Jiazi Year | The 16-Year Rise of the "First MEMS Chip Stock" in Suzhou

On August 29th, Minshan Co., Ltd., known as "China's first MEMS stock," released its mid-year report: In the first half of the year, the company achieved revenue of 156 million yuan, an increase of 9.08% year-on-year. Among them, the revenue in the second quarter of 2023 was 90.1263 million yuan, approaching the historical high for a single quarter and exceeding that of any single quarter in 2022.

 

This report card is a strong statement from Minshan Co., Ltd. After all, global consumer electronics shipments have been sluggish in recent years, coupled with a downturn in the semiconductor industry, the outside world has been expecting this veteran MEMS company to regroup.

 

The mid-year report shows that the company has independent R&D capabilities and core technologies in various aspects of existing MEMS sensor chip design, wafer manufacturing, packaging, and testing.

 

At the same time, it can independently design ASIC (Application-Specific Integrated Circuit) chips that provide signal conversion, processing, or driving functions for MEMS sensor chips, achieving localization of the entire production process of MEMS sensors.

 

In the past few years, Minshan Co., Ltd. has bet on consumer electronics, but this year, global smartphone demand has declined significantly, and shipments have fallen continuously. According to Canalys data, year-on-year decline was 12% in the first quarter of this year and 11% in the second quarter.

 

Against this backdrop, Minshan, which started with MEMS acoustic sensors, needs to gradually expand to multiple categories such as MEMS pressure sensors and MEMS inertial sensors, not putting all its eggs in one basket, and seizing the development opportunities in the automotive and industrial sensor fields.

 

This is Minshan Co., Ltd.'s 16th year of advancement, and it is a breakthrough for "China's first MEMS stock".

 

In late August, "Jizi Suzhou" interviewed Li Gang, the founder of Minshan Co., Ltd. With a background in R&D, he has a focused drive. From his exposure to MEMS at Peking University in 1997, to establishing Minshan in Suzhou ten years later, to taking the company public 13 years after that, Li Gang often says: "There are enough opportunities in this industry to last a lifetime."

 

"Vertically, a product line, a manufacturing process, there's always room for improvement;

 

Horizontally, the domestic market is large, and applications are constantly emerging. For example, expanding from consumer electronics to high-end automotive and industrial applications takes a long time, and MEMS can continuously disrupt this."

 

In 2007, Li Gang came to Suzhou as a "leading talent of Suzhou Industrial Park," witnessing the entire process of China's MEMS industry, from its inception to its current highly competitive state.

 

This year, Minshan Co., Ltd. moved to a new building in Suzhou, and its wholly-owned subsidiary, Lingke Sensing, also relocated to a new factory with a 10,000-square-meter workshop and a 2,000-square-meter clean room.

 

At present, Li Gang, founder of Minshan Co., Ltd., told "Jizi Suzhou": This year's goal is to improve the quality of MEMS inertial sensors to a higher level and create a new growth pole in the mobile phone field.

 

 

1 "There are enough opportunities in this industry to last a lifetime."

 

In the early 1990s, Li Gang, who was still in high school, came across a popular science insert in a physics textbook that stated, "60% of the national economy is related to microelectronics technology."

 

This sentence planted a seed in Li Gang's heart.

 

When taking the college entrance examination, Li Gang focused on finding majors related to microelectronics technology. In 1997, Li Gang successfully entered Peking University. Coincidentally, the MEMS National Key Laboratory of Peking University was established at that time, and Li Gang began to enter the MEMS field.

 

Li Gang often gives this popular explanation of MEMS:

 

"MEMS is short for Microelectromechanical Systems. It originates from the semiconductor industry. Using a human analogy, the entire semiconductor industry is like a human brain. Over the years, our semiconductor industry has continuously miniaturized brain cells, increasing integration or brain density. The role of MEMS is to provide auxiliary functions, forming an interaction above the brain, making it more perceptive, so MEMS is equivalent to the five senses that can perceive the physical world."

 

In fact, MEMS technology is essentially a micro-manufacturing technology. Chips manufactured based on MEMS technology have characteristics of low power consumption, miniaturization, and intelligence.

 

MEMS chips, as the front-end chips connecting the real world and the digital world, are known as "chips that are more analog than analog chips."

 

With the support of 5G and even faster transmission speeds and higher capacity data networks in the future, the Internet of Everything has a foundation for development, and MEMS sensors and actuators perform functions similar to human senses and nerve endings in the data world.

 

From university to doctorate, Li Gang has always followed the MEMS path: he has obtained a bachelor's degree in microelectronics from the University of Electronic Science and Technology of China, a master's degree in MEMS from the "State Key Laboratory of Micro/Nano Processing Technology" at Peking University, and a doctorate in electronic engineering from the Hong Kong University of Science and Technology.

 

In 2007, Li Gang came to Suzhou as one of the first "leading talents of the Industrial Park" to establish Minshan. According to Li Gang's recollection: "The conditions offered by the first batch of leading talents in Suzhou Industrial Park were among the best in the country." It was this seed funding that allowed Minshan to be born and take root in Suzhou.

 

To this day, Minshan's building still displays a precious photo: Li Gang and two other partners, Hu Wei and Mei Jiaxin, simply dressed with bright eyes, beside a crucial MEMS microphone engineering sample at that time.

 

In those days, MEMS sensors were monopolized by a few international players. Not many people understood what MEMS was, and even investment institutions found it unfamiliar and novel.

 

On the one hand, there was a vast development space; on the other hand, the almost blank market required Li Gang and his team to break through from scratch.

 

In the early years, Minshan went door-to-door to promote its R&D concepts while maintaining survival by designing chips.

