Frost & SullivanFrost & Sullivan

MEMS in the Russian semiconductor industry landscape MEMS in the Russian semiconductor industry landscape

Dmitry PokhlebkinFrost & Sullivan

Russia holds a small share of the global electronic components* (EC)market, with domestic electronic components meeting only 27% of the Russian market demand

Russian electronic components market: Supply chain, 2013

Global electronic components market: World segmentation, 2013 г.

Foreign EC manufactures

Foreign franchise distributors Global electronic components market

Russian EC

Imports

D ti

Foreign independent distributors

Other17 %Other17 %

Russian electronic components market reached $ 2.7 Bn in 2013

reached $ 450 Bn in 2013

manufactures

Federal Russian distributors

Domestic

Combined

USA12 %USA12 %

Europe11 %

Europe11 %

Russia< 1 %

Russia< 1 %

JapanJapanChina53 %China53 %

17 %17 %

Regioanl Russian distributors

Combined

11% 8% 17% 53% 10% 1%

p7 %p

7 %53 %53 %

Конечные потребители электронных компонентов (OEM, EMS)

Domestic electronic components comprises27%Note: * - Electronic components include semiconductors and passive

2

27%

Sources: Frost & Sullivan

components

Even provided outpacing growth of the domestic electronics industry Russia will keep staying lower 1% of the global marketRussia will keep staying lower 1% of the global market

Russian electronic components market, $ BnGlobal electronic components market, $ Bn

2,34 2,52 2,703

375419 429 449

400

500

CAGR 2009 – 2013 гг.11%

CAGR 2009 – 2013 гг.18%

1,41

1,90

1

2298

200

300

400

02009 2010 2011 2012 2013

0

100

2009 2010 2011 2012 2013

0,6% 0 9%100%

Segmentation of global electronic components market, %Current Russia share in the global

electronic components market is 0,6% (ie2.7 / 449)

99,4% 99,1%

0,6% 0,9%

98%

99%Russia

World

Provided outpacing growth of the domestic electronics industry (ie 18% -11%) Russia will have 0,9% by 2020

3

2013 2020Sources: Frost & Sullivan

… but “Ukrainian crisis” consequences are not taken into account …

Negative factors of possible sanctions against Russia:

Correlation graphs of oil prices and Russian electronic components market

1503 against Russia:Force reduction oil prices on the international market

Oil price forecast implicit in the federal50

100

150

1

2

3

/ ba

rrel$ Bn

Oil price forecast implicit in the federal budget for 2014 is $ 101 per barrel

Increased competition in the world military markets

002009 2010 2011 2012 2013

$ /

Russian EC market Oil price

Currently 35% of the Russian EC market is military and aerospace

… others:

Russian EC market segmentation, 2013 г.

5%4% 2%

Military and aerospaceRupture of the cooperation in a number of international research projectsIssues of “dual use“ equipments and products imported into Russia

35%7%

6%

5% Military and aerospace

Industrial electronics

Communications equipment

Automotive electronicsproducts imported into Russia…

8%

8%

Security systems

Consumer electronics

Medical electronics

Lightning and displays

4

25%Retail equipment

Sources: Frost & Sullivan

On the background of value migration in EC subsegment Russia participates in the most marginal and high-tech EC sectors, excluding passive EC, but not enough developing microelectronics

EC value chain, Russia, 20135 years ago today in 5 years

Materials EC Modules Product Materials EC Modules Product Materials EC Modules Product

37%∑ = 100% 35%∑ = 100% 32%∑ = 100%

Segment of “Product" will slightly decline due to the weakening value component of a brand

5%

22%

35%

7%

25%

33%

10%

30%

28%p

“EC” would take a part of “Modules” share due to increasing cost of technologies5% 7% 10%

Semiconductor market structure, 2013EC market structure, 2013

technologies

93%

7%29%

50%

100%

82%

79%

18%

50%

100%There is no significant amount of EC production in Russia which is a

However, Russian microelectronics share is much lower compared

71%

0%Russia World

21%

82%

0%Russia World

O l i di

positive factor; EC are more profitable

pto the World structure

5

Passive ECSemiconductors

Optoelectronics, sensors, discretesMicroelectronics Sources: Frost & Sullivan

so far …

Provided outpacing growth of the domestic electronics industry Russia will have <1% by

20202020

The Russian EC market maintains its dependence on imports and oil price

Russia engaged in medium margin segments without competing with China in theRussia engaged in medium-margin segments, without competing with China in the

segment of passive EC, on the other hand - not having sufficient domestic market for

development of microelectronics segmentp g

Is it all points of growth …?p g

6

Global MEMS trends: growth due to new technologies and market-based solutionssolutions

The projected CAGR of the global MEMS market will stay above the global EC market growth - about 13%*growth about 13%Current MEMS global market is about $ 12 Bn, and will exceed $ 20 Bn in 2018

