Thursday, April 19, 2012

RF electronics currently fuels GaAs wafer market, but LEDs will rapidly lead growth

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

GaAs wafer market should represent business of $650 million+ by 2017
After the large recovery growth from 2009, GaAs substrate market has slowed sharply in 2011 due to weak demand in RF circuits (handsets and WLANs) and in optoelectronics (LEDs and laser diodes).

From a growth rate of +22 percent achieved in 2010, the GaAs substrate market has only increased by +4 percent in 2011, reaching a value of nearly $360 million.
However, the market is expected to recover in 2012, driven by:
* The sheer volume of the handset market;
* The consolidation of the LED industry (balance of capacity).

Hence, GaAs substrate market should reach a business of $650 million+ by 2017 at a CAGR of nearly +11 percent, fuelled primarily by:
* Increasing GaAs content in handsets;
* Increasing penetration of LEDs in general lighting and automotive applications.Source: Yole Développement, France.

Initially, RF electronics (power amplifiers, switches…) represented the main market for GaAs wafer and will continue to feed the business for the next years with the development of sophisticated smartphones, the development of 3G/4G networks and the increased demand for data communication.

But recently, the development of new GaAs based devices is enlarging the market with associated high volume applications. LEDs represent such devices and are currently booming due to advantages offered over traditional light sources. Other devices such as solar cells for High Concentration Photovoltaic (HCPV) will also add to the development of the GaAs substrate market, but to a lesser degree.

Boosted by LEDs, SC GaAs substrate should lead growth of GaAs market for next years
In 2011, the Semi-Inductive (SI) GaAs substrate market represented ~56 percent (M$) of the overall GaAs substrate market whereas Semi-Conductive (SC) GaAs counted for ~44 percent (M$). “This trend is likely to reverse at short term as GaAs substrate demand for LEDs should rapidly surpass demand for RF electronics devices,” explains Pars Mukish, Technology & Market Analyst, LED & Compound Semiconductor at Yole Développement.

Globally, LED penetration rate is increasing in several applications such as TV, Signs and Displays. General Lighting is the next killer application for LEDs and should boost the SC GaAs substrate market by 2012-2013 if fundamental technology improvements are achieved to improve LED efficiency and increase the total amount of light generated per package. Moreover, the automotive industry is also shifting from the use of traditional light sources to LEDs for products such as headlamps and interior lights.

In that context, 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.

2011 Japan earthquake shifted part of revenues of some Japanese players to their competitors
The 2011 earthquake/tsunami have 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… But 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.

“At this level, due to its lower labor cost, China seems the new “El Dorado” of GaAs wafer manufacturing: all expansions plans announced will be localized in the country,” says Brad Smith, senior analyst, Compound Semiconductor for Yole Développement.

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