Abstract
Mobile phone camera module shipment volume has continued to grow, fueled by increased demand for phone cameras thanks to the rise of social networks. Due to the current mobile phone market homogeneity, phone brands have been centering on camera upgrades as a way to create product differentiation. New modules such as OIS (Optical Image Stabilization) and MEMS (Micro-Electro-Mechanical System) and array modules have pushed into the mobile phone supply chain. Accompanying with increased smartphone shipments, the supply chain of Chinese smartphone components also grows in importance. This report examines in more detail the forces underlying the growing importance of mobile phone camera modules and how new module technologies are affecting the industry.
Camera Modules Becoming Next Battlefield
The rise of social networks and changing habits of users has made phone cameras much more popular in the eyes of consumers. This has moved mobile phone brands to enhance their camera module performance. The trend is being reinforced by growing homogeneity among mobile phones as brands have no choice but to squeeze more camera power onto their products. As camera modules are getting more and more attention, the hardware competition is now heading over to camera module performance.
Observed specs of high-end mobile phones in 2014, the Samsung Galaxy S5 rolled out in February 2014 features 1/2.6" 16MP image sensor and F2.2 aperture that help improve the performance of camera module. The modules come with reworked autofocus and support HDR (High Dynamic Range) video recording. In March, the HTC launched the M8 featuring two camera modules, one in charge of photo shooting and the other in charge of recording in-depth information to perform reworked autofocus and form 3D images. In 2014, mobile phone brands, having continued addressing on pixel count, are to placing focus on camera performance to differentiate products with better image quality. For this to happen, camera module makers have aggressively developed new products like OIS, MEMS, and array modules in order to be well positioned at the forefront of the change. Looking at the development of those advanced technologies, the production of MEMS and array modules still remains scarce and whether they will prevail depends highly on the elimination of technical barriers. OIS modules, though ready for mass production, are facing supply shortages as almost all flagship mobile phones embrace OIS camera modules. The huge demand for OIS camera modules has strained the supply which is concentrated in the hands of a few giant brands.
Chinese Smartphones to Trigger Another Round of Price Competition
The supply chain used to be controlled by a handful of US, Japanese, Korean and Taiwanese firms. The situation however has been changing as the increasing shipments of Chinese branded mobile phones have raised the demand for China-made key components including camera modules. China-made camera modules have seen an evident uptake in global share in recent years owing to plentiful production capacity, cost advantage, and aggressive recruitment plans of Chinese makers.
In addition, major IC chipmakers such as MediaTek, Qualcomm, and Spreadtrum have launched low-cost turnkey solutions which have significantly reduced time-to-market, by solving the integration issues between mobile phone manufacturers and IC design houses. Many of the most exciting advances in hardware performance have found in Chinese mid-to-low-end smartphones. Coupled with cost advantage, Chinese brands have seen their mid-to-low end smartphone shipment share increased.
The burgeoning development of mobile phones in the mid-to-low-end sectors has pushed Chinese mobile phone brands to work more closely with Chinese camera module manufacturers. Due to relatively low profit margins, the price elasticity of demand for camera modules is high. Therefore, it is tougher for non-Chinese camera module makers to compete with local counterparts so they have shifted to high-end sector instead. This trend has made Chinese camera module makers the major beneficiaries.