Sensors: What’s in YOUR Smartphone?

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October 21, 2014

Sensors: What’s in YOUR Smartphone?

In the growing functionality of high end devices, the spread of basic smartphones, and the emergence of new device types – wearables, etc. – sensors are a $60.4B market that is growing at a 9.2% CAGR. We categorize them into 5 groups – physical, optical, radio, electrical and chemical – each serving specific applications and requiring particular design and manufacturing disciplines. As such, competition amongst sensor manufacturers stays within these silos. For sensor functions already well embedded into portable devices, suppliers are challenged to minimize cost, footprint and power draw, often integrating multiple functions of a type into a single solution. Emerging functions, such as gesture control or biometric ID, have drawn approaches using different sensor types, although economics and performance will eventually drive standardization. New devices are a growth market for existing sensor types, but may also create opportunity for new sensor components suited to specific applications. While we are bullish on new portable device opportunities for sensor components, we note that many longstanding sensor products are commoditized, particularly within well established traditional end markets, such as automotive and industrial automation.

  • The proliferation of electronic devices is driving sensor demand. Sensors are components that measure and convert natural phenomena into digital data that can be analyzed by electronic devices. Traditionally, the sensor market has been primarily automotive and industrial, but as personal devices have proliferated, they have catalyzed significant growth. Sensors are growing as a percentage of the BOM for high end smartphones, while the rapid growth of low end smartphones drives unit volume growth for basic sensors. The emergence of new device categories, such as wearables and home automation, and potential breakthroughs with autonomous vehicles and commercial drones may be considerable future opportunities for sensor makers. We project better than 10% overall CAGR for sensors over the next 5 years, based on these drivers.
  • Sensor demand segmented into 5 distinct silos. Sensors fall into 5 very different categories, based on the type of stimulus to which they are designed to respond: Physical, Optical, Radio, Electrical and Chemical. Each of the 5 types favors specific design methodology and manufacturing processes that has kept competition amongst sensor makers confined by those types. While integrating multiple functions within a type to a single module is a common strategy to reduce cost, footprint and power draw, functions are typically NOT combined across types. As such, the companies playing in sensors usually specialize in just 1 or 2 categories. Today, optical and RF ICs are the biggest parts of mobile device BOM, but physical and electrical sensors are projected as the fastest growing segments.
  • Physical sensors are increasingly based on MEMS. The most common physical sensors measure orientation, acceleration and vibration, functions built into all higher end smartphones. State of the art designs include all three sensors into a single component built as a microelectromechanical system (MEMS) – a tiny, moving machine built on a silicon chip. Increasingly, MEMS is also used for high performance microphones to process sound, cancel noise and measure proximity based on ultrasonic waves. MEMS components are also used by high end cameras for image stabilization. 11.2% projected growth in physical sensors will come from the increased precision of integrated components for high end devices, the proliferation of lower end devices with rudimentary components, and from the emergence of new device types like wearables.
  • Cameras, gesture control, and biometrics to drive optical sensors. The camera quality war in high-end smartphones drives more, and more sensitive, sensors. Stereoscopic focus could add a second sensor to the primary camera. Gesture controls could require multiple forward cameras, which could also support facial recognition or retina scans for ID. Other applications include infrared proximity sensors, ambient light meters, and UV meters. Components for these applications have converged on silicon CMOS, and like physical sensors, will see demand growth from increasingly sophisticated parts for high end products and commodity cameras for the entry level. We note that autonomous driving systems and commercial drones will rely on batteries of highly sensitive optical sensors.
  • Radio requirements continue to get more complicated. As 3G and 4G networks roll out into new spectrum worldwide and as the standards evolve to higher performance, radio component makers are asked to design integrated antennas, filters, and power amps to fit the broadening connectivity into compact and power efficient components. This integration brings down prices, partly offsetting volume growth, but offers opportunity for differentiation, particularly as high frequencies require special material (GaAs, SiG) and mixed signal process expertise. However, simpler RF elements for WiFi, Bluetooth, GPS and other standards are now integrated into digital parts, and as CMOS improves, cellular RF will likely eventually be integrated as well, an enormous risk for RF makers.
  • Capacitive touch sensors looking for differentiation. Electrical sensors are used for “touch” applications, like displays or fingerprint readers, usually combining an electrostatic charged surface and a semiconductor controller to interpret changes in the electric field as it is touched. Demand for touch screen modules continues at a 10%+ CAGR, but commoditization for basic displays, which make up most of the demand and growth, has driven down margins for many suppliers. New applications, such as fingerprint scanners or “no touch” proximity sensors, are opportunities for differentiation at the high end while strict price/performance will continue to rule at the low end.
  • Chemical sensors are a nascent opportunity. Chemical sensors, which measure the presence of specific molecules, have not been introduced into common consumer devices. Future applications could be breathalyzers, air quality testing, or blood analyses, although it is not clear if any of these have broad enough appeal for inclusion in general purpose devices, particularly since chemical sensors are specific to particular substances. Wearables, home devices and peripherals appear to be more appropriate venues for these sorts of applications, and thus, will likely have a much smaller end market.
  • Winners will dominate niches and aggressively integrate. In each sensor type, winners are emerging with scale and ability to integrate functionality. We see QCOM as uniquely able to integrate sensor functionality, beginning with RF, into reference designs – a substantial advantage, while SKYW is gaining share in RF near term. We also see substantial room for differentiation and integration in MEMS physical sensors – a boon for INVN, and KN. Optical sensors are a growth market without pure plays for investors. Touch screens are commoditizing, but SYNA is innovating and consolidating share.

