Wouldn't it be great if you could answer an incoming call by
just moving your smartphone to your ear? Or having it stop
ringing by simply turning it over? Well, such technology already
exists, andInvenSense (
) makes it.
Sunnyvale, Calif.-based InvenSense makes sensors that
track motion on smartphones, tablets, gaming consoles, smart TVs
and wearable fitness devices. The company has been on a fast
expansion track, fueled by increased demand of these markets.
Its new CEO Behrooz Abdi calls these ever-increasing features
on the smartphone contextual awareness: "What is the movement,
how is the phone being used, what are some of the complex
gestures that you can do with the phone?"
InvenSense has more than 100 corporate customers. The three
largest ones are Samsung at 20%, Nintendo at 25% and Quanta at
15% of revenue, writes Ashok Kumar, senior technology analyst at
Maxim Group in a report. The company's chips are also included in
Acer, HTC, LG, Asus and Motorola tablets and smartphones.
In addition, InvenSense has partnerships and design inclusions
),Texas Instruments (
),Nvidia (NVDA),Verizon (VZ) andIntel (INTC).
"We forecast the attach rate of motion sensors to increase
from about 45% of an 800-million-unit smartphone and tablet
market in 2012 to 70% of a 1.7-billion-unit smartphone and tablet
market by 2015," said Kumar. "InvenSense remains well-positioned
to monetize this growth in motion processing."
Its proprietary Nasiri Fabrication process is what separates
InvenSense from its competitors. As a result of this technology,
the sensors have a smaller footprint, use less power and perform
at a higher level for customers, thus lowering their costs.
InvenSense's smart sensors are able to make a lot of decisions
based on the environment and the movement, explains Abdi.
"Our competition always relied on the rest of the system to
make decisions, based on the output of their sensor," he said.
"Whereas we can actually take the output of our sensors, have
multi-axis and take the information from all the different
sensors, fuse them together, make more intelligent decisions
based on those, calibrate one set of sensors against other
sensors and get those decision factors to the processor in the
InvenSense also does not own any of the manufacturing
facilities for its sensors, unlike its competitors do. This
provides it with lots of flexibility, notes Abdi.
"We don't have to worry about building out brick-and-mortar
factories and we have multiple partners such as TSMC and
GlobalFoundries," said Abdi. "And we work with those
manufacturing partners, and that gives us a vast manufacturing
capability and flexibility to move devices around between
factories and be able to drive cost and supply chain much more
InvenSense is also in the process of significantly expanding
its capacity. The company expects to more than double its
capacity from 200 million units in 2012 to 400 million to 500
million units by the end of 2013. This is based on various design
wins in the market, says Abdi. However, analysts speculate that
the main design win could beApple (AAPL).
"They have most large phone and tablet companies except for
Apple," said Gus Richard, senior research analyst at Piper
Jaffray. "And I would note that a large new customer has
requested that they double the capacity. They are increasing
their internal test capacity quite substantially. So it's one
thing to ask a potential vendor to be ready to increase output
significantly. It's quite another to go out and spend capital and
buy and build test systems to be ready for that volume."
Ahead Of The Game
As the market trends demand more sophisticated sensors,
companies such as InvenSense need to stay ahead of the game. The
fierce competition also puts pressure on pricing, which is
another reason the company constantly adds more functionality to
"They are on the technology treadmill, which is the shift from
3-axis gyroscopes to 6-axis and then 9-axis (gyroscope,
accelerometer and electronic compass) and that's key to
stabilizing reselling prices," said Kumar.
"Additional markets they are targeting include Optical Image
Stabilization for digital cameras," he added." If you look
historically, what we've seen is a 3% to 5% sequential price
decline for like-to-like products. How a company gets ahead of
that price decline is offering higher functionality."
InvenSense's largest competitor isSTMicroelectronics (STM),
with whom the company is involved in a lawsuit.
"The ongoing litigation with STMicro represents a long-run
risk," said Kumar.
InvenSense went public in 2011, and in October 2012 it brought
on board new CEO Abdi, replacing the founder, Steven Nasiri.
Analysts believe the management is stellar and the transition
to the new CEO was a natural progression in the evolution of a
late-stage start-up going to a full-fledged public company.