 

"Of course, MEMS itself is a slow-paced development process. It's an ecological R&D, not something that can be solved by working overtime. It requires strong supply chain support, which is why Suzhou provides such a good environment." Li Gang added.

 

In 2008, Minshan's R&D team received assistance from the Suzhou Institute of Nanotech and Nano-Biomedicine, Chinese Academy of Sciences, producing the first batch of MEMS acoustic sensor chips on its R&D platform.

 

In 2010, Minsic, through the "MEMS process introduction" and cooperation with China Resources, participated in the national "02 special project," which led to the establishment of the first MEMS production capacity wafer line on the mainland.

 

Li Gang told "Jiazi Suzhou": "Until 2012, silicon microphones gradually began to have market demand in China, while before that, traditional sensors were commonly used in the market."

 

From 2007 to 2012, in the first five years, Li Gang, with the Minsic team, paved a path for the domestication of the entire MEMS industrial chain in Suzhou. This is also considered by Li Gang to be one of Minsic's greatest breakthroughs to date.

 

In Li Gang's view, technology itself needs to follow the supply chain, but if the supply chain cannot be managed, technology is difficult to iterate. In this, Suzhou and the nanotechnology industrial park provided a good foundation.

 

“If it weren’t for the help of leading talents that year, and the investment from Yuanhe Holdings, we wouldn’t have been able to start; second, without the Institute of Nanotechnology and a good R&D platform and pilot production platform, we might not have been able to achieve mass production quickly; later, when Minsic's capital chain encountered difficulties, Suzhou’s Ke Daotong gave us working capital,” Li Gang recalled.

 

Having weathered the initial "stormy period" of its founding, in 2016, Minsic's silicon microphone product line expanded production, with cumulative shipments exceeding 100 million units; two years later, in 2018, the silicon microphone product line expanded production, with cumulative shipments exceeding 500 million units, ranking fourth globally; in 2020, it achieved the milestone of 1 billion cumulative shipments.

 

That year, Minsic was listed on the STAR Market and was hailed as the "China's first MEMS stock."

 

To date, brands such as Huawei, Transsion, Xiaomi, Samsung, OPPO, Lenovo, Sony, Jiuan Medical, and Lexin Medical have all used Minsic's MEMS sensor products.

 

In Li Gang's view, any field that requires sensing needs sensors. "We've been doing consumer electronics for a long time, and then expanding into high-end automotive and industrial applications takes a long time, plus innovative opportunities like room-temperature superconductivity. We can say that there are opportunities in this industry for a lifetime."

 

 

2 Adding to the roadmap, verticalizing technology

 

According to Yole's statistics and forecasts, the global MEMS industry market size will grow from US$13.6 billion in 2021 to US$22.3 billion in 2027, with a compound annual growth rate of 9.00% from 2021 to 2027.

 

In the face of this market space, Li Gang believes that, We must be a technology platform company. Only by investing more will there be a multiplicative effect, and technology, in the end, is a matter of reuse.

 

Therefore, the company has formulated The development goal of becoming a "leading MEMS chip platform enterprise." Tracing back to the upstream of the chip, selecting MEMS chip types with larger or potential market capacity for downstream devices and modules, determining the R&D direction from the chip end, and then conducting targeted back-end R&D in packaging and testing according to the needs of downstream application scenarios.

 

In Li Gang's view, the golden rule of MEMS is not Moore's Law, but "One product line, one manufacturing process." “For example, when we make silicon microphones, it’s like making a human ear, because it runs on electricity and cannot be reduced indefinitely. If it were to be converted into making eyes, the process would be different."

 

After all, acoustic sensors are different from other components; once they fail, users have zero tolerance, so users have very high requirements for product quality.

 

Because of this, Li Gang believes that quality standards are the most important issue to be addressed in this industry. Having overcome the technical hurdles, supply chain hurdles, mass production hurdles, and sales hurdles, the final hurdle is the quality issue.

 

“This year, our goal is to improve the quality of inertial sensors and create a new growth point in the mobile phone field,” said Li Gang.

 

According to Minsic's semi-annual report, the company will focus on the consumer electronics industry (such as mobile phones, computers, headphones, watches and other portable devices, e-cigarettes, VR devices, smart homes, etc.), actively deploying and developing downstream markets such as automobiles, industrial control, and medical care.

 

The company's products include acoustic sensors, pressure sensors, pressure-sensitive sensors, inertial sensors, flow sensors, microfluidic actuators, and optical sensors, and, in response to downstream market demand, while enriching the types of sensor products, it will also provide system-level products including automotive and industrial control pressure modules, inertial navigation modules, and lidar modules, and will attempt to participate in Internet of Things-related solutions in smart cities.

 

In general, the consumer electronics field is the basic market for Minsic's MEMS sensor products; while the development opportunities in the automotive and industrial sensor fields are Minsic's rapidly expanding second growth curve, which is also Minsic's path to breaking through.

 

After all, automotive semiconductor products need to go through a series of safety certifications to enter the supply chain of automakers. The certification cycle is generally at least two years, and the industry has relatively high barriers. At the same time, automakers need to consider the stability and verification and testing costs of products and generally will not change suppliers easily, so manufacturers often obtain relatively long-term stable orders after entering the supply chain.

 

Horizontally, Minsic is trying to add to its roadmap; vertically, it is the verticalization of technology, following the golden rule of "one product line, one manufacturing process."

 

For Minsic, founded by Li Gang, this is a breakthrough in its third year of listing. The results of the semi-annual report have given the market some confidence, but it still needs to develop its second growth curve to rise to a new level.