Fee, Fie, Foe, Fum

With AAPL finally capitulating to the phablet phenomenon, battlefronts of the smartphone spec wars are shifting. As we noted in a 2013 piece “The PC-ification of the Smartphone”, improvements in display resolution, screen size and processor speed are reaching the point of seriously diminishing returns. The new device differentiators are sensors. Since the first iPhone, the number of sensors in a flagship smartphone have more than doubled, with new applications, such as secure ID, health monitoring, gesture control and others, pressing manufacturers to add more in future generations. These innovations have also tended to trickle down to lower end smartphones, where unit growth remains torrid. Furthermore, the possible emergence of sensor packed wearables, “internet of things” devices, and autonomous vehicles, could add to this considerable market growth.

For sensor makers, this is obviously great news and a shift of focus from the automotive and industrial applications that had been the historical drivers of the market. Competition in the $60B market plays out in silos, with five distinct segments – each measuring a different category of stimulus and requiring very different design and production techniques (Exhibit 1-2). MEMS-based physical sensors are projected to grow at 12.4%. Accelerometer, gyroscope, and compass combos are now standard, MEMS microphones are replacing electrostatic technology, and ultrasonic gesture controls are an emerging opportunity. Optical sensor sales are more than $22B/yr, half of which are CMOS image sensors. Image sensor growth is driven by mobile devices, and projected at almost 11%, with upside should camera-based gesture controls or autonomous vehicles become a real market in the next few years. The rest of the optical sensor market is expected to decline, with the full market growing just 4-5% as a result.

RF components, essentially radio wave sensors, are staple products for analog and mixed signal semiconductor makers and are needed for any radio communication standard. 7-8% projected growth is driven by global 3G/4G network rollouts, and wider spectrum assignments, although stand-alone RF components may be threatened if the functionality can be successfully integrated into digital SoC parts. The dominant application for electric sensors in mobile devices is capacitive touch screen controllers, a less than $2B market growing at double digits, with the potential for additional growth from fingerprint ID and gesture control. Finally, chemical and biological sensors are a very large market at more than $15B, but focused almost entirely on industrial and medical applications. Future consumer applications are possible but likely, far in the future given form factor, application demand and regulatory issues.

Within each type, winning competitors innovate with new applications, improve the acuity of their components, and integrate multiple sensor functions into a single solution, particularly important as functions standardize and become prone to commoditization. We also note that competitors that are overly exposed to more commoditized traditional markets, like automotive, industrial or medical, will find it difficult to deliver growth. In this, we see players like INVN and KN in physical sensors, and touch screen innovator SYNA as particularly attractive ways to play sensor growth in mobile devices. Analog RF maker SKYW has performed well recently, taking market share, but faces slowing market growth and potential long term disruption from QCOM and other digital players. With the acquisition of OVTI, there are no pure play optical sensor players for investors – ONNN, which just acquired privately held share gainer Aptina Imaging may have the best exposure.

