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The compound semiconductor industry positions for an exciting 2014

by Eric Higham | Jan 31, 2014

A little late with this, but a new year is like an anniversary. It’s a time to reflect on what has transpired in the previous year and think about the excitement of the upcoming year. Will it be more of the same? Are there trends at work that will change the course of events? The answers to those questions unfold over the course of the year, but the excitement starts now!

In the case of the compound semiconductor industry, 2013 appears to have been a good year for the GaAs device market. The results won’t be final for another month or so, but at this point it looks like the revenue increase will be slightly more than 10%! This is above average growth for the GaAs market and as always, it is being driven by developments in the cellular market. The ongoing battle between GaAs and CMOS for mindshare and market share in the PA segment will heat up in 2014, with new announcements from both camps. If you are in Frankfurt in March, stop by the CS International show and listen to Coming Full Circle - will Si CMOS Burst the GaAs Bubble? I’ll try to put the GaAs/CMOS issue into context and talk about some of the recent developments in that area.

The driving force for the entire compound semiconductor market continues to be data consumption. That’s been my constant message for the last few years, but an interesting thing happened in 2013. The Cisco VNI report that forecasts IP data consumption showed slower growth in the overlapping out years for the first time since 2009! A word of explanation: the report is a five-year forecast, so the 2013 report overlapped most of the 2012 forecast. Since 2009, successive forecasts have shown data consumption growing even faster than the previous year’s forecast. With this trend, the message was that regardless of the predicted leveof data consumptionl….it is not high enough! This latest forecast showed about a 30% drop in the yearly data levels from last year’s forecast.  Viewed on a time scale, the forecasted data levels have shifted by about a year. Data consumption is still growing strongly, but for an entire industry based on data consumption; this is a troubling data point that needs to be monitored closely.

As evidenced by the latest optical and microelectronics compound semiconductor industry reviews that I have posted, companies in these segments continue to develop products, processes and technologies. The fiber transport network that forms the backbone of data connectivity and is moving deeper into the networks continues to move upward in data capacity. Deployed networks are moving toward 1 Tbps and components and networks are routinely being developed for 100+ Gbps applications.

Despite the push of fiber deeper into the network, CATV MSOs still depend on HFC (hybrid fiber coax) networks to deliver their services. The big development in this segment is the implementation of the  DOCSIS 3.1 specification that allows for increased data rates, higher bandwidths and different upstream/downstream path splits. This new specification allows HFC-based CATV/broadband offerings to compete very favorably with all-fiber offerings. I have provided some blog comments on this topic and I am putting the finishing touches on a market forecast for opportunities in CATV infrastructure that will be posted sometime in February. Stay tuned for that, because there are some interesting trends at work.

It promises to be a fun-filled year. We’ll hear much more about topics like CMOS, small cells, carrier aggregation, MIMO, GaN, Internet of Things (IoT), graphene (yes…graphene!), DOCSIS 3.1, 400 Gbps and many other topics that threaten, enhance and coexist with GaAs. With the surplus of conferences and trade shows that dot the calendar, I hope to see all of you during the course of the year! If you get the chance, introduce yourself and I’d be happy to chat about these or any topics of interest in the compound semiconductor industry.

-Eric

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