BARRIERS TO THE SUCCESSFUL COMMERCIALIZATION OF MEMS:AN INDUSTRY REPORT CARD FOCUSING ON THE ISSUES OF

DESIGN FOR MANUFACTURING AND TEST

SENSORS EXPOROSEMONT, ILLINOIS

JUNE 8, 2009

Roger H. GracePresident, Roger Grace Associates

Past President and Co-Founder, MANCEF

rgrace@rgrace.comwww.rgrace.com

ROGER GRACE ASSOCIATES• Founded in 1982

• Offices in Naples, Florida and San Francisco, California

• Over 25 Years Experience in the MEMS/Nano industry…an industry pioneer

• International clientele of companies, laboratories and governments

• Specializing in sensors, semiconductors, MEMS/MST, Nanotechnology, capital equipment

• Focus on:

– custom market research

– strategic marketing

– due diligence analysis

– company and product positioning, branding, and promotion

– business development

– distribution channel development

• For more information…www.rgrace.com; rgrace@rgrace.com

BARRIERS TO COMMERCIALIZATION– Lack of high-volume (killer) applications– Lack of well defined direction from roadmaps, industry standards, industry associations– Multidisciplinary knowledge is required– Packaging and testing costs typically at 70% of total value– Lack of focus on customer needs…technology centric suppliers– Technology push versus market pull strategy– Lack of capital formation opportunities, risk averse investors; low IPO opportunity because

of small sales volume levels of companies– Successive “bubble busts” i.e. biomems, optical telecom…wary investors– Very fragmented market, many small companies, few large players– Limited “success stories” of MEMS/MST companies– However…new market opportunities for large volume applications emerging in automotive

e.g. gyros, pressure ;consumer e.g. oscillators, microphones, gyros, accelerometers, and displays; and mil/aero in gyros and accelerometers

MEMS/MST Commercialization Timetable

ProductProduct DiscoveryDiscoveryProduct Product EvolutionEvolution

Cost Cost ReductioReductio

nn

Full Full Commer-Commer-

cializationcialization

Elapsed TimeElapsed Timeyearsyears

Pressure Sensors 1954-1960 1960-1975 1975-1990 1990 36

Accelerometers 1974-1985 1985-1990 1990-1998 1998 24

Gas Sensors 1986-1994 1994-1998 1998-2005 2005 29

Valves 1980-1988 1988-1996 1996-2002 2002 22

Nozzles 1972-1984 1984-1990 1990-2002 2002 24

Photonics/Displays 1980-1986 1986-1998 1998-2005 2005 25

Bio/Chemical Sensors 1980-1994 1994-2000 2000-2010 2010 28

Radio Frequency (R.F.) 1994-1998 1998-2001 2001-2008 2008 13

Rate Sensors 1982-1990 1990-1996 1996-2006 2006 22

Micro Relays 1977-1993 1993-1998 1998-2008 2008 28

Oscillators 1965-1980 1980-1995 1995-2009

2009 44

Median 27

MARKETS & APPLICATIONS• Pressure Sensors

– Automotive– Mobile Phones– Health Care– Energy Management

• Inertial Sensors– Portable Electronics (MP3, Cameras,GPS, Mobile Phones,Computer)– Gaming– Automotive– Military

• Bio Sensors – Patient Monitoring / Personal Diagnostics

• Chemical Sensors– Automotive– Environmental / Building Monitoring

• Displays / Photonics– Pico Projectors

• Microphones– Mobile Phones– Audio Systems– Computers

• Oscillators– Automotive– Consumer /Portable Electronics

• RF MEMS– Mobile Phones– Military Communications/Radar

SUBJECT 98 99 00 01 02 03 04 05 06 07 08

R&D A A A A A A- A- A- A- A- B+

Marketing C- C C+ C+ C+ C C C+ C+ C+ C+

Market Research C B- B- B- B B B+ B- B- B B

Design For Manufacturing

C+ B- B B B B B C+ B- B B+

Established Infrastructure

C+ B B+ A A A A A- A- A- B+

Industry Association INC INC INC B B+ B+ B+ B B B+ B

Standards INC INC INC INC C B- B- B- C+ C C

Management Expertise C C C+ C+ C+ C+ C+ B- B- B B

Venture Capital Attraction

C B- B+ A C C- C C+ C+ C C-

Creation Of Wealth C B- B+ A C C- C- C- C- C C-

Industry Roadmap N/A B- B B+ A- A A B B- C+ C-

Profitability C- C- C- C- C- C- C- C C+ C C-

Employment INC INC INC INC INC C C C+ C+ C+ C

Cluster Development INC INC INC INC INC B B+ B+ B B- C+

Overall Grade B B B- B- C+

DESIGN FOR MANUFACTURING/TEST• 1998 Grade= C+, 2007 Grade= B, 2008 Grade=B+The way it was…• little to no concern for packaging and testing in initial design…

purely an afterthought• small number of “killer apps”…about 8• packaging and testing not considered a major product differentiator• packaging and testing 60-70% of cost of manufactureThe way it is…• packaging and test integral in the design of virtually all high

volume applications• new and innovative e.g. wafer scale technology being adopted by

high as well as lower volume applications but remain limited• packaging and testing now being considered as differentiators• new approaches changing the paradigm of cost structure e.g.

