CIS (CMOS Image Sensor) has become one of the most vibrant fields in the semiconductors business, with an annual revenue growth rate of up to 10%. According to the findings of Counterpoint’s smartphone camera tracking service, the total revenue that CIS vendors generate from selling to smartphones is likely to grow above US$12 billion.

The growth is in parallel with the aggressive camera specification upgrades in smartphones, which has been the single largest end-market and accounted for nearly 70% of the overall CIS revenue in 2018. Our findings show that in 2018, each smartphone shipped featured 2.4 image sensors on average. By 2020, this number is expected to be over three.

Exhibit 1: Continuous Growth of Smartphone CIS

Even though the global smartphone market is still stagnant and expected to decline again in 2019, the trend of pursuing better image quality helped grow demand towards a multi-camera setup, super-high-resolution, and larger optical formats. This has resulted in continuous growth in the market value of CIS. During the first half of 2019, over US$5 billion worth of CIS were applied in smartphones.

Top CIS suppliers benefit from the growing market in different degree

Sony, the largest image sensor supplier, had renamed its former semiconductors segment to ‘Imaging & Sensing Solutions’. This segment accounted for over 20% of Sony’s total operating income during the quarter ending June 2019. This is interpreted as a move towards highlighting Sony’s CIS business. Due to the long-standing leadership in imaging technology and products, Sony’s CISs are widely applied in mid-range to high-end smartphone carrying a meaningful premium.

During Q2 2019, Sony raked in nearly 195 billion yen or over US$1.8 billion from image sensor sales. To consolidate its market leadership and address the increasing demand for high-quality image sensors, Sony is planning to invest approximately 700 billion yen (roughly US$6.5 billion) during the period of 2018~2020. It is also establishing new design centers across Europe.

Samsung LSI is catching up, with the announcement of KRW 133 trillion (roughly US$10.8 billion) investment plan for non-memory semiconductors in April. The company expects its CIS business, which stood around US$2.46 billion in terms of revenue, to copy its success in the memory market. Besides the increased adoption by Samsung smartphones, Samsung’s image sensor business is also benefiting from the growing business from major Chinese partners, such as Xiaomi, Vivo and OPPO.

To further step up the megapixels of the rear camera, Samsung had introduced two new 0.8μm pixel image sensors – 64MP ISOCELL Bright GW1 and 108MP ISOCELL Bright HMX (first adopted by Xiaomi’s concept model MIX Alpha) with industry’s highest resolution. Moreover, Samsung is ready to advance the pixel technology from the current 0.8μm to 0.7μm by mass-producing the first 0.7μm-size product – 43.7MP ISOCELL Slim GH1 at the end of 2019. All of these make Samsung a real challenger to Sony.

Exhibit 2: 2019 H1 Smartphone CIS Revenue Breakdown

During H1 2019, Sony and Samsung together occupied approximately 85% of sales revenue, indicating that the current CIS market for smartphones is highly consolidated. However, smaller players like OmniVision and SK Hynix are still capable of making revenue by providing differentiated products, which are primarily used in front cameras or multi-camera setups as the supplementary sensors. To increase presence in the fast-growing smartphone CIS market, OmniVison had introduced its first 48MP CIS featuring a 0.8µm pixel – OV48B, while SK Hynix plans to transform part of its DRAM facilities to expand the production of CIS.