How a small MEMS microspeaker start-up seduced the MEMS leader

As Yole Intelligence, part of Yole Group prepares to launch its annual bestseller, the Status of the MEMS industry (See here the 2021 edition), the acquisition of Arioso Systems by Bosch Sensortec made us wonder about the implications of such an event and the impact that it could have on the future of the MEMS microspeaker Industry.

This article has been written by Yole Intelligence’s analysts, Dimitrios Damianos and Pierre Delbos, both part of the Photonics & Sensing Division, in collaboration with Yole Finance, part of Yole.

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Probably not many people have batted an eyelid in the wake of the recent acquisition of upstart Arioso Microsystems by Bosch Sensortec, the MEMS leader. However, this is an important development for the company itself and the MEMS industry in general and let’s discuss why.

The MEMS microspeaker industry was established more than 15-20 years ago by the first start-up company developing these solutions, and although since then a handful of other start-ups have appeared, the market is still in its infancy. It is amazing how each of these start-ups uses its own proprietary technology, from monolithically integrated transducer & membrane to electrostatically bending bars engraved in Si; we won’t go through the details of each technology in this article but will address the various ongoing developments in the start-ups and focus on Arioso.

Audio Pixels, the first MEMS microspeaker start-up (to our knowledge), had been working closely with Tower Semi as their foundry (both being in Israel), but it experienced various manufacturing and other problems in the commercialization of their technology, and up to now no product has been introduced to the market. Today, the company claims to have resolved its developmental problems and improved the device’s performance and reliability. It seems they have established an extra MEMS manufacturing and packaging agreement with a Chinese MEMS foundry partner, Earth Mountain, with engineering samples currently being sent to clients. Interestingly enough, Earth Mountain, which is backed by Sequoia Capital Seed Fund, was set up in a record time and has an annual capacity of 50M units.

USound, founded in 2014, succeeded in commercializing the first official MEMS microspeaker product with STMicroelectronics as its foundry partner two years later. Since then, it has raised a significant amount of money totaling more than $75M, with the latest round of $30M at the end of 2021. This is helping ramp up mass production of its 2^nd generation microspeakers which offer support for spatial audio, a big driver for TWS hearables enhancing the user experience. Usound manufactures MEMS microspeakers for global TWS earbud brands, hearing aid companies such as Shenzhen Magnet Technology Co., Ltd, augmented reality glasses with MEMS audio, and audio glasses like Fauna.

xMEMS, established in 2017, went out of stealth mode in 2020, raised $15M in 2021 (Series A), and an Asian TWS company (Inventec Appliances Corp) is already incorporating its MEMS microspeakers that are manufactured at TSMC. xMEMS’ various microspeaker products are expected to be integrated this year into more end products, like TWS, hearing aids, and glasses/goggles.

There are also a couple of other MEMS microspeaker companies, such as Sonic Edge (that raised $2.5M end of 2021) and MyVox Ultrasonics, with limited information known about them at this point.

Finally, and most importantly, Arioso Microsystems was a 2019 spin-off from Fraunhofer IPMS in Germany. Normally, the company would have been preparing for a ~$10M Series A investment expected ideally to be completed by the end of H1 2022.

Ultimately, Arioso was acquired by Bosch Sensortec. Was it because Bosch was a potential investor and knew well about the start-up’s ongoing developments? In any case, Bosch saw an opportunity to acquire a new company relatively inexpensively (since it’s a start-up with no revenues as yet) at a level probably close to the sought-after Series A funding amount (~$10M). A crucial advantage for Arioso is that it has a potentially strategic technology that can open up a whole new market for Bosch related to a huge ongoing megatrend: Audio as a Human Machine Interface (HMI) and the associated rapid growth of the TWS/hearables market.

