CMOS image sensor sales are expected to suffer their first sales decline in 13 years because of a smartphone slump, low camera growth in handsets, and weak global economy, according to IC Insights.
For most of the last two decades, strong growth in CMOS image sensors pushed this product category to the top of the optoelectronics market in terms of sales volume, said IC Insights. CMOS image sensor sales generate over 40% of total opto-semiconductor revenue annually.
In 2022, however, the CMOS image sensor market category is on track to suffer its first decline in 13 years with sales expected to fall 7% to US$18.6 billion and unit shipments projected to drop 11% to 6.1 billion worldwide, IC Insights indicated. The projected 2022 decline in CMOS image sensors comes after two years of meager sales growth in 2020 (4%) and 2021 (5%).
This year's sales drop reflects overall weakness in consumer smartphones and portable computers with digital cameras for video conferencing following an upsurge in demand for Internet connections and online conferencing capabilities during the COVID-19 virus pandemic, IC Insights noted.
A modest recovery is expected to take place in the CMOS image sensor market next year, IC Insights said. The market revenue is forecast to grow 4% to US$19.2 billion in 2023, and rise another 13% in 2024 to reach a new record high of US$21.7 billion.
In addition to weak demand in mainstream consumer camera cellphones and portable computers, CMOS image sensors have been negatively impacted by deteriorating global economic conditions resulting from high inflation and spiking energy costs caused by the Russian war in Ukraine as well as US trade bans on China, recent coronavirus-induced lockdowns in Chinese manufacturing centers, and slowing growth in the number of cameras being packed inside of new smartphones. Some managers in China have described the image sensor market conditions as a "perfect storm," combining a slowdown in mainstream mid-range smartphone shipments and an unanticipated pause in the increase of embedded cameras being designed in new handsets, IC Insights said.
Market leader Sony, which accounted for about 43% of CMOS image sensor sales worldwide in 2021, reported a 12.4% sequential decline in image sensor dollar-volume revenue during the company's fiscal first-quarter 2023 ended in June 2022. In the first half of calendar 2022, Sony struggled to match image-resolution requirements for camera phones and its CMOS image sensor sales to leading Chinese system manufacturers were lowered by US trade bans. Sony still believes excess inventories of phones and image sensors will be reduced by early 2023 and market conditions will "normalize" in the second half of its current fiscal year (ending next March).
Nearly two-thirds of CMOS image sensors are used in cellphones, and that share is expected to fall to about 45% by 2026, according to IC Insights. A slow-but-steady recovery in CMOS image sensors is forecast to be driven by a new upgrade buying cycle of smartphones and more embedded cameras being added in other systems, especially for automotive automation capabilities, medical applications, and intelligent security networks. CMOS image sensor sales are expected to rise by a CAGR of 6% between 2021 and 2026 to reach US$26.9 billion in the final year of IC Insights' forecast. Meanwhile, unit shipments are forecast to grow by a CAGR of 6.9% between 2021 and 2026, reaching 9.6 million units.