As LEDs ramp, GaAs wafers shift from SI to SC type

April 19, 2012 — Gallium arsenide (GaAs) substrate shipments faltered in 2011, owing to weak demand for RF circuits and optoelectronics. Growth slowed from 22% in 2010 to 4% in 2011, hitting $360 million for GaAs. In 2012, GaAs shipments will recover, says Yole Développement, thanks to high-volume handset shipments and balance of capacity in the light-emitting diode (LED) industry.

Figure. GaAs wafer market (volume) by substrate type, and forecast. SOURCE: GaAs Wafer Market and Applications report, Yole, April 2012.

GaAs substrates should reach $650+ million by 2017, creating 11% compound annual growth rate (CAGR) in the forecast period, fuelled primarily by increasing GaAs content in handsets and increased penetration of LEDs in general lighting and automotive applications.

RF electronics (ie, power amplifiers, switches) were initially the main market for GaAs wafers, and will be the main market for GaAs in the near term, with the development of sophisticated smartphones, 3G/4G networks, and the increased demand for data communication. New GaAs-based devices are enlarging the material’s market with associated high-volume applications. LEDs and highly concentrated photovoltaics (HCPV) are two such markets for GaAs substrates.

Boosted by LEDs, semiconducting (SC) GaAs substrates will lead growth of the GaAs market. In 2011, semi-inductive (SI) GaAs substrates held ~56% (M$) of the overall GaAs substrate market (SC GaAs held ~44%), a trend that is likely to reverse in the short term, said Pars Mukish, technology & market analyst, LED & Compound Semiconductor at Yole Développement.

LEDs are penetrating TV, signs and displays, and other applications. The high-volume general lighting sector is a “killer application” for LEDs, boosting the SC GaAs substrate market by 2012-2013. Fundamental technology improvements are needed to improve LED efficiency and increase the total amount of light generated per package for LEDs to penetrate this market. Moreover, the automotive industry is also shifting from the use of traditional light sources to LEDs for products such as headlamps and interior lights.

SC GaAs substrate volumes are likely to equal SI GaAs substrate volumes by 2013 due to steady growth of the RF electronics market compared to booming growth of optoelectronic market.

The 2011 earthquake/tsunami in Japan damaged several Japanese manufacturing plants and strongly impacted production capacity of some key GaAs substrate suppliers who lost market shares to the profit of some competitors. Whether these companies will invest to recover operations, reduce operations or exit the business is still unclear. The GaAs wafer industry is evolving and some players have already announced plant expansion in order to gain market share and prepare future growth of the market.

Due to its lower labor cost, China has won all GaAs wafer manufacturing expansion plans, noted Brad Smith, senior analyst, Compound Semiconductor for Yole Développement.

The Yole Développement report, “GaAs Wafer Market & Applications,” presents all applications of GaAs wafer and associated market metrics. It also details GaAs wafer industry, including profile of main players & associated strategies, industrial value chain in 2011, revenues & market shares of key players.

Companies cited in the report: Anadigic, Avago, AWSC, AXT, CCT, Century Epitech, Dowa, Epiworks, Freiberger Compound Materials, GCS, Hitachi Cable, Hittite Microwave, IntelliEPI, Kopin, M/A-Com, Mimix Broadband, Mitsubishi Chemical, Mitsubishi Electric, NeoSemitech, OMMIC, QE, RFMD, Skyworks, Soitec, Sumika, Sumitomo, Electric Device Innovation, Sumitomo Electric Industries, TriQuint, UMS, VPEC, Win Semi, Xiamen Powerway.

Authors: Pars Mukish works at Yole Développement as a Market and Technology Analyst in the fields of LED and Compound Semiconductors to carry out technical, economic and marketing analysis. Brad Smith has 30 years industry experience in both optical and semiconductors in marketing, business development and market research.

Yole Développement is a group of companies providing market research, technology analysis, strategy consulting, media, and finance services. Internet: www.yole.fr.

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