) sensors instead of advanced AI edge processors? Not all sensors are MEMS and not all MEMS are sensors, but MEMS sensors are everywhere from smartphones to cars, from smart factories to medical apps. So, what are they, how is China progressing in them, and are US sanctions playing a role?
MEMS involves the miniaturization of mechanical and electro-mechanical devices, with dimensions ranging from micrometers to millimeters. MEMS devices are created using microfabrication techniques like those employed in the semiconductor industry. The devices contain tiny moving parts that sense, measure, and control things such as acceleration, pressure, temperature, and light.
China’s MEMS market
China is the largest MEMS market in the world, worth as much as $14.4 billion in 2022, and potentially as much as $24.6 billion by 2025. Today most MEMS feed into the consumer electronics and automotive electronics industries, almost 77% of sales. There is one problem though: foreign companies dominate the Chinese market, as most Chinese players are extremely small. Over 60% of MEMS are imported, with the figure moving above 80% when just counting high-end MEMS products.
Goertek, at 2%, is the only Chinese company with any significant market share. Broadcom (11%), Bosch (8%), STMicro (4%) are some of the larger players in the Chinese market. The industry as a whole is rather fragmented though, with 54% being ‘other’ companies that are too small to make up even 1% of the market share.
I have counted at least 70 Chinese MEMS companies, ranging from design, to IDM, to manufacturing. Products range from audio, MEMS mirrors, microfluidics, optical, radio frequency MEMS, gas sensors, pressure sensors, and more. Most of these companies are found in Shanghai, Jiangsu, and Zhejiang, with Suzhou in Jiangsu province as a major production base.
Investments in MEMS grow every year, from 43 different investments in 2017 to 144 investments in 2022. Investments focus on consumer electronics MEMS, automotive MEMS, bio-medical MEMS, and industrial MEMS. Bio-medical MEMS companies have seen the most investments but consumer electronics have brought in the most in monetary terms.
So why the growth in MEMS imports and how is it going with boosting domestic know-how and production? First, let’s consider market drivers, and second, government policy.
Market drivers and policy
The need for high-end imported sensors has constantly increased along with growth in China’s consumer electronics assembly industry, as this has started to flatten out, new industries have stepped in to help continue this growth in demand for MEMS sensors. Big data coupled with IoT means more and more sensors are being used to gather data for processing. These sensors may be applied to smart cities and factories and become prevalent in EVs. In EVs some of the most common sensors are inertial sensors like accelerometers and gyroscopes; optical MEMS like mirrors for driverless solutions, pressure sensors for airbag deployment or inside batteries; and thermal sensors to monitor subsystems like BMS. More than 100 MEMS sensors are now used in every car, and this figure will increase.
Automation and safety, whether it be in a vehicle, a factory, or a city, require these sensors.
China’s 14th Five-Year Plan, the 2021 Development Plan for Basic Electronic Components, and the 2021 Three-Year Action Plan for IoT Infrastructure all mention MEMS, the second of which even calls for targeted support of temperature, gas, motion, photoelectric, velocity, and biochemical sensors. The private industry has taken note, and that’s why we are seeing more and more companies entering the field, and local governments adding support initiatives of their own.
While the majority of US sanctions have focused on high-performance semiconductor manufacturing equipment and computing chips, sensors have been caught in the political crosshairs, and the February China balloon incident might mean the sector comes under more scrutiny. Since 2018, I can count at least six MEMS-specific companies that have been placed under some form of US sanction. Including sensors in general this may be over 16 companies. Chinese companies that directly describe themselves as MEMS companies include, MTMicrosystems, Shanghai Nova Instruments, North (Tianjin) Microsystems, Shenyang Institute of Instrumentation Science, Beijing Yanjing Electronics, and Hangzhou Haikang Micro Image Sensor. Only one company sanctioned after the balloon incident is sensor-focused, Dongguan Lingkong, specializing in long-range sensors. Further information is hard to find because its website seems to be down, as is the website of its major 80% controlling shareholder Eagles Men Aviation, also on the list.
Despite these sanctions, most Chinese MEMS companies face no restrictions. The market is dominated by foreign players, but I see no technical reason why Chinese firms can’t compete with the big boys. Right now, though, most lack the economies of scale to compete globally. Government interest in this area could help but we seem to see more local help, from municipalities like Suzhou, rather than central government help, as there are fewer barriers in this space compared to other parts of the semiconductor industry. I expect in the coming years we will see China’s larger players like GoerTek, SMEI, and MEMSRight gradually grow, even into foreign markets, while foreign firms continue to dominate in the foreseeable future. Automotive, bio-medical, and industrial sectors all show strong growth potential in China, which is good for the MEMS industry, and despite a weaker consumer electronics industry and some factories moving away from China, the fact is it is still the largest electronics manufacturing center in the world, and so China’s appetite for MEMS solutions in this space will stay strong.