Abstract

High Camera Module Adoption Rate in Mobile Phones Benefits Worldwide Mobile Phone Camera Module Shipment

Mobile phones equipped with camera modules are already an established product type of mobile phone vendors and the camera phone share in mobile phone shipment in regions around the world continues to increase. Despite the impact of the global financial crisis in the second half of 2008, worldwide camera phone shipment volume in the full-year 2008 reached approximately 870 million units, growing 9.6% compared to 2007. As for 2009, the global economic outlook is still unclear, and in the first half of the year mobile phone brands were conservative with their shipments. It is expected that worldwide camera phone shipment in 2009 will reach about 840 million units, declining 2.5%.

In 2008, global mobile phone camera module market scale was approximately 1.02 billion units (including 870 million main camera modules and 150 million sub camera modules), growing 12.9% compared to the previous year. Even though mobile phone end-market demand in 2009 is not as strong as in the past, it is expected that worldwide mobile phone camera module market scale will maintain a level of approximately one billion units due to the rising ratio of mobile phones equipped with camera modules and the increasing adoption of sub cameras. The share of mobile phones equipped with camera modules is expected to rise from 71.4% to 75% in 2009.

Due to the impact of the global financial crisis in the second half of 2008, Taiwanese mobile phone camera module manufacturers witnessed a decline in orders from mobile phone clients. Nevertheless, new orders from Nokia, Samsung, and LG helped the Taiwanese mobile phone camera module industry to maintain double-digit shipment growth for the full-year 2008. In 2009, key clients Motorola and Sony Ericsson have not been performing strongly, and Nokia has lowered its shipment targets. As a result, Taiwanese mobile phone camera module industry shipment volume is expected to decline slightly in 2009, reaching approximately 227 million units.

3MP Modules' Future Development Potential Threatened by 5MP and Higher Products

In 2008, the main resolution for camera phones was 2MP, while the share of 3MP increased. Originally it was expected that in 2009 3MP products would replace 2MP products on a large scale to become the mainstream resolution. However, unit prices of 3MP camera modules are currently US$10-US$12, while unit prices of 2MP modules are US$4-US$5, and a considerable price gap between the two thus remains. With an uncertain economic outlook and declining consumer spending, mobile phone brands still had large-scale shipments of 2MP products in the first half of 2009. As a result, 2MP and 3MP modules are expected to have equal market shares in 2009.

After 1.3MP modules reached a shipment peak in 2006, they were quickly replaced by 2MP products as result of their low performance/price ratios, and their market share has continued to fall. 3MP modules face a similar predicament: their prices are unable to compete with those of 2MP modules, and in terms of selling points they are inferior to 5MP and 8MP modules. With mobile phone brands aggressively making plans for camera phones with resolutions of 5MP and higher, 3MP modules will be quickly replaced by 5MP products if their prices are unable to decline significantly in the near-term future.

Resolution-oriented Competition Slowing Down; Auto Focus Importance Increasing

The possibility of camera phones replacing consumer digital cameras has been discussed for a long time, but a significant resolution gap still exists between the two product types. In 2008, the mainstream resolution of camera phones was 2MP, while the mainstream resolution for digital cameras was 8MP. Besides resolution, photo quality, photo transmission convenience and user habits are also key factors for the fact that camera phones are unable to replace digital cameras.

In 2009, the mainstream resolution of digital cameras already reached 10MP, with high-end models featuring resolutions as high as 12MP. After 10MP, it is expected that resolution increases will slow down. High-end camera phones already feature 8MP resolution and the resolution gap between digital cameras and camera phones is thus declining.

As for photo transmission, in the past mobile phone users were often unable to find photos they had taken, or did not know how to transmit photos from their mobile phone to their PCs. In view of this fact, mobile phone vendors improved user and transmission interfaces on mobile phones and followed the model used for digital cameras, whereby users employ USB sticks to connect to their PC and download photos.

With the gap between camera phones and digital cameras in terms of resolution and transmission convenience becoming smaller, picture quality becomes the next focus area of camera phone vendors. Camera phones have inherent weaknesses; the small volume of mobile phones poses challenges for camera module design, and the image sensor in mobile phones is much smaller than those in digital cameras. In terms of light sensitivity, they are thus unable to compete with digital cameras. With the progress in terms of image sensor technology, these specific issues could be overcome in the future.

Auto focus function is a key factor for image sharpness and clarity. Almost all digital cameras possess this function. However, camera phones equipped with this function are still mainly high-end models due to price and volume problems. Prices of VCM used in camera phones are still higher than US$2. Furthermore, reductions in volume are limited. However, with major mobile phone vendors increasing their shipment share of 5MP and higher products, VCM prices could fall following the increase in shipment volume. Therefore, it is expected that the share of camera phones equipped with auto function will gradually increase. In time, the threat this development poses to entry-level digital cameras will increase considerably.

Appendix

List of Companies