A h lf f MEMS t h l i t th t f "I t d ti " d “G th“A half of MEMS technologies are at the stages of "Introduction" and “Growth“20 basic MEMS technologies: "Introduction" - 20%, "Development" - 30%, "Maturity" - 40%, "Decline" - 10%

3 key industry segments ("Consumer Electronics", "Automotive" and "Healthcare") ocupy 80-85% of global MEMS market and this trend will continue within the next 5 years"Healthcare” will take a part of "Automotive“ share; "Consumer Electronics" will remain at the same level

Note: * - The average price per a MEMS unit will decline by about 30%

7

about 30%

Sources: Yole Développement, Frost & Sullivan

Russian MEMS trends: formation of the domestic market for MEMS starts at the background stagnating segmentsat the background stagnating segments

Today the Russian market is represented in a form of imported preassembled modules with integrated MEMS-componentsThere is no domestic mass-production of MEMS; and MEMS components are not supplied: 1) No national assembly modules, 2) assembled modules should not be repaired (module changes entirely)

Structure of Russian MEMS market differs from the structure of the world MEMS market World MEMS: «Consumer Electronics", "Automotive" and "Health" - collectively more 80%Russian MEMS: «Automotive", “Military" and "Industrial Electronics" - collectively about 80%

The main segment of the domestic MEMS market – "Automotive" is experiencing a serious decline" Automotive" - decline by 8% in 2014 (PwC forecast) Automotive - decline by 8% in 2014 (PwC forecast)

8

Sources: PwC, Frost & Sullivan

Frost & Sullivan ranked EC segments recommended for support and development in Russia based on the World trends and Russian market features

Semiconductors

Microelectronics Other semiconductors

3D; RFID; Аналоговые ИС

Радиационностойкие (Rad-Hard)Высоконадежные (High-Rel)

Optoelectronics :Цифровые матрицы с

Sensors and actuators:Датчики давления (Pressure sensors)

Discretes:Силовые транзисторы и модули

3D; RFID; Аналоговые ИС

Цифровые матрицы с чувствительными элементами (CCD and CMOS image sensors)Лазерные передатчики и приемники (Laser transmitters and pickups)Твердотельное освещение и

Датчики давления (Pressure sensors)Датчики ускорений и рысканья (Acceleration and yaw sensors)Датчики магнитного поля (Magnetic-field sensors)Микроэлектромеханические

Силовые транзисторы и модули (Power transistors and modules)Слаботочные транзисторы (Small-signal transistors)Переключающие транзисторы (Switching transistors)Твердотельное освещение и

светодиоды (Solid-state lamps and LEDs)Устройства инфракрасного диапазона (Infrared devices)Оптроны и оптические переключатели

Микроэлектромеханическиесистемы (MEMS)

(Switching transistors)Диоды (Diodes)Выпрямители (Rectifiers)Тиристоры (Thyristors)ВЧ и СВЧ диоды, транзисторы и модули (RF and microwave diodesр р

(Couplers and optical switchers)Цифровые визуальные индикаторы (Digital character display)Фотоэлектрические модули (Photovoltaic solar cells)

модули (RF and microwave diodes, transistors and modules)

Note: 1) - «First tier»

9

Оптоволоконные компоненты (Fiber-optic components) 2) - «Second tier»

Sources: Frost & Sullivan

10 arguments in favor of MEMS in Russia

1. MEMS market is growing faster than the World EC market

2 M j i f MEMS h l i h l

Today MEMS leads at two percent, tomorrow - more

"I d i " d "D l " i l d ½ MEMS2. Majority of MEMS technologies are at the early stages of lifecycle

3. Large range of possible applications in all industrial segments

"Introduction" and "Development" include ½ MEMS technologies

Examples: portable electronics, automotive, military, space, medicine, security, etc.seg e ts

4. MEMS technology opens up new design possibilities

5. The reduction in size leads to increased sensitivity of 

Mainly due to miniaturization, which allows to create entirely new products

By reducing the inertia of a device mechanical elementsythe sensors based on MEMS

6. Greater reliability compared to the separate components

By reducing the inertia of a device mechanical elements

SoC reliable sets of multiple devices with the same functionality

7. MEMS technology allows to reduce power supply

8. The reduction in size leads to a reduction in the chip 

Low power consumption results in lower heat generation

Additional cost savings through reducing consumption of expensive materialsarea

9. There is a sort of activity in MEMS in Russia

10 A ti MEMS i t t d l t f

expensive materials

Russian Association of MEMS, about 20 domestic organizations developing MEMS

Att ti t MEMS ithi "D l t f t h l

10

10.Accounting MEMS in strategy development of Russian electronics industry

Attention to MEMS within "Development of nanotechnology industry in the Russian Federation until 2015"

Sources: Frost & Sullivan