GigaOM

I like my Nintendo Wii, although I occasionally wake up the next day feeling sore (and old). Nintendo was brilliant to use the Wii to change the paradigm of gaming by making the motion-sensitive controller. In a similar way, Apple was brilliant to make the iPhone responsive to the orientation of the screen (plus it looked good in the ads.)

This shift in design and capability has been great for consumers, but it’s also opened up opportunities for investment in the semiconductor sector. Both the iPhone and the Wii remote contain tiny machines located on a chip called an accelerometer, which is a type of MEMS device. MEMS, or microelectromechanical systems, are a class of chips that combine today’s digital information with the analog world with which our devices come in contact.

They’ve been around for a while — measuring everything from the air pressure in tires to the moisture in clothes dryers — but each new innovation leads to the possibility of selling millions of chips into popular consumer devices. They may also be the future of medicine; MEMS cameras are already used in laparoscopic surgery and drug delivery. And recently funded companies like Nanochip may even one day use MEMS to offer better (and cheaper) memory.

Startups such as Discera, which makes timing components that could replace quartz; Siimpel, which is designing for cell phone/camera components; and Enpirion, which handles power management on a chip, are designing MEMS. The applications are practically endless as technology becomes less about gadgets and more about making life easier. MEMS can be used to make touch-sensitive controls on our appliances and sensors to determine if the lawn needs to be watered. Connect those with an IP network and the vision of a truly connected world becomes a reality.

The value of MEMS sold in 2007 was $7.1 billion; that’s expected to grow to $14 billion by 2012, according to Yole Développement. As semiconductor markets go, it’s not a huge one. There are also plenty of existing players, including Hewlett-Packard, Texas Instruments, Freescale and Analog Devices, which makes the accelerometers used by the Wii remote.

It’s cheaper to produce MEMS, because they are typically built in older fabs. But manufacturing millions of such tiny devices correctly is challenging. They can also be temperamental, reacting to humidity and other sources of wear and tear thanks to their interaction with the real world.

Still, the market is wide open for new applications or innovations in existing chips. For a startup that can come up with something truly unique, they have the opportunity to shape the future in terms of product design, and make their investors a pile of money in the process.