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The RF Compound Semiconductor Market and the Future

by Eric Higham | Feb 27, 2017

For the regular readers of this blog, you’ve undoubtedly noticed that I write toward the end of the month. There is no compelling reason for that, it just serves as a good time to collect my thoughts as I transition to the next “thing”. In this case, that thing is a new page on the lovely calendar that I have in my office. Transitions involve change and change can create some challenges. The obvious example this time of the year in New England is the change of seasons. The transition from winter to spring happens every year, but the timing is not exact. We’re never exactly certain when it will happen; we just know that it will. At the risk of seeming a bit premature, the Boston area just recorded two of the three warmest February days on record and these unusual temperatures melted all our snow cover very quickly. There are people near and dear to me that love snow and lament the thaw each year, but it’s the natural transition to the next phase. Now, having said that, this area is likely to get more snow and cold weather, but it feels like we’ve turned the corner and we can see spring on the horizon.

I’m sensing that same gut feel of transition, marked by imprecise timing in the RF compound semiconductor market. I just released a new report and data file entitled RF Compound Semiconductor Technology Forecast and Outlook: 2016 - 2021 that looks at the technologies and markets for RF compound semiconductors.  Funding and nurturing from the US Department of Defense initiated GaAs supply chain development in the late 1980s. Initial targets for this new technology were defense applications, but the performance and evolution of GaAs devices soon made them applicable in a whole range of wireless applications. This enabled the wireless revolution, which has served as the growth engine for GaAs revenue for more than a decade. The success of GaAs technology fostered development of other compound semiconductor technologies like GaN, SiGe and InP for RF applications.

A central conclusion of the report is that GaAs technology continues to dominate the RF compound semiconductor market, accounting for more than 80% of all revenue in 2016. The reason for this dominance is the cellular market where large numbers of increasingly sophisticated smartphones rely on architectures with higher levels of RF content to keep pace with the insatiable consumer demand for data. But, the other inescapable conclusion is that the RF compound semiconductor market is in transition.

My forecast calls for steady revenue growth for RF compound semiconductors, but this growth will come from the other technologies, as GaAs revenue remains essentially flat. The cellular market uses GaAs compound semiconductor technology exclusively, but smartphone growth is slowing as we approach saturation. To be sure, GaAs-based front ends in mobile phones will become more complex as new frequency bands and carrier aggregation increase data capabilities. The upside that these developments provide will be muted by price erosion, manufacturing improvements and new device architectures and the result will be little to no revenue growth.

The good news for the GaAs industry is that even with revenue growth stalling, GaAs will still account for nearly 70% of the RF compound semiconductor revenue in 2021. The good news for the RF compound semiconductor industry is that the other technologies will see strong growth in the next five years. The cellular segment will remain the largest, but the market will diversify with applications like fiber transport, automotive and test growing quickly.

So, the question becomes does the compound semiconductor transition remain predictable and pleasant, like the change of seasons disturbed only by a few warm days in February or do we see “100- year” weather events pounding the area in April? The answer? Stay tuned!




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