Exh 1: Global Sensor Revenue, 2013-18

Exh 2: Global Sensor Revenue, Mobile Device Applications 2013-18

Exh 3: Global Smartphone Shipments, 2007-14

Exh 4: Global Tablet Shipments, 2010-14

Devices Everywhere

The growth of the smartphone, and its big brother, the tablet, have been phenomenal. Since the launch of the iPhone in 2007, 2.8B smartphones have sold worldwide, and since the birth of the tablet with 2010’s iPad, 450M of the larger form factor portable devices have shipped. In 2014 alone, we expect more than 1.2B smartphones and 245M tablets to sell, up 21.9% from a year ago (Exhibit 3-4).

This is a huge market for the companies supplying components. Still, many observers have gloomy forecasts looking ahead, as a sharp shift in mix toward inexpensive devices similarly shifts component demand to cheaper, more commoditized parts. Moreover, even at the high-end of the market certain important performance specs, like screen resolution, memory capacity and processor speed, have reached a point of diminishing returns in differentiating devices. This pushes component makers into pricing competition that best suits larger suppliers that can leverage scale advantages and can integrate multiple components into turnkey packages.

Exh 5: Component Composition of a Premium Smartphone

Exh 6: iPhone Sensors by Generation, 2007-2014

Exh 7: iPhone Bill of Materials, 2012-2014

The big exception to this unenthusiastic outlook is sensors. We define a sensor as a component which measures and converts natural phenomena into digital data that can be analyzed by electronic devices. Sensors are growing as a percentage of the bill of materials (BOM) for mobile devices, whether cheap or expensive and whether large or small (Exhibit 5). For example, recent tear downs of Apple’s flagship iPhone 6 reveal at least 16 sensor components, including 2 accelerometers, 2 camera image sensors, 2 capacitive touch sensors, 3 microphones and 4 radios. This is an increase of at least two vs. the 5S, and 9 more than the original 2007 iPhone (Exhibit 6-7). Based on this trajectory, and on the comments of mobile device makers, we expect that the sensor content for high-end devices will continue to expand in future generations, as new applications like health monitoring, biometric security, gesture controls, augmented reality, and others become increasingly commercial.

Innovations at the high end trickle down to lower price points where unit growth remains better than 40% per year. The Android One specification, created by Google to enable sub $100 smartphones, asks for 7 sensors. While the specs are designed to foster component competition, and prices are obviously low, it is new territory for sensor makers, as the feature phones that low end smartphones are displacing had far fewer and less sophisticated sensors.

There will also be growth from new categories of devices. The much hyped smartwatch category will be a boon to sensor demand, even if unit sales end up disappointing the bullish prognosticators. The Apple Watch, as described by the company ahead of its introduction, likely contains 7 or more sensor components. Other wearables, including head-mounted displays, virtual reality, smart headphones, etc., will also require a battery of sensors. Drones, robots and autonomous vehicles will take the need for sensors even higher, should any of the applications utilizing them ever become widely adopted.

Exh 8: SSR’s Taxonomy of Sensors

Silos

The sensor market is not contiguous. The wide range of natural world phenomena – e.g. sound, light, motion, orientation, touch, radio waves, magnetism, electric fields, chemical reactions, etc. – that modern devices may try to analyze requires a number of different technology approaches to capture. We have categorized sensor components into five categories, each with distinct preferred design architectures (Exhibit 8).

Physical Sensors measure forces exerted onto the component, such as inertia, vibration, gravity, pressure or magnetism (Exhibit 910). Typically, physical sensors are built as microelectromechanical systems (MEMS) – tiny machines, with microscopic moving parts atop a digital silicon base. Those parts may be sensitive to movement or some other force and their reaction is measured and digitized to be interpreted by a controller. Common MEMS parts in smartphones include accelerometers and gyroscopes (often combined to a single part), magnetic compasses, high quality microphones, and barometers. Increasingly, device makers are including seemingly redundant sensors to support different applications with subtly different requirements. For instance, Apple has included two accelerometers in its iPhone 6 line, one, a “6-axis” component (N.B. 6-axis parts combine a 3-axis accelerometer with a 3-axis gyroscope) offering leading edge precision, and a second 3-axis accelerometer with lower power draw and faster registration to support an “instant-on” functionality. It is possible that a future iPhone could even include a third accelerometer/gyroscope specifically to support image stabilization in the camera. Beyond the expansion of these inertial sensors, future applications could include ultrasonic gesture controls and virtual reality displays.

