When the chips are down – prices can rise (but don’t panic)!

One of the many unwanted consequences of the Coronavirus pandemic has been its effect on the semiconductor industry. Reduced manufacturing capacity and surging demand in many sectors including personal computers and smartphones have led to a shortfall in the availability of all sorts of semiconductor chips and devices.

So it is no surprise to find that this is also affecting the manufacture of image sensors used in machine vision cameras, with some camera manufacturers warning recently about potential supply issues. This has been swiftly followed by the announcement of impending temporary price increases of up to 15% as a consequence of the shortage. The resulting rush to place camera orders to beat the price rise is good news for suppliers such as us in the short term but we don’t want customers who need vision solutions later in the year to be disadvantaged by limited availability if at all possible – and the good news is that there are ways to mitigate this.

Making the right choices

Back in 2015, Sony announced its intention to close its 200 mm CCD wafer line in Kagoshima in 2017 and to stop the manufacture of the majority of its industrial CCD sensors.

At that time, this decision raised concerns in the industry that the availability of high image quality sensors would be reduced because alternative CMOS sensors traditionally had a reputation for lower image quality.

However these fears proved unfounded as new, high performance CMOS sensors soon emerged and have continued to evolve ever since. The result was the availability of an unprecedented range of sensors pre-pandemic, with a rich choice of resolutions, pixel size and frame rates, and this helps hugely in the context of the current shortage of image sensors. Working closely with expert machine vision suppliers will enable users to get the best match of sensor to the particular application from the cameras that have the best availability. This may mean opting for a sensor at a higher specification than would normally be required, but could mean the difference between getting a vision system up and running or not – and reaping the multiple benefits that vision systems bring.

Another way of mitigating the impact of reduced camera availability is to bring vision project start dates forward. Vision projects involve an evaluation stage to determine the best vision solution, followed by building, testing and implementing the resulting system. The effects of camera shortages would be to extend the time needed to procure the components to build the system. Since vision project planning aims towards a required implementation date it makes sense to contact vision suppliers as early as possible to get projects underway sooner rather than later. In this way any potential camera supply delays can be built into the project timescale to meet the required end date.

What about those price increases?

On the face of it, a 15% price increase for cameras seems pretty significant. However, recent estimates suggest that around 70% of vision revenue in the UK comes from vision solutions and integration projects. In most of these, the cameras can be a relatively small proportion of the total project cost and so increases in camera prices have comparatively little impact for the end user. The price increases will be most keenly felt where camera costs are the major contributor, such as replacing failed cameras or upgrading existing systems. The proposed price increases have been put forward as ‘temporary’, so does that mean that they will go back to pre-pandemic levels when full manufacturing capacity returns? This will depend on overall demand levels at semiconductor foundries (not just from the machine vision industry) and any global increase in capacity. Estimates on when the image sensor shortage will be over range from around 6 months to 2 years, but no-one is sure. According to the US-based Semiconductor Industry Association, about 75% of global manufacturing capacity is based in East Asia. Suggested increases in manufacturing capacity both in the US and the EU would change this dynamic but would take some time to implement and is unlikely to impact on image sensor production in the short term. For many years, the machine vision industry has enjoyed the benefits from enhanced image sensor manufacturing capabilities, either through cheaper cameras or improved performance for the same price. Factors such as market share will naturally affect pricing models for individual camera manufacturers going forward, but don’t be surprised if the new higher pricing structures become the ‘new normal’. We can also hope for a return to the prospect of ever increasing sensor capabilities becoming available without significant further price rises, but only time will tell.

Scorpion Vision Ltd provides both imaging components and factory automation systems based on machine vision technology. We hold an extensive stock list of both industrial cameras and machine vision lenses for our partners and customers who build systems and can mitigate in the short term against limited supply or we can suggest alternatives to those cameras that are currently unavailable.