Image sensors have a long history, dating back to fax machines and video cameras, but the recent steep run is largely thanks to the cameraphone. The cameraphone provided a convergence of factors that drove revenues to steep double-digit levels: a simultaneous swelling of handset sales worldwide, growing adoption of cameras in handsets, and rapid migration toward greater pixel counts in those cameras.
Now handset sales are taking a breather, dropping an expected 10% in unit sales this year. Other segments are also seeing declines, of course, and unit prices for the image sensors are relentlessly competitive.
The figure shows the long steep ride on a log scale, from our new report. The log scale makes it easy to see the change in growth rate (a chart with a linear scale is in our press release). What's remarkable, perhaps, is that the market decline this year won't be more severe than it is already.
We still expect single- and low double-digit growth in the recovery, and there are still many new opportunities for growth in unit sales beyond that. The two most notable are automotive and webcams. But, it gets more and more difficult to drive revenues up when it’s already near the $7 billion mark. Without the fortuitous convergence of rising cameraphone sales to drive the market forward, cycles will become more prominent.
By the way, it's not that the suppliers have had an easy time of it up to now. (Sound familiar, anyone?) But that will be a topic in a later blog.