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GaAs Epitaxial Substrate Production Registers Small Gains

by Eric Higham | Sep 10, 2012

I recently posted the results and forecasts for the GaAs epitaxial substrate market. The Excel data model is entitled "GaAs Epitaxial Substrates 2011-2016" and the accompanying Forecast and Outlook report is "Markets for Semi-Insulating GaAs Epitaxial Substrates: 2011 - 2016". Our survey results indicate GaAs epitaxial production saw a small (between 2-3%) gain in 2011. This small gain was the result of opposite trends in the two major epitaxial processing techniques, however. As I have been reporting, the demand for pHEMT devices dropped significantly, decreasing by nearly 7% in 2011. The primary reason for this appears to be several large GaAs device manufacturers converting from GaAs to silicon-on-insulator for handset switches. An increase of about 9% in MOCVD processed wafer demand was able to offset the decline in MBE wafer epi and the overall market rose slightly. MOCVD wafers are closely associated with HBT devices used for handset PAs and this underscores the important role these types of devices play in the overall GaAs device market.

Despite the small increase in epitaxial wafer demand, the market revenue grew by almost 20% to nudge jsut past $600 million. The supply chain disruption that spiked pricing in the GaAs bulk substrate market also seemed to have had the same effect on the epitaxial wafers. This price increase is likely a one-time event and epi wafer pricing will return to a more typical price reduction curve starting this year. This, coupled with the slow growth period the entire GaAs market will be in for the next several years will lead to a declining market value through 2016.

The good news is there will be slow growth in device, epi and substrate demand, fueled primarily by handset growth in general and the continued penetration of smartphones. Driven by handset growth, it is not surprising that we believe MOCVD wafer production will increase through the forecast period. What may be surprising is I expect MBE wafer demand to also increase, albeit at a much slower rate than the MOCVD production. I think most of the transition from GaAs to silicon-on-insulator has already taken place and it is unlikely that excess MBE process capacity will remain idle. I think it is far more likely that this MBE and pHEMT capacity will be re-tasked to other high performance markets and this will create the opportunity for some growth.

-Eric

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