Exh 9: Physical / MEMs Sensor Applications

Exh 10: Expected 2013-19 MEMs Growth by Segment

Optical Sensors capture and measure light waves. The primary application has been camera image sensors – most smartphones, including low end models, have two. While the first electronic image sensors were based on charged coupled device (CCD) technology, components based on the commonly used CMOS semiconductor approach have grown dominant based on lower costs and superior power efficiency (Exhibit 11-12). With time and investment, the quality of the best CMOS sensors now rivals CCD and will likely surpass it. Although camera modules are the largest market for optical sensors, they will also compete for roles in emerging functions, like gesture controls, and biometric ID (facial recognition or retina scan). It is also possible that future cameras will utilize more than one image sensor to improve image quality, enable better zoom, and even to offer 3D images. Finally, simple ambient light sensors, RGB light color sensors, and infrared proximity sensors (to determine if a phone is being held to the user’s ear) are widely used and cheap commodities. Samsung has added a UV light meter to its recently announced Galaxy Note 4 which monitors a users exposure to sunlight.

Exh 11: CMOS versus CCD Sensor Advantages

Exh 12: CMOS versus CCD Sensor Process Flow

Exh 13: Analog RF Flow Simplified

Radio Sensors are not often thought of as sensors, but clearly fit the definition. An RF front end takes the radio signal from the antenna, filters out noise, amplifies the target signal, converts it to lower frequency and then digitizes it, a process that is usually split amongst a handful of individual components. Given the very high frequencies used, RF components have traditionally been built on materials like gallium arsenide (GaAs) or silicon germanium (SiG), rather than on ordinary silicon, and require analog semiconductor design techniques (Exhibit 13). Recently, new CMOS process technology have allowed chip vendors to implement RF functionality for less complex standards like Bluetooth, WiFi, GPS, and NFC in silicon, and in some cases, integrate it directly into the digital baseband modem or even a full system-on-a chip (SoC). However, integrating the cellular RF front end remains elusive, as the changing spectrum map and enormous complexity of the standard still requires stand-alone analog solutions. Opportunity exists to reduce this complexity for device makers by integrating more frequency bands and more RF front end functions into the same component, an approach taken by Qualcomm in its recent entry into the market. Eventually, as digital processes continue to improve and RF front end requirements become more stable, we believe that leading SoC vendors, like Qualcomm and Mediatek, will be able to integrate much of the functionality onto their components.

Exh 14: Capacitive Fingerprint Reader Mechanics

Electric Sensors can evaluate the shape and location of conductive objects that disturb an electrostatic field. The primary application is touch screens, which are ubiquitous in smartphones, tablets, automotive dashboards, and other user interfaces. Electric sensors are implemented in CMOS and typically integrated with a microcontroller that determines the exact location of the touch. Until the introduction of the iPhone in 2007, the large majority of touch screens used resistive technology, which could register the touch of any object, but Apple’s multi-touch solution requires capacitive technology, which only registers objects, like a fingertip, which can conduct electricity. While much of the market for touch screen controllers is now undifferentiated, there are benefits to greater degrees of precision in high end touch screens. Fingerprint scanning is an emerging market for electrostatic sensors, led by Apple’s TouchID (Exhibit 14). Future touch screens may include a highly sensitive transparent fingerprint scanner implemented under the glass that could offer equal performance to a stand-alone sensor, and thus, obviate the need for separate hardware. Electric sensor vendors will also compete for gesture controls, as new sensors can extend the electrostatic field an inch or more above the glass surface to register finger movement without touch.

Chemical Sensors typically use microfluidic MEMS technologies, implemented as an array in a “lab-on-a-chip”, to identify the concentration of biological and chemical materials in a sample. While the techniques are used in specialized environmental and medical instruments, it has been difficult to establish consistent accuracy in low cost consumer applications. Some applications may have the added hurdle of regulation as medical device, requiring FDA or other government approval. On the other hand, the US Department of Homeland Security has funded a program called “Cell-All” to commercialize sensors that could detect deadly chemicals, such as Carbon Monoxide or Sarin gas, working with Qualcomm, LG, Apple and Samsung. Still, the narrowness of chemical sensors seem to relegate them to niche applications that might be better served as attachable peripheral dongles than incorporated as a standard function.

The Bigger Picture

For many sensor categories, mobile devices are not the largest market. In 2013, a majority of physical sensors were sold to the automotive industry for things like airbags, anti-lock brakes and engine performance monitors. With the increased sophistication of automotive electronics, including the emerging fields of collision avoidance and parking assistance, Gartner projects automotive sensor demand to continue at 8.4% growth through 2018, while demand from portable devices grows at better than 13% per year. By the end of the forecast period, automotive sensors are expected to have dropped to about 42.6% of the market, while mobile devices and other consumer products become the majority of demand. Overall, Gartner projects physical sensors to grow from $6.1B in 2013 to $10.8B in 2018, a 12.4% pace (Exhibit 15-16). We believe that this is a reasonable estimate, with some upside possible from wearables and ultrasonic gesture control.

