Telecom collapse affects Albuquerque's MEMS industry
albuquerque.bizjournals.com
Dennis Domrzalski NMBW Staff
From the September 6, 2002 print edition
Albuquerque's Next Generation Economy (NextGen) had hoped by now to be in the process of building a $35 million plant to manufacture microelectro-mechanical systems (MEMS), which are hair-diameter machines that can sense, communicate and react to situations. The plant, or FAB, was to be up and running by June 2003.
But the collapse of the telecommunications industry has cut demand for MEMS devices, especially in the area of optical telecommunications, and NextGen isn't sure when it will build the FAB.
"The market has gotten so soft. It's like with the semi-conductor guys, business is off and orders are down, and microsystems technology is suffering along with everything else," says NextGen CEO Mike Skaggs.
But Albuquerque MEMS companies still have places to go to design and manufacture their tiny machines. They can do the basic research and manufacturing at Sandia National Laboratory (SNL) and finish off the process at the new, $1.1 million Manufacturing Training and Technology Center (MTTC) at the University of New Mexico (UNM). The MTTC has a clean room which can be used for back-end production of MEMS products. That process involves removing the tiny machine from the silicon wafers on which they are built.
One Albuquerque MEMS company, MEMX, which is building a telecommunications optical switch, is already using the facility for some of its back-end production, says UNM professor Harry Weaver. MEMX was doing some of that work in southern Colorado, Weaver adds.
But it isn't clear whether the more than two dozen Albuquerque MEMS companies will survive the MEMS downturn. About a year ago, San Francisco-based MEMS analyst Roger Grace was predicting a 21 percent compounded annual growth rate for the $20 billion a year MEMS industry. But now, with the telecommunications implosion, that growth rate will be more like 12 percent, Grace says.
Hardest hit by the telecom troubles are MEMS companies that were hoping to provide switches and other technology to the industry. "The marketplace has gone sour," Grace says, citing the example of a company called Cronos, which is in the business of making telecom optical devices, and which was sold to JDS Uniphase for $750 million. But just recently, JDS sold Cronos to a Switzerland firm for $8 million.
And Lucent Technologies just shut down an optical MEMS operation that it had invested six years worth of time and work in, Grace says. "People who have made major investments in the optical telecom space are either selling them off or closing them down. The MEMS industry is in a state of turmoil, just like most high-tech industries are," Grace says, adding that although the telecommunications industry needs and wants the MEMS optical technology, it just can't afford to buy the items.
But there are some bright spots in the MEMS industry. MEMS devices are used extensively in automobiles, where they are used as air bag and tire pressure sensors. And with 55 million vehicles being sold a year worldwide, that sector of the industry remains strong, Grace says.
Grace adds, though, that he expects the MEMS optical telecom business to rebound in about two years.
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