Invensense gyros, Freescale chip- stacking accelerometer, SiTime stacking ASIC/resonators, Ziptronix stacking chips in general

ESTABLISHED INFRASTRUCTURE

• 1998 Grade= C+, 2007 Grade= A, 2008 Grade= A-• The way it was…• little design software support…companies just beginning to enter

market with limited software packages• manufacturing tools as a “home brew” approach• high volume testing company just beginning e.g. ETEC• packaging foundries begging to formulate• The way it is…• software development and companies prolific e.g. Coventor,

SoftMEMS• manufacturing tools designed specific for MEMS e.g. Suss, EVG, • several MEMS- specific packaging companies in place e.g. Amkor,

ASE.• MEMS- specific merchant market test companies still limited

e.g.MST Technology Systems (spinout of ETEC• establishment of MEM Unity…www.memunity.org

MARKETING

• 1998 Grade =C-, 2007 Grade=C , 2008 Grade=C• The way it was:• Companies were technology driven and driven by

technology people• Little to no market research to understand the unfulfilled

needs of the customer, unique advantages and the competitive environment

• Little to no promotion to communicate advantages, effectively create positioning

• The way it is:• Minor improvement from 1998 grade 10 years later• Termination of Micro Nano Newsletter, print version of

Small Times

CRITICAL SUCCESS FACTORS

• The “S” in MEMS stands for “SYSTEMS”…”think outside the chip”

• Adoption of “co-design” principles• Efficient process transfer from breadboard to

production• Pay attention to customers’ needs• Adopt more resources from the semi industry

– People– Packages– Process standardization

MANUFACTURING /PACKAGING/TEST CHALLENGES

• Focus has been on MEMS device design which demands extensive resources

• Design team needs to consider calibration/test strategies early on in the design process…and make provisions for their judicious integration

• Final test cost between 5-30% of total product cost depending on many variables

• MEMS suppliers forces to create their own test systems because of the custom nature of their products…no true play MEMS “test foundries” available…unlike the huge availability of wafer foundries

• Limited number of suppliers available to provide integration/assembly/packaging and test function up to small scale production levels e.g. Infotonics, Bennington Microtechnology Center

• Availability of test systems developers/integrators…bring in early in the design process

• Evolve the solution from breadboard to manufacturing…non-scalability of test systems from Lab View

• Who owns the IP?

SELECTING A PACKAGING AND TEST SUPPLIER

• Need to have established track record with customers having similar assembly and test complexities

• Supplier throughput requirements need to match customers’ needs

• Typically customers test systems become resident in suppliers factory…need to be compatible with suppliers space requirements

• Compatibility of customers process needed with established infrastructure of supplier

LESSONS TO BE LEARNED BY NANOTECHNOLOGY

– Continued support of “design for manufacturing” programs by government funding e.g. National Science Foundation

– Creation of manufacturing tool, packaging and metrology companies

– Continued support of R&D programs by federal governments

– Development of industry standards by SEMI and ASME?

– Creation of an industry roadmap

– Focus on customer needs…technology for technology sake won’t work

– Provide defensible product differentiation…carbon nanotubes?

– Continuation of support of micro/nano clusters worldwide via regional and federal funding

– Create early success stories and hit “home runs” to encourage private investment

– Maximize value added by enhanced functionality/packaging/interfacing

SUMMARY• The overall grade downgraded from “B” in 2007 to “B-” in 2008 with

changes amongst the individual grades…marketing, creation of wealth and VC attraction continue in the “C’s” with established infrastructure and R&D continuing in the “A’s”

• MEMS still has a long way to go to meet the challenges of commercialization especially in the marketing, management and capital formation areas…Nano is far…far behind

• Many opportunities for Nano to learn from its “big brother” i.e. MEMS/MST to help its commercialization acceleration into the market

• Numerous “lessons learned” to date from the semiconductor industry

CALL TO ACTION/RECOMMENDATION

– Create significant awareness as to the unique solution benefits of MEMS based system solutions

– Understand customer/market needs\ vis-à-vis rigorous market research

– Define and establish defensible product differentiation

– marketing pull vs. technology push

– Continue to develop manufacturing/packaging solutions that can help differentiate the product from a price/feature/performance perspective…packaging and testing will continue to be “king”

– “Those who forget the past are condemned to relive it”…George Santayana…The Age of Reason…1908-1910

NOTEWORTHY UPCOMMING MEMS EVENTS

• Transducers’09, Denver Colorado, June 21-25, 2009, www.transducers09.org

• MEPTEC Test Conference, October, San Jose California

• Smart System Integration, March 2009, Como Italy

• MEMS Industry Group Executive Congress, Napa California, Nov. 5-7, 2009 www.memscongress.com

.

• THANK YOU/ DANKE/MERCI/HSIEH

HSIEH/SHOKRUN/GRAZIE

FOR MORE INFORMATION

• Copies of the presentation will be available on www.rgrace.com/SENSORSEXPO09.html in approximately one week.

• Any questions…please contact me at rgrace@rgrace.com