Exh 15: Non-Optical Sensor Revenue by Type, 2012-18

Exh 16: Non-Optical Sensor Revenue by end-Market, 2012-18

Curiously, portable devices are not expected to be the biggest driver of growth for optical sensors. According to IC Insights, smartphones and tablets will rise from 46.8% of total demand for optical sensor components to 54.1% in 2017, implying 9.4% annual growth. Meanwhile, automotive, medical, scientific, industrial and surveillance applications rise from 16.6% to 24.7% of the total in the same time frame, for a 16.5% CAGR (Exhibit 17). For the whole market, which includes shrinking demand from stand-alone digital cameras, Gartner projects 10.8% annual growth for CMOS image sensors, while CCD components, largely the province of stand-alone cameras, shrink at a similar rate (Exhibit 18). These estimates likely do not include the potential for emerging applications, such as gesture controls, augmented reality or autonomous vehicles, but we expect these to remain small during the forecast period. Beyond image sensors, the market for light sensors – ambient light meters, RGB color sensors, infrared proximity sensors and UV light meters – has roughly $1B in annual sales expected to grow at better than 9% going forward.

Exh 17: IC Market by Camera Applications, 2011-17

Exh 18: Image Sensor Revenue by Type, 2011-17

Exh 19: RF Front End Revenue Growth, 2013-2018

RF components generally fall into the much larger field of analog semiconductors, which includes a myriad of specialized parts for regulating electric power, and converting data signals within electronic devices. Focusing specifically on RF parts, mobile devices represent the vast majority of the market, with transceivers for network equipment and specialized radios for industrial and military applications making up most of the rest. RF components for mobile devices were a $5.6B market in 2013, projected to grow at roughly 8.9% per year through 2018 (Exhibit 19). This forecast could be meaningfully optimistic if the integration of RF front end functionality into digital SoC solutions becomes realistic within the timeframe.

Exh 20: Capacitive Sensors, 2013-2018

Capacitive sensors are a roughly $9B market forecasted by Markets and Markets to grow at 15% through 2018 (Exhibit 20). Touch screen controllers make up the majority of these sales, with mobile devices making up the large majority of touch screen controllers. The remainder of the market is for motion, positioning and capacity measurement applications, largely for industrial products. The primary risk to the forecast is the threat of optical or ultrasonic gesture control, but we believe that even devices that implement these technologies will continue to include touch screens for the foreseeable future. To the upside, Apple’s strong commitment to fingerprint identification could drive demand for capacitive scanners across a much broader universe of devices, while implementation of touch screens into wearables and other connected devices could also add to the market.

Chemical and biological sensors are a better than $15B market, projected to grow at 11.5% through 2020 (Exhibit 21). This demand is largely medical, industrial and automotive, with diabetes/glucose monitoring systems, carbon monoxide detectors and breathalyzers the primary consumer applications. Ostensibly, these applications and others, like air quality indicators, pathogen detectors, and airborne bacteria warning devices could be implemented in mobile devices, but there are serious roadblocks. The majority of chemical sensors rely on fuel cell technologies that would be far too bulky to be implemented in a smartphone. Moreover, health applications carry the risk of being classified as medical devices, which would subject them to an FDA approval process. Finally, none of these applications seems to have the broad appeal that would make them likely candidates for inclusion in a mass market mobile device. Still, new developments to build MEMS semiconductor based solutions for chemical sensors could eliminate form factor concerns and lower the cost of adding a component to a device.

Exh 21: Chemical / Biological Sensors, 2013-2020

New Applications

Component makers are jockeying to find the next big thing in the mobile device market. With the advent of a capacitive fingerprint reader to the iPhone with last year’s 5S model, Apple has sounded its support for biometric identification. This could lead to adoption of fingerprint scanners as an industry wide standard. If so, Synaptics, with a technology to implement a capacitive fingerprint reader as a transparent layer under the main display, could be a significant winner. Alternatively, facial recognition or retina scans could compete with fingerprint identification, with optical image sensor makers the beneficiaries.

