CAMERAS EVERYWHERE

While U.S. institutions such as the National Aeronautics and Space Administration pioneered much of the basic technology for image sensors, Sony and other Japanese companies did the bulk of the work to put them into everyday devices.

Japan dominates the market for charge-coupled devices (CCDs), high-end sensors used in video cameras, high-resolution digital still cameras and, increasingly, the camera-equipped mobile phones that took off spectacularly in Japan and are now moving abroad. 

But CCDs face a broadening challenge to their two-decade dominance from so-called CMOS (pronounced "sea moss") image sensors.

Manufactured with the complementary metal oxide semiconductor process used for nearly all other microchips, rather than the arcane procedures used for CCDs, the CMOS sensors are cheaper, use less power and can be combined with other circuitry on a single chip to save space and boost performance.

But several shortcomings, including electrical interference that damages image quality, have largely relegated CMOS sensors to cheap gadgets like optical PC mice, which now use more of the chips than any other product.

After steady technological advances, however, CMOS may soon clash head-on with CCDs in high-end digital cameras and photo phones.

Sony, the world's largest consumer electronics maker and a leading developer of both CCDs and CMOS image sensors, already uses CMOS sensors in its Clie PDAs and Aibo robotic pets.

But while the Japanese had the niche business of making CCDs to themselves, they can expect lots of company as CMOS sensors elbow their way into new markets.

Several foreign companies, including chipmaking giants like Micron and STMicroelectronics that have acquired CMOS sensor startups, are already supplying sensors, although largely to what the Japanese consider niche or low-end markets.

Micron's Maloney says that as his company moves into the high end of the market, however, their competition will be in Japan.

"Today when I go to work in the morning I am typically competing with North America- and Europe-based companies, but when I go to bed at night, I'm kept awake by the thought of my longer-term Japanese competitors," he said.

Micron, for its part, has certainly created a lot of sleepless nights for Japan's chipmakers.

Micron and other aggressive chipmakers like South Korea's Samsung Electronics Co drove Japan's electronics conglomerates almost entirely out of a market they once ruled in dynamic random-access memory (DRAM), the mainstay of computer memory chips.

Last December Japan's largest chipmaker, Toshiba Corp, stopped making standard DRAMs completely and sold its U.S. chip plant to Micron.

Now the two are set to square off over dominance in CMOS sensors.

RIVALRY AT THE TOP

"In terms of market share, we're aiming for the top spot," Takehiko Kaneko, a Toshiba manager for image sensor marketing and engineering, said in an interview.

Analysts in Tokyo were wary about Micron's chances, at least in the near term, against the camera- and consumer-savvy Japanese industry.

"This is, today at least, a different market from DRAM," said HSBC analyst Steven Myers. "CMOS imagers are not necessarily commodities at this point."

WestLB analyst Kun Soo Lee added: "Image sensors require a lot of technological expertise that has not yet leaked overseas... The Japanese manufacturers should be all right for the next two or three years."

He expected Sony and Matsushita Electronic Industrial Co, with their expertise in professional video equipment as well as consumer electronics, would set the trends.

But in line with the industry's increasingly global nature, Micron has been working with the Japanese, not just against them.

Photobit, an image sensor startup acquired by Micron late last year, began working nearly two years ago with Hitachi Ltd., Japan's biggest electronics manufacturer and its number-three chipmaker, to combine Micron's sensors with Hitachi's digital signal processor technology. That relationship continues today and Micron is shipping a large volume of low-power sensors to Hitachi, which uses them in camera modules supplied to video cell phone makers, Maloney said.

© Reuters Ltd