STMicroelectronics continues to dominate the MEMS foundry business, with some 40% share, up slightly in 2009, as its revenues held up significantly better than most of the other major foundries in the downturn in consumer electronics and automotive sales. Healthy 19% growth pushed Dalsa Corp. past Micralyne Inc. to become the largest of the pure-play MEMS foundries with $31 million in reve-nues. Dalsa moved into third place overall, closing the gap with number two Texas Instruments, who saw its foundry business slip 24% last year to $45 million.

Foundries continued to gradually take a larger share of total MEMS production, with total foundry revenues at the leading companies holding up somewhat better than MEMS sales overall. Top 20 foundry revenues, which account for the vast majority of the foundry business, declined about 3% in 2009, slightly less than the roughly 5% drop in MEMS sector revenues overall. May 17, 2010 2

Asia Pacific Microsystems (APM) and Touch Microsystems (TMT) rode the Asian growth wave to 17% and 29% increases in sales, respectively. Jazz Semiconductor saw 25% growth, as startups started production of some new MEMS applications.

Hewlett-Packard is now the largest customer for MEMS foundry services, as the inkjet nozzle maker pursues a fab-light strategy. InvenSense and Knowles Electronics follow as the next largest users, and the first companies to make a significant success—with revenues of more than $80 million--using the fabless model to build a business in innovative MEMS products, with their low cost con-sumer gyroscopes and sector-leading MEMS microphones respectively.

IC companies with their available 8-inch fab capacity will continue to make inroads in the MEMS business, as they master different MEMS product technologies and figure out how best to manage the multiple different process flows. Meanwhile the specialty MEMS foundries—all still under $35 million in annual sales, and most much under that -- have to figure out how to afford advanced pro-duction technology for larger volumes, at consumer product margins. That may leave foundries fo-cusing on a bimodal distribution of tasks –doing, on one hand, the more standard volume manufac-turing of mainstream technology that is not key to product differentiation, and on the other hand doing the development of the most sophisticated leading edge devices where specialized manufac-turing experience can provide faster time to market.

More of the big IDMs that dominate the MEMS market are also offering or using foundry services to make most efficient use of their capital investment. MEMS makers from Sony to GE Sensing and Oli-vetti are offering their production services to select outside customers to help fill their fabs. Even Robert Bosch has restarted offering limited foundry services in its fab, helping companies with pro-totyping and running multi project wafers –as long as customers use Bosch technology blocks with-out customization.

Meanwhile, other MEMS producers are turning to external foundries instead of adding or updating their own captive capacity. Yole figures another five major MEMS systems makers are now looking to use external foundries, which will boost the foundry business by some $350 million.