Abstract
Flextronics announced in February 2005 the acquisition of the camera module division of Agilent. Although Agilent had just a 3% share of the global image sensor market in 2004, it already possessed certain technical capability and had Motorola and Nokia among its clients. Building atop its strong base in manufacturing, Flextronics hopes the acquisition will expand its technological prowess and client base. The growth of the global camera phone module market has been accelerated by the major brands' efforts to stimulate replacement demand. However, the contest among compact camera module producers has also intensified, and the pace of new deployment and mergers is picking up.
While the global camera phone module market continues expanding, leading mobile phone companies are taking different paths in selecting module technologies. Japanese and Korean companies choose mainly the CCD sensors while American and European firms opt for CMOS. Japanese companies still control the supply of CCD. But Korean companies are following closely to supply mobile phone companies in their own country. However, technological breakthroughs in CMOS for camera phones with over one million pixels make it the top choice for major handset companies.
Concerning the supply systems for camera phone modules, Sharp and Hitachi provide the components mainly to Japanese mobile phone companies. Samsung Techwin and Hansung supply mostly to Korean companies like Samsung and LG. At the same time, Flextronics, ST Microelectronics, PriMax, and Premier cater mainly to U.S. and European phone companies like Nokia, Siemens, and Sony Ericsson. The keys in the supply channels lie in the supply of customized products for customers and maintaining close relationships with them. But there are certain changes in the lower-tier segment because of the inroads made by some new players in the fields of camera phone modules, such as ESS, which have successfully garnered orders from some Korean mobile phone makers.
Generally speaking, the segmentation of the handset market has become more delicate, spawning a wide variety of mobile phone models with varied industrial designs. The major technical capabilities of module companies will include the ability in designing, matching image sensors, optical processing, flexible printed circuit board support, assembling experience, software design, system testing, and mobile phone platform design. High customization ability and fostering close ties with customers will dictate the future development of module companies. Acquiring new customers via mergers and acquisitions can be a shortcut strategy to achieve such goals.