GLGi: CMOS Camera Phone Image Sensor Market

Council Member Biography

Roger Douglas Melen, PhD., is a consultant specializing in electronic-imaging nanotechnology sensors. He knows about CMOS image sensors, CCD image sensors, touch sensors, orientation sensors, position sensors, haptic controls, wifi/wimax hotspots and access points, biosensors, digital cameras, cell phone accessories, digital copiers, fax machines, IBM cell processors, Multimedia DSPs, wireless 802.16 MIMO OFDM access, WIFI kiosks hotspots, audio processing, bionic electronics, protein spectroscopy and digital X-RAY machines. Previously, he was the Vice President-Research and Development at Canon Research Center America and is now a consultant to Toyota. He has authored an IEEE book “CCD Technology and Applications”. He is a member of the Technical Advisory Boards at Cypress Semiconductor for cell phone CMOS image sensors, and at Fiorano on Internet services. He also has experience in the products of Kodak, Canon, Micron, Omnivision, Magnachip, Atmel, AMD, Metrofi & VIMicro.

Table of Contents

CMOS image sensor: Market overview, competitive landscape and future trends

Industry players: comparative analysis and positioning

Emerging technologies: New market entrants and product/technical differentiation

Cameraphones: Implications on user trends and social networking

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Competitive Landscape ofThe CMOS Cameraphone

Image Sensor MarketRoger Melen PhD

PHD Thesis: CCD Image SensorsIEEE Book 1976: Charge Coupled Device Technology and Applications

Stanford Consulting Professor Electrical Engineering 1974-Current

Founder: 1976-1986 Cromemco Graphic Imaging ComputersVice President of Research: 1990-2001 Canon Research, Palo Alto California

Senior Advisor Toyota ITC Palo Alto: 2001-Current

Sept 11, 2007

1994 Canon Inc (Japan) Invents Digital Camera Cellphone

1995 Apple under John Scully Invents A Mockup of an

AppleVideophone(MacWorld ’95)

But in 1995 the analog cellphones transferred digital data too slowly

Cellular Cameraphones are more than 14 years old !!!

Lightsurf (sold to VeriSign in 2005 for $270M by Philip Kahn was the founder)

and Sharp developed the first U.S. Market cameraphone (model J-SH04). This first Sharp cameraphone brought to the US market was in 2002. It was connected to the Sprint Cellular Network. This phone had a ~$25-35 CCD image sensor module

However CCDs were too expensive and consumed way too much powerfor long battery life in cellphones

In early 2003 Cellphones based on low power and low cost ($4) MicronAnd Omnivision CMOS image sensors hit the cameraphone market and the rest is history.

Kodak CMOS Patents usedBy Micron, Omnivision, and others.

U.S. Patent # 5625210 Pinned PhotodiodeU.S. Patent 6624850 4T CMOS

Magnachip 2005 Camera module with1.3 Mp (This particular sensor had poor image quality and was redesignedIn 2006)

Source: Micron

By 2005 Micron was established as clearly the #1 supplier and Omnivision #2

Source: ISuppli

Cameraphone sales have exploded since 2003. The camera market penetration has gone from 0% to 70% in just four years aidedby additional cost savings ($3+$3=$3) from integration with the image processor chip. Micron has emerged as the leader.

Source: SEC 10Q & 10K

.3 MP 1.3Mp 2 Mp 3Mp

2004 2005 2006 2007

Dominance in CMOS Image Sensor Chip Market Share has not helped Micron’s Stock Price.

Source: Micron

In 2006 Micron pulled ahead of Omnivision and gaining market share. Magnachip lost major share as the market sweet spot moved to 1.3 Mp. STMicro moves ahead of Magnachip to gain #3 position.

Comparison of the “ Big Four” Cellphone Sensor Companies

Micron Omnivision Magnachip Samsung

Main Business DRAM CMOS image sensors (pure play)

2nd Tier Foundry

Consumer Electronics

Giant

2007 Image Sensor Market Share

~ 35 % ~ 20 % ~8 % ~5-10% ++

Image Sensor Operating Margin

~ 25% ~ 25% ~ 8% ~

“New Killer Feature” 3 Mp Anti-shake

Reduced Delay, Wavefront focus

Autofocus .25 inch 3 Mp

Product Range .3 to 3 Mp .3 to 3 Mp .3 to 3 Mp .3 to 3 Mp

Manufacturing In-House Outsourced toTSMC (foundry)

In-House In-House

Finance NYSE Nasdaq Discounted $1B corporate bonds

KoreaInc

• Many places now have laws prohibiting picture taking private areas under a person's clothing without that person's permission

• Certain locations, such as airports, railroads, bridges, tunnels, or certain landmarks may be banned.

• Filming on private property follows many restrictions.

• Photographing or videotaping a tourist attraction, whether publicly or privately owned, is generally considered legal, unless explicitly prohibited by posted signs.

• Photographing of retail premises is permitted unless explicitly prohibited by posted signs.

• One must not to hinder the operations of law enforcement, medical, emergency, or security personnel by filming.

• Any filming with the intent of doing unlawful harm.

