Consumer MEMS microphones: a burden Knowles wants to get rid of

A week ago, Knowles Corporation announced a new growth strategy plan, mainly focused on the $250 million acquisition of Cornell Dubilier, leveraging the company’s capability in high-quality film, electrolytic, and mica capacitor technologies. But information regarding their consumer MEMS microphones business shared later in the press release was not disclosed in detail and could be seen as major proof of the profound transformation the MEMS ecosystem is currently going through.

How did Knowles, the historical leader in the MEMS microphones industry, end up looking for someone to buy its once-lucrative consumer microphones business? Pierre Delbos, Technology & Market Analyst from Yole Intelligence, part of Yole Group, today offers a short analysis of Knowles’ announcement.

What is behind this announcement? Is Knowles Electronics selling its MEMS microphone business? If so, who could be a potential buyer? What will be the impact on the MEMS microphone industry?… This analysis has been extracted from the reports, Status of the MEMS Industry and Consumer MEMS Microphone Comparison.

Pierre Delbos Technology & Market Analyst, Sensing & Actuating, Yole Intelligence
It might sound counterintuitive at first, as the overall MEMS audio industry has been flourishing over the past twenty years. From the early adoption of MEMS microphones in smartphones back in the 2000s to their commoditization in laptops, tablets, wearables, and so on, MEMS technologies allow better voice capturing while bringing new functionalities to the table (ANC, beamforming, etc.).

By 2022, more than 6.7 billion MEMS microphones had been shipped worldwide, according to the report, Status of the MEMS Industry, and Knowles largely reaped the fruits of this erupting market. So, what happened to Knowles lately?

One could say this turn around comes from excessive “good enough” competition for consumer applications. In other words, tens of new entrants improved the quality of their microphones, and the market demand decoupled from SNR improvement over the years.

Several key MEMS players developed their own microphones: Infineon Technologies, TDK Invensense, MEMSensing, STMicroelectronics, AAC Technologies, etc., and eventually improved their technology and piled up design wins. And one specific company over-performed: the Chinese Goermicro. Sourcing its MEMS dies from Infineon Technologies and SMEC, Goermicro replaced Knowles as the #1 MEMS microphone maker in 2021 and secured design wins in several Apple, Samsung, and Xiaomi smartphones & wearables. Moreover, the Chinese government has been investing massively in the MEMS industry, and tens of new companies have entered the low to mid-end microphone industry. The impact of this ecosystem expansion was unclear during the good years. But recently, with the consumer downturn and the drop in smartphone sales, the microphone market suffered from a massive over-supply, creating an overly competitive market and pressuring prices.

The high-end audio market, which could once be seen as Knowles’ escaping path from this unreasonable competition, is also limited and addressed by other companies, such as Infineon Technologies and TDK InvenSense.

No escape down below and a dead end on top… The medical and automotive microphone businesses could still be of interest for a couple of years but will never replace the revenues Knowles was used to in the consumer market. And even though Knowles had a pretty consolidated cost structure, as analyzed in Yole SystemPlus report, Consumer MEMS Microphone Comparison, the consumer market is just too bloody for them. One remaining option: sell the business.

What does this mean for the microphone industry? Do we already have an idea of the buyer? A Chinese microphone giant could make sense. Look at what happened with Omron and AAC Technologies. Polarization of the MEMS industry is underway and should reshuffle the cards for players like Knowles.

About the author

Pierre Delbos is a Technology & Market Analyst, Sensing and Actuating, in the Photonics & Sensing division at Yole Intelligence, part of the Yole Group. He is involved in the development of technology and market reports covering MEMS & sensing technologies, including magnetic sensors, optical and audio MEMS, as well as gas and particle sensors. He also collaborates with his team on custom studies for the key players in the MEMS industry.

Pierre holds a master’s in Microelectronics and Photonics Engineering from Grenoble Institute of Technology, PHELMA (France).

This article has been written in collaboration with Jérôme Mouly, Director, Photonic & Sensing Division at Yole Intelligence.