2002 tough, but MEMS still a solid business opportunity.

Although a number of significant milestones were achieved in 2002, this past year was one of the toughest to date for those in the microelectromechanical systems (MEMS) industry, according to In-Stat/MDR (Scottsdale, AZ, www.instat.com). The high-tech market research firm reported that year-over-year revenues grew just 4.4%--from $3.8 billion in 2001 to $3.9 billion in 2002--even though unit shipments increased 47.6%.

However, according to Marlene Bourne, a Senior Analyst with In-Stat/MDR, "A number of governments, who believe that this technology of the future cannot be ignored, are well on their way to creating the infrastructure necessary to ensure that they won't be left behind. Future regional competitiveness may very well be a direct result of the significant level of spending that is taking place right now in China, India, Mexico, Taiwan and other countries."

Despite the mixed news, MEMS remain a solid business opportunity for both customers and suppliers. As such, revenues are forecast to increase at a compound annual growth rate (CAGR) of 15.9% to $8.3 billion in 2007, with unit shipments growing at a CAGR of 26.1%, from 1.0 billion units in 2002 to 3.3 billion units in 2007.

The funding in this market for the first six months of 2003 was just $52.2 million, on track to be the lowest level since 1998. Also, nearly two-dozen companies have gone out of business including at least four fabs. To add to the strain already being felt in the fab sector, only 11% of companies supplying MEMS devices are currently outsourcing their fabrication needs.

According to the report, some fairly radical shifts in market shares will occur over the course of the next five years. Radio frequency (RF) MEMS will see the biggest gains (in terms of unit shipments), with optical MEMS gaining the most, on a revenue basis. As for end-use markets, industrial will gain the most, from a unit shipment standpoint, while communications will see its share of the market jump, based on revenues.

To purchase the report, "Got MEMS? 2003 Industry Overview and Forecast," or for more information, visit www.instat.com/catalog/Scata logue.asp?ID=47.