Interestingly enough, Bosch Sensortec had a quick stint in Audio MEMS in the past, acquiring Akustica back in 2009, a MEMS microphone company with some initial design wins in PCs and smartphones. The move was probably not intended to help Bosch enter the microphone market but rather to strengthen its leading position in the automotive and consumer MEMS scene by leveraging the technical know-how in monolithic CMOS-MEMS integration from Akustica. Eventually, Akustica’s activities were shut down in 2017 after Bosch failed to find a potential buyer; a possible reason why it exited the mic business could have been due to the established players Knowles and AAC and the rapidly growing and thriving Goertek who, between them, accounted for more than 80% of the MEMS microphone market five years ago. In addition, the very low MEMS mic prices and associated low margins in such an established market – which were being pushed down even further due to the rise of the Asian players AAC and Goertek (or Goermicro now) – was not a business worth pursuing. Bosch missed the wave of audio MEMS, followed later by the rise of TWS.

We think that the acquisition of Arioso comes at the right time for various reasons.

One of these reasons is related to the market and the MEMS technological potential. Bosch does not want to miss another wave of audio MEMS development and another thriving market. Now MEMS microspeaker developments are ramping up with no clear winner yet, as every company involved is a start-up, and the $10B microspeaker market is ripe for disruption. MEMS microspeakers offer a significant value proposition versus older electrodynamic speakers and balanced armature speakers, technologies that haven’t changed much for more than 50 years. And the MEMS microspeaker market is expected to grow with a 64% CAGR_21-26 according to Yole’s recent Microphones, Microspeakers, and Audio Processing 2021.

Another reason is product diversification. Bosch adds another device to its portfolio, targeting mainly consumer markets, where it can leverage its existing sales channels and business development and push this new type of device forward. Let’s not forget that Bosch has a design win for its IMUs in Apple’s Airpods Pro and Airpods 3, and of course, other hearables.

Finally, the Nanoscopic Electrostatic Drive (NED) technology of Arioso could be a telling reason. NED technology can be used to manufacture other types of MEMS devices, micromirrors, ultrasonic sensors & transducers, etc. Despite Arioso licensing the NED IP from Fraunhofer Institute, Bosch would also have at least some priorities to use this technology for other future devices.

A couple of years back, it was believed that smartphones would be a good entry point for MEMS microspeakers. But nowadays, the beachhead segment for almost every MEMS microspeaker company is the TWS and hearing aids market. The closed, in-ear design seems to provide a perfect spot for an efficient air displacement, good sound pressure level, and decent acoustic performance overall.

TWS earbuds are becoming a commodity, and volume shipments are expected to continue growing strongly by 24% annually up to 2026, according to Microphones, Microspeakers, and Audio Processing 2021, as the general public consumes more and more wearable technology, and as more functionalities are added to these hearables.  As the MEMS microspeaker performance in open environments improves, they will eventually go into smartphones and laptops/tablets, and automotive markets are considered in the future; at least, that is the start-ups’ roadmaps.

In any case, the acquisition of Arioso comes at the right time, as for the first time, a MEMS leader looks to get its hands dirty by actively participating in the emerging MEMS microspeaker industry. Will other established, historical MEMS leaders follow in the footsteps of Bosch and get involved in this market? And will we see more acquisitions of this handful of start-ups? Or will the big MEMS companies try and develop the technology internally or via partnerships? Whoever wants to play a key role in the imminent future, the time to act is now.

Dimitrios Damianos, Ph.D., is a Senior Technology & Market Analyst in the Photonics & Sensing division at Yole Intelligence, part of Yole Group.

Based on solid technical expertise in imaging, sensing, and photonics, Dimitrios oversees the day-to-day production of valuable technology & market reports and custom consulting projects. He also plays a key role in the expansion of Yole’s market & technical knowledge, supporting the development of strategic projects and maintaining long-term relationships with key accounts while ensuring their expectations are met.

Dimitrios holds a BSc in Physics and an MSc in Photonics, both from the University of Patras (Greece), and a Ph.D. in Optics & Microelectronics from the University of Grenoble-Alpes (France).

Pierre Delbos is a Technology & Market Analyst, Sensing and Actuating in the Photonics & Sensing division at Yole Intelligence, part of Yole Group.

Pierre is involved in the development of technology and market reports covering MEMS & sensing technologies including magnetic sensors, optical and audio MEMS, along with 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 degree in Microelectronics and Photonics Engineering from Grenoble Institute of Technology, PHELMA (France).

Source: yolegroup.com