Key findings include:
- A 49% increase in deals over Q2, with increases seen across all markets, and a particularly high number of deals in North America;
- Increases seen in transactions of T&M software businesses and record PE investment in the sector;
- Growth of 20.4% in the BDO T&M share price index in the last nine months, outperforming the FTSE and S&P.
The global trend towards miniaturisation of devices and components is a key driver of innovation in the Test & Measurement market.
Micro-Electro-Mechanical Systems, or MEMS, are miniature devices comprised of integrated mechanical (eg levels, springs, vibrating structures, etc) and electrical (resistors, capacitors, inductors, etc) components, designed to sense, report and interact. Examples include airbag deployment in vehicles and motion & orientation detection in smartphones.
In less than 20 years, the technology has developed from an interesting academic pursuit to gain a stronghold in the automotive sector, and to become an integral part of many common products, both improving functionality, and disrupting the status quo.
The MEMS sector is expected to grow at 8.9% CAGR to 2021, increasing in value from $11.9bn in 2015 to $20bn in 2020.1 Over the same period, the CAGR of units shipped is expected to be 13%, reflecting falling prices.
Commoditisation is a key challenge in the sector: the consumer market is now highly competitive. Despite this trend, the future of MEMS is rich with commercial possibilities, including the trillions of MEMS sensors envisioned to be used as the eyes and ears of the Internet of Things, ongoing demand from the smartphone and wearable device markets, and increasing opportunities in the automotive sector with the rise of driverless cars.
Industrial, environmental and medical applications will also spur development.
Key innovations surfacing in the sector include:
• Identifying new applications and component combinations (eg combined environmental sensors that can detect more than one gas, also incorporating pressure, particle, humidity and temperature sensors)
• Ongoing miniaturisation of inertial sensors (eg accelerometers, gyroscopes)
• Embedding software to increase functionality and create value
• Decreasing power consumption, especially for mobile device applications
• Advanced packaging to decrease footprint of sensors.
Major trade players are rapidly looking to take advantage of these trends and continued M&A activity is likely.
The future for sensing, measuring and reporting has rarely looked so strong.