RPT-ANALYSIS-Get the Picture: Smartphones drive back-lit sensors

(Repeats to add ANALYSIS tag)

* BSI sensors to dominate smartphone market by 2014

* Larger players such as Samsung, Sony to enter market

* For now, OmniVision has the edge

By Saqib Iqbal Ahmed and Jennifer Robin Raj

BANGALORE, March 1 (Reuters) - In the race to narrow the gap in picture quality between mobile phones and digital cameras, OmniVision Technologies Inc has a 6-9-month lead with its backside illumination (BSI) technology, but global electronics giants are closing in.

The relatively new BSI technology received a boost when teardown firm Chipworks identified OmniVision's BSI image sensors in Apple's iPhone 4.

Unlike traditional CMOS image sensors, which use one side of the wafer, BSI sensors use both sides of the chip, maximizing the ability of each pixel to collect light and deliver better quality in a smaller-sized camera.

"Apple has popularized BSI technology and a lot of competitors aren't going to want something that's not BSI because it's not as fancy, nice, efficient or wonderful," said Raymond James analyst Hans Mosesmann.

Needham & Co analyst Rajvindra Gill expects BSI sensors to be the predominant image sensors for smartphones within 2 years or so.

By 2014, 9 out of 10 smartphones and feature handsets will have BSI image sensors, up from fewer than one fifth today, predicts IHS iSuppli's Pamela Tufegdzic.

Analysts reckon the CMOS image sensor market is worth around $3 billion, and BSI sensors make up about 5 percent of that now.

BSI sensors, which allow for sharper pictures, are particularly effective for still images, given the better resolution of the end result.     Mosesmann notes that: "BSI is something you very much want for things like snapshots -- where you want to print it out and share and you need a higher resolution product."

OmniVision, the industry leader in commercializing BSI technology, last week posted quarterly results that blew past Wall Street estimates, helped by a strong contribution from its BSI sensors.

But tech giants Sony Corp , Samsung Electronics and Toshiba are fast nipping at the U.S. firm's heels.

ENTRY BARRIERS

Few have made a success out of the image sensor market as it moves rapidly, making it a tough one for those later entrants who need to stump up significant investments to make the chips.

CMOS image sensors have traditionally been built on maturing memory production lines. While firms can make BSI wafers on an existing line, a series of extra steps are needed to ensure both sides of the wafer are defect free, said Gleacher & Co analyst Doug Freedman.

"It's quite a bit different technologically, and what you need is a commitment to building the BSI product," he said.

Analysts estimate those extra steps could increase the cost of a sensor of a given resolution by 25-30 percent, another barrier for firms looking to get into the market.     OmniVision, which said in November it was already pursuing design wins for its second-generation BSI chip, is about 6-9 months ahead of its nearest competitors.

Last month, it showed off its new OmniBSI-2 technology, based on its second-generation BSI, at the Mobile World Congress, the world's largest wireless trade show.

Also in Barcelona, Aptina Imaging Corp put on display its new 1.1 and 1.4-micron BSI image sensors, highlighting the growing interest in the technology.

Needham's Gill said the larger players have all "kind of missed the boat" in 2010.

However, "bigger players are going to come with their own factories and fabs, and will have dramatically higher capability for R&D and the capacity to ship large volumes," noted Morgan Keegan analyst Harsh Kumar.

Companies such as Samsung and Sony will primarily make the chips for their in-house phones, whereas smaller companies like Aptina could pose a more direct threat to OmniVision's margins.

As the technology improves, the potential winners will be those that go on to develop the best BSI sensors for higher and higher mega-pixel products.

"BSI is not some kind of secret sauce that OmniVision and Sony will have forever," said Mosesmann at Raymond James. "Other players will try to come at this and they will share the market." (Reporting by Saqib Iqbal Ahmed and Jennifer Robin Raj in Bangalore, Editing by Ian Geoghegan)