This part serves as the conclusion of the 2013 MEMS Industry Commercialization Report Card series that has addressed 14 topics serving as the critical success factors for MEMS commercialization. This episode addresses the topic of Research and Development (R&D) and provides a summary of the Report Card's research findings, conclusion, and recommendations plus a call to action. Finally, it presents a solicitation for your valuable assistance in contributing to the 2014 Report Card.
Research & Development
2013 Grade=B, 2012 Grade=B, Change=0, S.D. = 1.6 (based on 85 respondent inputs), S.D. = 1.20 (based on grades from 1998 to 2013)
Fig. 1: Research and Development activities for MEMS maintained its B level from 2012.
The general consensus amongst the 85 respondents of the Report Card study is that MEMS R&D activity is represented by a small R and a large D. It is commonly accepted in the high tech community that when the economy is in a downfall, as was the case in 2008 and 2009, organizations cut expenditures starting with marketing and R&D. We have previously reported on these phenomena in parts two and 10.
The good news is that the recent involvement in MEMS by companies including Google, Apple, Microsoft, Intel, and Qualcomm have boosted overall MEMS industry R&D activity levels. World class organizations including CEA-Leti, IMEC, CSEM, Fraunhofer, and VTT continue to support the needs of the MEMS community to provide world class R&D expertise. In the US, both DARPA and the National Science Foundation are significant supporters of MEMS R&D activities. Additionally, the US Federal Laboratory System, especially Sandia National Laboratories continue to make significant contributions to MEMS R&D activities. Finally, large corporations including GE, IBM, and Xerox have supported advanced research in many technical fields, MEMS included.
I have opted to provide economic data on total worldwide R&D spending since the obtaining of R&D expenditures specific to MEMS is very difficult to obtain and/or project. This is a result of the unavailability of data from MEMS companies since, with only two pure-play MEMS companies being public, virtually all companies do not make this data available to the general public. However, it is interesting to note that Bosch, a private company, who has a broad line of products including appliances, automotive systems and MEMS, has reported that they have invested 9.9% of their total sales in R&D in both 2012 and 2013 up from 8.1% in 2010 and 2011.
A great deal of information on spending levels and trends can be obtained from the overall worldwide R&D expenditure figures. R&D Magazine and Battelle in their annual R&D forecast reported that worldwide R&D expenditures in 2013 exhibit a zero growth from 2012 levels approximating $1.6 trillion with the top ten countries accounting for approximately 80% of the total. The combined investment of the US, China, Japan and Korea was more than half of the total.
The US led the pack with a total of $449.6 Billion (US) which translates to 2.8% of gross domestic product (GDP). Their Source-Performance Matrix analysis reported that for the US, industry R&D expenditures led the pack with $295 billion. Federal government was at $121.2 billion, non-profits at $16.1 billion, academia at $13 billion, and other government at $4 billion.
In 2013, Europe's R&D expenditure was 1.9% of GDP as it was in 2012. In Asia it moved from 1.8% of GDP in 2012 to 1.9% in 2013. The rest of world maintained its 0.9% of GDP level.
The lackluster performance in 2013 was due primarily to the unsettled European and US economies including sequestration in the US. This in turn, affected global performance since R&D investments often are closely linked with GDP and economic outlook. While R&D funding is not the sole indicator of how a nation, or in this case the MEMS industry, will perform, it certainly is a fundamental consideration among other factors like science, technology, engineering and mathematics education levels, capital markets, healthcare, infrastructure, property rights, and immigration policy.
- Simply because more energy is going into commercialization and less into basic research, much of which has been done. It's never completely over, but is less of a focus than it might have been before.
- Front end MEMS has been heavily researched and developed. Backend MEMS packaging is researched and developed in pockets at a lesser rate with more coming, but struggling some.
- There is little pure research in MEMS that is exciting. A lot of development work but no new breakthrough technologies being researched. A sign of a peaking industry.
- MEMS research is no longer hot for funding in an academic setting, where nanotechnology is currently the norm. It seems like most of the R&D is currently in industry and doing more development than research.
- 2013 was the start of a new golden age of R&D, driven by new apps like wearables, assisted driving, microfluidics, implantables, and new materials like graphene.
- More companies are becoming involved in MEMS development, i.e., Apple, Google, etc.
- Federal funding is very uncertain and decreasing.
