How did Sony grow by leading two CIS technology revolutions?

Image sensors are divided into two categories: CCD sensors and CIS sensors. CCD is mainly used in SLR and industrial scenes, while CIS is active in scenes such as mobile phones, security, and automobiles due to its advantages of small size and low cost.

The CIS industry is now entering a period of rapid development. According to a report by market research firm Yole, the scale of the CIS industry will be close to US$21 billion in 2020, with a compound annual growth rate of about 9% in the next three years. Data from another research firm, IC Insights, shows that the global CIS shipments will grow at a compound annual growth rate of 11.7% from 2018 to 2023, and are expected to exceed 9.5 billion in 2023.

Sony has always been the "number one player" in the CIS market. In 2019, Sony continued to maintain its leading position in the CIS field, with a market share of 49.2%, exceeding the second-place Samsung and the third-place OmniVision combined. So how did Sony grow in this field?

Leading two CIS technology revolutions

Here we first sort out the main nodes of Sony's CIS products:

In 2000, we started developing CIS;

In June 2006, the first CIS was shipped from Kumamoto;

In 2009, we started developing back-illuminated CIS;

In October 2012, the two-layer stacked CIS was launched.

In February 2017, three-layer stacking technology was launched.

It is worth mentioning that the back-illuminated CIS and stacked CIS proposed by Sony led to two changes in CIS technology.

Before launching the back-illuminated CIS, Sony developed a chip called "Exmor" for on-chip analog-to-digital signal conversion, which upgraded the traditional external ADC (analog-to-digital converter) to a built-in ADC. The advantages are that it supports operation at low frequencies and can effectively reduce noise and achieve high-speed extraction. In addition, Exmor emits digital signals, which are more resistant to interference.

IMX035 is the first product in this series, which is used in the security field. Subsequently, Sony quickly promoted Exmor technology to electronic fields such as cameras.

After implementing built-in ADC, Sony launched the Exmor R sensor with back-illuminated technology in 2008, with the first product being the IMX055CHL. However, it was not Sony's own products that made the Exmor R sensor famous, but Apple's iPhone 4s. This technology gave the iPhone 4s excellent high-sensitivity performance.

However, Sony was not satisfied with the status quo, but chose to continue research and development, and soon discovered that the area ratio of the pixel layer in a single sensing unit could be further improved.

In 2012, Sony released its first double-stacked CIS chip, named "EXMOR RS". The image sensor unit and logic control unit were made on two wafers respectively, and the sensor unit and the logic control unit were interconnected through TSV (through silicon via) packaging technology.

In 2017, Sony released the first three-layer stacked CIS chip at the ISSCC conference. Sony stacked the image sensor unit, logic control unit (ISP chip), and DRAM chip together. This CIS chip has 19.3 million pixels, a single pixel area of ​​up to 1.22x1.22um, and 1Gb DRAM memory integrated on the chip. This CIS chip can shoot high frame rate images at 120fps and can provide 960fps FHD super slow motion playback.

Currently, Sony's CIS products have spread across the fields of smartphones, security, automobiles, etc. Sony previously stated that it hopes to further expand CIS production capacity to 120,000 pieces/month in 2020. Based on this, it is estimated that Sony's CIS production will have a compound growth rate of about 14% from 2017 to 2020.

Especially in the field of smartphones, Sony's CIS has successfully entered the supply chains of Apple, Xiaomi, OPPO, vivo and other manufacturers. According to a report released by market research firm Strategy Analytics, the total revenue of the global smartphone image sensor market was US$6.3 billion in the first half of 2020. Among them, Sony ranked first in the market with a revenue share of 44%.

Acquired Toshiba's image sensor business

In addition to its early technological layout, Sony's acquisition of Toshiba's image sensor business in 2015 also consolidated its leading position in the CIS market.

In December 2015, Sony officially announced that it would acquire Toshiba's image sensor business for 19 billion yen (approximately US$155 million).

In August of the same year, Sony announced that the two parties had signed a non-binding memorandum of understanding to negotiate the acquisition. Four months later, the two parties finally finalized the acquisition plan.

The two parties have reached an agreement to transfer manufacturing facilities, equipment and related assets of Toshiba's 300mm wafer production line, which are mainly located in Toshiba's Oita Operations Co., Ltd. After the transfer, Sony will operate the production site as a production facility of Sony Semiconductor Corporation (one of Sony's wholly-owned subsidiaries), mainly producing CMOS image sensors.

In addition, employees formerly employed at Toshiba's manufacturing plant, including employees in its CMOS image sensor engineering and design departments (a total of approximately 1,100 employees), were hired by Sony after the transfer.

At the time, Sony expected the market for CMOS image sensors to grow further, and this acquisition would increase Sony's production capabilities in this area.

At that time, Sony's share of the global CIS market was about 40%. After acquiring Toshiba's image sensor business, its market share has increased year by year and is currently stable at around 49%.

Conclusion

Sony has been strong over the past decade, but this situation may change after Sony "cuts off supplies" to Huawei, its second largest customer, as Huawei accounts for 20% of its sales.

So far, Sony has been investing heavily to produce image sensors to meet strong demand, including announcing plans to build a new factory in Nagasaki.

Although Sony has obtained permission from the US government to resume some supplies to Huawei, sources close to Sony told the Nikkei that Sony remains cautious about the future of its business with Huawei, as Huawei still needs to obtain reliable sources for many other chips and components for its smartphone business.

Nikkei previously reported that the image sensor business is one of Sony's main sources of revenue, with an operating profit of 240 billion yen in the fiscal year 2019 ending in March this year, almost the same as the performance of the video game business. But when Sony announced its second-quarter earnings for fiscal 2020 in October, it expected image sensor profits to fall 66% for the entire fiscal year.

However, Apple could be Sony’s savior. If the iPhone 12 series can maintain strong demand, Sony may be able to make up for some of the losses caused by Huawei.

In addition to competitors such as Samsung and OmniVision, the rise of domestic manufacturers in niche areas has also impacted Sony in recent years. For example, SmartSens has ranked first in the global market share in the security field for two consecutive years since 2017; GalaxyCore successfully mass-produced 1.12 um 13-megapixel CIS the year before last; and BYD Semiconductor successfully mass-produced 1.3-megapixel automotive-grade CIS in 2018.

How will the CIS landscape change in the future?