Page 27 - An Introduction to Microelectromechanical Systems Engineering

6 MEMS: A Technology from Lilliput

component level but about $200 million at the system level. The price differential
between the component and the system can readily reach a factor of ten and occa-
sionally higher. Another example is an emerging automotive application for MEMS
initiated by the U.S. Congress when it passed the Transportation Recall Enhance-
ment, Accountability and Documentation (TREAD) Act in 2000 requiring warning
systems in new vehicles to alert operators when their tires are underinflated (the law
was in response to the significant number of fatalities from the Ford/Firestone safety
issue). A U.S. federal court directed the National Highway Traffic Safety Administra-
tion (NHTSA) in August 2003 to require auto manufacturers to install a direct tire
measurement system with a pressure sensor in each wheel [9]. With 16 million new
vehicles sold in North America each year, there is suddenly a new market for nearly
70 million pressure sensors totaling approximately $100 million per year. The cost of
the total system, which includes electronic circuitry and a wireless link to the dash-
board, ranges between $65 to $200 [10], making the market size at the system level
well over $1 billion per year.
Forecasting of the MEMS markets has not been without its feckless moments.
Poor forecasting of emerging applications has left visible scars on many companies
engaged in the development and manufacture of MEMS products. For instance, the
worldwide market for airbag crash sensors is estimated today at $150 million, even
as these components become standard on all 50 million vehicles manufactured every
year around the globe. Market studies conducted in the early 1990s incorrectly esti-
mated the unit asking price of these sensors, neglecting the effect of competition on
pricing and artificially inflating the size of the market to $500 million. As a result,
many companies rushed to enter the market in the early 1990s only to shutter their
programs a few years later.
Marketers also did not fare well in predicting the rapid deflation of the telecom-
munications economic bubble in 2001 and its Draconian effects on the industry. In
the midst of that bubble, studies showed that the markets for optical switches and
tunable lasers, two areas that relied heavily on MEMS technology, would soon
exceed 10 billions dollars. Venture capitalists poured hundreds of millions of dollars
into companies that developed products for fiber-optical telecommunications, many
based on various aspects of MEMS technology. Large companies rushed to spend
billions in acquiring startup companies with innovative product ideas. With its stock
at a historical peak in the year 2000, Nortel Networks of Ontario, Canada, pur-
chased Xros, a startup company in Sunnyvale, California, developing a MEMS-
based optical switch fabric, for $3.25 billion in stock. The market for optical
switches did not materialize and Nortel ultimately shut down the division. During
the same period, JDS Uniphase of San Jose, California, acquired Cronos Integrated
Microsystems of Research Triangle Park, North Carolina, a MEMS foundry, for
$700 million in stock. JDS Uniphase later divested the division to MEMSCAP of
Grenoble, France, for approximately $5 million. Dozens of startup companies met
the fate of death as funding dried out and revenues did not grow. But if this dooms-
day scenario inflicted pain on numerous companies, investors and speculators, it
also sowed the seeds of great innovation into the MEMS industry and left a breed of
highly competitive and reliable products. The intellectual capital left behind will
undoubtedly spur in the near future ideas and products for applications beyond
fiber-optical telecommunications.