Tuesday, August 08, 2017

ON Semi Exits Mobile CIS Business, Licenses-Out Related Patents

SeekingAlpha Q2 2017 earnings call transcript gives some interesting info about ON Semi image sensor business:

"During the second quarter, we exited the mobile image sensor market as the margin profile for that business was not comparable with our target financial model.

Furthermore, we monetize the value of highly differentiated mobile imaging technology, through an intellectual property licensing agreement with a third-party. We have excluded the gain of approximately $24 million related to this transaction from our second quarter non-GAAP results.

Second quarter free cash flow and operating cash flow included approximately $24 million from a licensing arrangement related to the mobile image sensor business.

For the second quarter, we again posted strong growth in our CMOS image sensor business for viewing and ADAS applications. We continue to gain market share in automotive image sensors and our design win pipeline for our CMOS image sensors for automotive applications continues to grow at a rapid pace.

We continue to see strong growth in machine vision applications with our PYTHON line of CMOS image sensors. As I indicated earlier, we are engaging at the very early stage with key players in artificial intelligence for machine vision and robotics applications.
"

The company's spreadsheet shows the proportion of image sensor business over the years:

6 comments:

  1. There's a typo in the headline. :)

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  2. Sigh. Sony only became the leader and greatly profitable after many years of significant investment in the CMOS image sensor space. Once again, American industry cedes the market-driver of advanced technology to Asia. Not that automotive and machine/robotics vision is not important, but it does not have the volume nor does it drive innovation anything like a mass market that is highly competitive. It is this innovation that is the foundation for the future, even in the more profitable markets ON prefers. Meanwhile, who licensed the patents? Surely it must be one of the remaining mass mobile-market players.

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    Replies
    1. Eric, the volume for automotive sensors is going to grow considerably. This year 94 million cars will be sold worldwide. A small fraction of those, currently located at the top end, contain a dozen cameras or even more (surround view, back-up, forward ADAS, etc.).

      As camera use increases, and becomes mandatory (for features like pedestrian avoidance, if not auto braking) heavy sensor use will flow downstream. The point of 1B automotive sensors shipping per year is not that far away. While margin erosion is inevitable (that's already happened for back-up cameras), the margins are likely to remain higher than for mobile.

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    2. Good points but I think the margins will track with the volume.

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    3. That's is true. What's more worrying for ON is that Sony knows this market will grow, and in line with their wanting to own all major segments of the CMOS sensor market, will aggressively pursue it. They're already introducing sensors with LED flicker mitigation and ASIL-C.

      With their superior dark current and FWC they'll have a significant performance advantage at automotive temperature ranges.

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