Study confirms uncooled thermal camera market downturn

Technological developments to reduce material costs and economies of scale have become a key competitive advantage. Thus, FLIR, the market leader, and many players at both sensor and camera levels try to target as many commercial markets as possible to aggregate volumes.

“Military market downturn and high price erosion have deeply affected traditional infrared imaging margins for the past few years at both sensor and camera level”, explains Yann de Charentenay, Senior Analyst, MEMS & Sensors, Yole Développement. What is the best strategy to survive?

The report, reacting to the strong price pressure, identifies various trends depending on the business models of the companies:

Vertically integrated players - companies with internal sensor manufacturing have an efficient cost structure to lead the price war happening in commercial camera markets: DRS and FLIR in the surveillance market, and FLIR and Fluke (for pyroelectric) in the thermography market. Those camera makers who focus on core and camera manufacturing, in addition to outsourcing sensor manufacturing to foundries (FLIR, DRS, and Raytheon), reduce the sensor cost and benefit from the wafer level techniques of the foundries. Other vertically integrated companies (BAE, L3com and Lumasense ITC) will probably follow this path in the future.

Sensor merchant suppliers - suppliers who are under pressure due to their camera customers being unable to follow the price war led by vertically integrated manufacturers. In order to maintain their competitiveness in front of the semiconductor foundries used by vertical companies, they have upgraded their production line to 8’’, climbed up in the value chain by providing cores with increased integration, and they have also developed innovative MEMS technologies customised for infrared imaging.

These business strategies, the report suggests, will deeply change the competitive landscape and create merger/acquisition opportunities in the next few years.