Another well hyped future for mobile devices is gesture control via hand/finger movements or eye-tracking. Here there are several possible methodologies, each with their own advantages and disadvantages. Capacitive sensors can pick up finger movement within inches of the screen without touching, a technology that has already been implemented in the Samsung Galaxy series and in Amazon’s Fire Phone. The technology is far along and cost effective but limited in its sensitivity and effective range. Optical sensors can operate at long distances and can distinguish specific objects – eye pupils, facial expressions and complicated gestures that are lost to other methods. However, optical solutions require multiple cameras, are subject to limited viewing angles, and may be relatively bulky, expensive and power hungry. Ultrasonic gesture control uses a sonar-like methodology based on MEMS microphones. It has the advantage of being omni-directional, fairly long-distance, moderately sensitive, and reasonably sensitive. However, it is not as sensitive as optical solutions or as cheap and available as electrostatic technology. In the long run, we believe that advancing technology will favor optical gesture control, but could see an ample nearer term market for the other two technologies.

Finally, the sensor needs of new product categories, like virtual reality or autonomous drones, could become an interesting market. Virtual reality depends on extremely accurate and fast inertial scanners, requiring accelerometers, gyroscopes, magnetometers, gravimeters, etc. that are far more sensitive than those needed for ordinary mobile devices. The same is true for autonomous drones and self driving cars, which will also require extremely precise proximity and geolocation solutions. Likely these will be based on optical image scanning and perhaps, radar. We expect that these sensor applications will not be meaningful for component vendors until the very end of the century but could become important primary markets for those who build expertise.

Exh 22: MEMs and Physical Sensor Leaders

Who Plays, and Who Wins?

The leaders in physical sensors are semiconductor companies that have invested to build expertise in idiosyncratic MEMS technologies (Exhibit 22). These include established multi-line semiconductor companies with longstanding business supplying the automotive industry, such as Robert Bosch, STMicroelectronics, and Infineon, and relative new comers, typically with a much narrower focus on components for mobile devices, like InvenSense and Knowles. Competition in MEMS parts for mobile is fierce, with market share shifts from generation to generation. InvenSense has been a steady share gainer in mobile, notably taking the primary accelerometer/gyroscope socket from STM in the most recent iPhones. Knowles Corporation, spun out earlier this year from Dover Corporation, is a microphone specialist offering both traditional and MEMS versions for mobile devices and specialized markets, like hearing aids. It too is a share gainer. In the category, we favor InvenSense.

The optical sensor market has become the province of very large conglomerates, like Sony, Toshiba, Samsung and Sharp, and semiconductor giants, like Hynix and Renesas (Exhibit 23). The only two pure plays in the sector, OmniVision and Aptina, were recently acquired. OmniVision’s purchase by the Chinese investment group Hua Capital is pending and Aptina is now part of the broadline ON Semiconductors. It is difficult to see any of these as good options for investors specifically seeking exposure to optical components.

Exh 23: CMOS Image Sensor Leaders

RF components is a fairly concentrated market, with Skyworks, Qualcomm and RF Micro Devices holding 55% of the mobile device business. Adding in Triquint, Murata and Avago brings the top 6 concentration to nearly 75%. Skyworks, RF Micro, Triquint and Avago are relatively pure plays in mobile RF, with Skyworks having been an obvious share gainer over the past two years. Qualcomm’s RF business is small relative to its modem and processor businesses, but it too is a share gainer and a substantial threat to eventually integrate RF functionality to its SoC products. We are quite bullish on Qualcomm’s long term prospects and include it in our large cap model portfolio, although it is hardly a concentrated investment in RF. We believe the investment case for Skyworks is attractive at its current valuation (Exhibit 24).

The market for capacitive touch screen controllers is competitive, led by microcontroller players like Texas Instruments and Atmel (Exhibit 25). For these companies, their exposure to mobile device touch screens is dominated by their much larger and varied microcontroller businesses. We prefer user interface specialist Synaptics, which is taking significant market share in high end smartphones, has delivered 35%+ annual growth, and is uniquely positioned to deliver integrated fingerprint scanning with its touch screen controller solution. We include Synaptics in our small cap model portfolio.

No market leaders have emerged in chemical/biological sensors for consumer devices, and component manufacturing for medical and industrial applications appears to be integrated into the companies building the end use devices. We do not see any leveraged investment opportunities in the space.

Exh 24: Mobile RF Sensor Leaders

Exh 25: Mobile Touch Controller Leaders

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