According to a new report from IHS, MEMS microphone sales will exceed $1 billion in 2014, up 24% from last year. Long-term, the market is expected to reach $1.37 billion in 2017 with big customers Apple (NASDAQ:AAPL) and Samsung (NASDAQOTH: SSNLF) leading the way.
Both electronics giants feature up to three microphones in their handsets, and that may soon increase to four. Together, they are driving the market, particularly in the high-end MEMS microphones. IHS expects sales of high-end chips to increase 40% in 2014.
What's driving the market?
Handsets and tablets make up the majority of MEMS microphone consumption. Whereas most cell phones were typically equipped with a low-quality microphone suitable for phone calls, today's high-end, and even the mid-end, smartphones require high-quality microphones. What's more, phone makers require multiple microphones now for noise cancellation and better speech recognition.
The two biggest high-end smartphone manufacturers are Apple and Samsung. Combined the two companies made up 96% of revenue for very-high signal-to-noise ratio, or SNR, MEMS microphones. The category is defined as an SNR 64 decibels or above. The companies use these high-end chips for improved voice commands through Siri or Google Now.
As more companies aim to differentiate their hardware, they may look to voice control to separate themselves from the pack. This will lead to more mid-range phones using very-high SNR microphones.
InvenSense vs STMicroelectronics
Although the two companies ended their legal battle and agreed to cross-license certain patents, the two MEMS chipmakers are still very much at ends when it comes to winning designs and increasing the top line.
Here, InvenSense's focus is starting to pay off. The company makes far fewer products than STMicroelectronics, specializing in MEMS chips, and got into MEMS microphones through the acquisition of ADI segment. As a result, its very-high-SNR microphone selection is rather robust.
In fact, its recently released ICS-40161 is a top-port microphone that sports 65 dB SNR and a very high 131 dB maximum SPL, or sound pressure level. The microphone, along with its sister bottom-port version, offers flexibility to OEMs looking for high-end microphones for both the top and bottom ports of their designs.
In total, InvenSense offers eight designs that qualify as very-high-SNR microphones including the ICS-40720, which sports a 70 dB SNR. (And remember decibels are on a logarithmic scale, so 70 dB is about four times more powerful than 64 dB)
Comparatively, STMicroelectronics doesn't sell a single microphone that fits the very-high-SNR bill. The highest SNR in any of its microphones is 63 dB, which qualifies as "high-SNR." Although, the market for these chips is growing, which is better than the shrinking low-SNR market, ST doesn't hold any particular advantage over the competition.
Growth despite the slowing smartphone market
There's still a lot of growth left in MEMS microphones despite the impending slowdown in smartphone sales. Samsung and Apple are leading the way in adding additional sound sensors to their designs to improve functionality.
Moreover, Samsung is investing heavily in wrist-wearables, and Apple is expected to follow. Voice control represents an elegant solution to significantly smaller screens on wearables, leading to an increased demand in high-end MEMS microphones.
Amazon.com introduced another market for MEMS microphones on Wednesday with its voice-controlled set-top box. The company put the microphone in its remote instead of the box, which means users won't have to shout across the room, but a very-high-SNR microphone is ideal for such applications nonetheless. And it's these high-end chips that are driving the market higher as manufacturers maintain selling prices.
As more devices add voice control, MEMS microphone makers are poised to capitalize. InvenSense's technology is far superior to STMicroelectronics and privately held Bosch (Akustica). As a result, I expect InvenSnese to capitalize on the opportunity better than others.