Monday, September 21, 2009

Consolidation--Part 3: Image sensors as a case study

I can't think of a photonics market where someone doesn't frequently say, consolidation is a-comin'. The image sensor market is no exception. So when we finished our new image sensor report, I wanted to see how it looked over the 13 or so years that we've tracked that market. And you know what? The more things change, the more they stay the same.

At the high level, there hasn't been one iota of consolidation in all those years, despite the fact that the image sensor business has grown about 10X in that time. The first chart shows a simple way of measuring the consolidation. It shows that the top 5 suppliers have had about the same overall share over many years.

I should note here that the membership in the Top 5 has changed during that time. That is, the market share is not static. It's just that there is no sign of a move toward consolidation at that level.

Individual segments, on the other hand, are often highly consolidated. For example, the sales of image sensors for security cameras, for optical mice, and for certain scientific and professional applications are held by just a few players in each case. In fact, this is typical of photonic products, where the overall category is really a hodge podge of subsegments, and few, if any, suppliers can ever achieve significant market share overall.

The next chart shows how the number of suppliers has changed over the years. Far from consolidating, the number of suppliers has increased since the commercial success of CMOS image sensors in this decade. In fact, just as one supplier is acquired or exits the market, another pops up.

So, when referring to consolidation, be sure to mention whether you are referring to a narrow segment, or the overall market. Consolidation in narrow segments is common, while consolidation in the overall product group is unusual.

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