It occurs to me that “we” (collectively) have a tendency to take things for granted. Perhaps it’s human nature, perhaps it’s a bit of ennui with the consistency of the status quo. The obvious example is a personal relationship. Sometimes we crave change and we want things to be dynamic and different, but change isn’t always good and there is a certain coziness in the status quo. A less obvious example is travel. I had the opportunity to travel to China recently. Friendly people, although my complete unfamiliarity with the language was problematic, interesting technical discussions, some stunning architecture and sights, but it made me realize how much I have taken things in the US for granted. I’m talking about little things, big things and particularly the traffic! I have always taken for granted that the traffic in Boston is bad, but it is the low minor leagues compared to Beijing.
But, this isn’t a travel blog; it’s a technology blog, so let’s discuss another area that gets taken for granted. I just updated my RF GaAs device forecast (RF GaAs Device Forecast and Outlook: 2016 - 2021) and I think this is a prime example of what I’m talking about. To paraphrase the late comedian, Rodney Dangerfield, the GaAs market “don’t get no respect”.
Why do I say this? GaAs closed 2016 with total merchant and captive (but excluding foundry) revenue of slightly more than $7.5 billion. At this level, GaAs revenue represented about 80% of all RF compound semiconductor revenue, but who gets excited by GaAs? Arguably, GaAs has paved the way for the development of the other compound semiconductor technologies and it serves as a target as these technologies and silicon try to capture market share. I hear people say “the GaAs industry hasn’t changed in years” and hear terms like “static” and “not very dynamic” attached to the market, but as the historical revenue performance chart below shows, these bromides don’t ring completely true.
Now, I don’t mean to paint the wrong picture of the RF GaAs device market, because there are issues. Wireless applications, particularly cellular terminals, make up a disproportionately large share of the revenue. This is critically important because the rate of growth of smartphone sales is slowing. This is the single biggest driving factor for the entire segment and it resulted in very little revenue growth in 2016, so the industry is closely monitoring this trend.
I believe there is help on the way for the RF GaAs market. Even as smartphone growth stalls, smartphone growth will provide a short-term boost to the market. This is one of those “the king is dead, long live the king” statements. Operators and equipment manufacturers are introducing gigabit LTE networks and equipment, so tomorrow’s smartphone will be capable of gigabit data rates and this will mean more GaAs content to support higher orders of carrier aggregation in terminals and infrastructure. This short-term boost will take the market to the end of the century when the 5G engine will start to rev up. It’s still a bit early to know what that will mean for the GaAs market, but it will make for exciting times.
So, before you get too concerned about the “static” RF GaAs market, remember that there is opportunity in situations you take for granted; the RF GaAs market has a 14% CAAGR since 1990. Now, the GaAs industry must continue to evolve; it will need a bit of care and nurturing from the industry. To stay truly static runs the risk of losing what has been accomplished. Remember, don’t take something that is really good for granted, you’ll miss it when it’s gone!