iSuppli Comments on Shutdown of Systron Donner Automotive

The gut-wrenching downturn in the global automotive industry has spurred the shutdown of Systron Donner Automotive, the world’s second-largest supplier of car quartz Microelectromechanical System (MEMS) gyroscopes, according to iSuppli Corp. “The entire automotive supply chain is feeling the pain of the plunge in car sales — but the most dramatic impact has been the closure of Systron Donner Automotive of Concord, Calif., just before Christmas,” said Richard Dixon, senior analyst, MEMS, for iSuppli. “This is major turnaround for a company that sold nearly $105 million worth of MEMS vehicle dynamics gyroscopes in 2008, giving it the second rank in the market behind Bosch.”

Schneider Electric, Systron Donner Automotive’s French owner, laid off the firm’s entire engineering team of 87 people, leaving a skeleton crew to meet the firm’s contractual commitments. Schneider hasn’t announced this development yet.

Global automotive shipments fell precipitously in 2008 and are expected to decline again in 2009. The drop in car shipments has impacted suppliers throughout the car supply chain, but the plunge has been particularly hard on the makers of MEMS sensors. Such sensors are used in airbag systems found in more than 90 percent of all cars, and are also employed in advanced systems like the vehicle stability control devices found in many mid-range and luxury vehicles.

Most MEMS sensor companies suffered revenue declines ranging from 6 percent to 15 percent in 2008.

Beyond the widespread impact of the industry downturn, Systron Donner Automotive was facing rising competitive pressure.

“The company was under competitive siege and already was beginning to lose market share at its key long-time customer, Continental, to Panasonic, which is offering a cheaper product,” Dixon observed.

In another shock to the automotive supply chain, Infineon in February shed its Norwegian arm, SensoNor Technologies AS, announcing that SensoNor was to be sold to Norwegian private investors.

“Infineon’s decision clearly was prompted by the recent downturn, which has especially hit the market for Tire Pressure Monitors Sensors (TPMS) that were co-developed and are partly manufactured in Norway,” Dixon said. “This will help balance Infineon’s books in the short term and has little impact on its market-leading position in TPMS pressure sensors today. Some process steps which were done in SensoNor’s site in Horten, Norway, will join the rest of TPMS production in Villach, Austria, simplifying the supply chain, but the major impact is to Infineon’s capability to innovate, as the SensoNor group represented an R&D team par excellence.”

Bright spots in automotive
Despite all the bad news, there remain some automotive applications that continue to thrive amid the downturn, especially those driven by non-market forces, such as government mandates for Electronic Stability Control (ESC) systems.

These systems on average require three MEMS sensors: a gyro, an accelerometer and a pressure sensor. ESC systems will be mandatory on all passenger vehicles sold in the United States starting in 2012 and in the European Union beginning in 2014.

Such a requirement has allowed the suppliers of MEMS sensors for ESC systems to continue to perform well during the downturn. For example, Sensata — a leader in high-pressure sensors used in ESC brake modulators — recorded a slight increase in its automotive MEMS sensor revenue in 2008.

Overall, iSuppli’s latest automotive MEMS tracker forecasts that after the contractions of 2008 and 2009, the market for automotive MEMS will resume its earlier healthy growth in 2010 and will achieve double-digit revenue expansion in 2011.

About iSuppli Corporation
iSuppli Corporation is the global leader in technology value chain research and advisory services. iSuppli provides market intelligence services for the EMS, OEM and supplier communities in addition to servicing consumer electronics and media concerns. Services afforded by iSuppli range from electronic component research to device-specific application market forecasts, from teardown analysis to consumer electronics and from display device and systems research to multimedia content and services.