Laws have been passed to regulate the usage of Cameraphones but the laws have had limited effectiveness:

Source: Wikipedia

Innovative companies are developing autofocus, flash-free performance• Artificial Muscle of Menlo Park, CA (www.artificialmuscle.com) has new revolutionary DLP-95 auto-focus lens positioner. Based on their patented ElectroActive Polymer Artificial Muscle (EPAM™), AMI is introducing a reliable, battery-friendly, lightweight alternative to conventional electromagnetic actuators such as voice coils or steppers.

• DxO of Paris, France (www.dxo.com) has “Silicon Powered Optics” an advanced IP solution based on a revolutionary co-design of the optics and the ISP chain. •InvenSense of Santa Clara, CA (www.invensense.com) will present the first single-chip, dual-axis gyroscope for cameraphone image stabilization, designed and priced for volume manufacture

•Johnson Electric of Hong Kong (www.johnsonelectric.com) has Nanomotion's NanoLens and NanoZoom technologies. NanoLens is the fastest and most accurate Autofocus camera module while NanoZoom is the only zoom designed for small handsets, featuring x3 zoom in an extremely compact space with high design flexibility. •New Scale Technologies of Victor, NY (www.newscaletech.com) has the world’s smallest linear motor, piezoelectric SQUIGGLE motor, which adds both autofocus and optical zoom to phone cameras and offers 10x better force and resolution than micro-motors twice its size.

•Varioptic of Lyon France (www.varioptic.com) will demonstrate the world's smallest commercial liquid lens camera module - 2mp autofocus

•Kodak is licensing new color filter array CMOS image sensor technology for better low light performance

Johnson Electric autofocus lens

Lens and Focusing Advances

Cameraphone usage is not the same as a Camera Usage (digital camera ownership is high among camerphone owners)

“Modern cameras taught Americans to both conceive of their lives in terms of fondly remembered events and to edit out unpleasant memories.” Source: Kodak and the Lens of Nostalgia

Kodak cameras are preferred by women to take pictures of children and family with the best brand and simplest camera.

Canon cameras are preferred by men. Men prefer more controls and own more equipment.

Cameraphones are use to supplement current camera usage.

Camera phones Are part of a Greater Trend: Social Networks

Source: Michael Agger

• sharing• anti-crime• memo

an altered perception of the gravity of our day-to-day routines.

fuels the increasingly destructive American habit of over-sharing

enables first-person witnessing of global and neighborhood events

Cameraphones can be an Upload device to YouTube Flikkr Phone-Tag Picasa LiveJournal Rabble Vox Xanga scanR

Nokia and SonyEricsson 2 Mp cameraphone users

are minor but significant contributorsTo Flikkr.

Cameraphones Are part of a Greater Trend:

Sensor Networks

Moore's Law Era enabled Modern Computer Internet Free Telephony and Cellphones Digital Entertainment 1 computer person

“No More Moore” Era Ubiquitous Nano Sensors Wireless Sensor Networks 1000 computers per person

Predicted emergence of many new sensors at home, and in the office, car, airport, as well as in your future clothes.

Image Sensor Near Term Business Outlook

• Micron maintains #1 position as the gorilla. Micron’sbusiness may be spun out to private equity.

• Omnivision remains as #2• Magnachip, Samsung & STMicro battle for #3

INSTAT resepredicts 2007 Image Sensor Market= 28% unit growth & 8% revenue growth (ouch!)

There are Risks of Lower Sensor Chip Profit 1. Handset volume is up this year (1.2B) driving cost cutting. 2. CMOS sensor chip market glut may form. From many suppliers 3. Lower Future Handset Market Share is Possible

- Smaller Phones have less space - Cameras add cost for the carrier

and many users never use them.- More than 74 percent of camera phone users

also own a digital camera. Source: the NPD Group, Inc.

3. Future cellphones may be replaced less frequently that the current 24 month period.

4. Most consumers only want cameras in phones as long as they are nearly free.

Outlook: Sensor Chip Revenue is as Good as it Gets

Micron could divest its image sensor business

Rumors and stories of spinning out imaging have been widespread since June.

• “We believe Micron's image sensor segment (approximately 11 percent of revenue), which was a source of cash in 2006, has been a drain on results of late as the company has lost share at key customers. We believe management is considering divesting this segment, and a formal announcement of a sale would likely serve as a catalyst for the stock with cash being used to fund capex, working capital, and debt reduction,” he wrote.

• “Admittedly, a comparison to OmniVision, which is fabless, is not apples to apples, but we do believe it helps give an understanding of what Micron's sensor business could be worth. We note that despite being fabless, we estimate OmniVision carries a higher gross margin than Micron's sensor segment at this point. Below are our assumptions for Micron’s sensor business and valuation scenarios based on OmniVision,” he added.

Source: American Technology Research Doug Freedman

http://www.icinsights.com/news/bulletins/bulletins2007/bulletin20070806.html

• Major Chip Foundries in Asia have been filling and are near to 100% of Capacity• Full foundries are a positive indicator for good chip industry (and cellphone)

Current Chip Market News:

The End