IC foundries based in China and Taiwan are all gearing up for rapid demand growth for microelectromechanical systems (MEMS) devices driven by a new wave of expansion for the Internet of Things (IoT), according to industry observers.

The market for MEMS sensors has been dominated by IDM vendors such as Bosch, STMicroelectronics and Freescale Semiconductors. Eyeing the huge market potential, China- and Taiwan-based IC foundries are partnering with their fabless clients to expand their presence in the field, said the observers.

Particularly in China, the central government has launched a national fund to finance the development of its local semiconductor industry. MEMS is among the chosen industry sectors the China government is looking to support financially, the observers indicated.

The government-sponsored Shanghai Industrial Technology Research Institute (SITRI), founded more than a year ago, has a 8-inch wafer fab targeted specifically at the manufacture of MEMS parts. SITRI is mainly responsible for helping the local MEMS startups have their new designs ready for commercial production, the observers disclosed.

China's SummitView Capital backed by the Shanghai government has also joined the push for promoting the development of the local MEMS industry, the observers noted.

In addition, the leading China-based 12-inch IC foundries Semiconductor Manufacturing International (SMIC) and Shanghai Huali Microelectronics (HLMC) is working with their own partners specializing in MEMS, the observers said.

SMIC previously introduced a 3-axis accelerometer which is designed by MEMSensing Microsystems and utilizes the foundry's CMOS integrated MEMS device fabrication and TSV-based wafer-level packaging technologies, while HLMC is cooperating with Shanghai Quality Sensor Technology (QST) and Shanghai Lexvu Opto Microelectronics Technology to develop MEMS products.

Taiwan Semiconductor Manufacturing Company (TSMC) has been expanding its MEMS business at a gradual pace. TSMC has been InvenSense's foundry partner, and a partner of MediaTek-invested mCube , the observers said.

United Microelectronics (UMC) is working with Taiwan-based Solid State System (3S), specializing in MEMS microphone chips. 3S' offerings are targeted mainly at smartphones and wearable devices.