- R&D is being pushed a little to the background in favor or commercial product rollouts.
MEMS R&D activities in 2013 have focused on product development rather than on pure or applied research since the majority of MEMS companies are still struggling with profitability issues. MEMS R&D activities will see an increase in 2014 in hopes of playing catch up from the expenditure momentum lost during the 2008 and 2009 global economic downturn. It is important to note that there continues to be a great deal of larger companies acquiring startup/smaller companies as a means recouping from their earlier reduction in R&D investments.
Finally, the recent interest in MEMS from industry giants is very good news since these organizations are known for their strong R&D spending philosophy. IoT and home health care will be major consumers of R&D activities in the near future. These are expected to create major opportunities since sensors and especially MEMS of all different types will play major roles in these wireless sensor-based nodes.
REPORT CARD GRADE SUMMARY
Figure 2 is a summary of the grades associated with the 14 Report Card topics…a.k.a. critical success factors for MEMS commercialization since its inception in 1998.
Fig. 2: The MEMS 2013 Commercialization Report Card overall grade for 2013 remained at B- as it had since 2010. However, there were many changes in the individual topic grades from the 2012 levels.
- The final grade for the 2013 Report Card remained at B- as it has for the previous three years.
- Standard deviation of yearly grades =0.65 The overall grade stayed at B- from 2012 to 2013 with changes amongst the individual grades and with nine grades remaining constant versus three in 2011.
- Established Infrastructure only subject to attain A status.
- R&D, Market Research, Marketing, DfM, Management Expertise, and Industry Association are in the Bs.
- Standards, Creation of Wealth, Profitability, Employment and Cluster Development are in the Cs.
- VC funding the only subject in the Ds and continues to do so.
- No negative changes.
- Positive changes (+1): Marketing, DfM, Profitability, Industry Roadmap, and Standards.
- Standard deviations for subjects range from 1.4 for Market Research to 1.9 for Creation of Wealth.
- MEMS still has a long way to go to meet the challenges of commercialization especially in the marketing and capital formation areas.
- Numerous lessons learned to date and more to come from the semiconductor industry.
Conclusions, Recommendations, And A Call to Action
- Create significant awareness as to the unique solution benefits of MEMS based system solutions and how they add value.
- Understand customer and market needs, vis-à-vis, rigorous market research.
- Define and establish defensible product differentiation.
- Adoption of a marketing-and-applications pull vs. push technology strategy
- Continue to develop manufacturing and packaging solutions that can help differentiate the product from a price/feature/performance perspective. Packaging and testing will continue to be king.
- Accept the fact that obtaining VC funding for MEMS will continue to be a big struggle while better routes are angels, industrial partnering, and buyouts.
- Continue to support the development of MEMS industry roadmaps and standards
CALL TO ARMS: An Invitation To Contribute To The 2014 MEMS Industry Commercialization Report Card
Sensor Newsletter readers are encouraged to participate in the 2014 MEMS Industry Commercialization Report Card. Please go to Roger Grace Associates Website at http://www.rgrace.com to access the study. One each of two-$100.00 American Express gift cards will be awarded to individuals whose names have been drawn who have completed and submitted the survey by the deadline. I am expecting to publish the results of the 2014 Report Card no later than April 30, 2015. All participants in the study will receive a copy of the study final report.
I thank all of the individuals who provided valuable information to me for the creation of this report series through the many long and involved personal interviews. In addition, I wish to thank the 85 individuals who provided responses to the market study, for without them there would be no results to report. Finally, I would like to thank Mat Dirjish, Executive Editor of Sensors Magazine and Newsletter who, not only provided me with the opportunity to contribute this series, but who has provided excellent guidance in the development of the 12 episodes.
You are encouraged to go to the Sensors Magazine Website to review each of the 12 episodes of the Report Card. The links are below.
About the Author
Roger H. Grace is president of Roger Grace Associates (Naples, FL) which he founded in 1982 as a marketing consultancy serving the sensor, MEMS, IC and capital equipment markets. He holds the B.S.E.E. and M.S.E.E. (as a Raytheon Company Fellow) degrees from Northeastern University where he was awarded the Engineering Alumni of the Year Award in 2004. He was a visiting lecturer at the University of California at Berkeley College of Engineering from 1990 to 2004. He can be contacted via email at [email protected].