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Military outlook for GaAs devices to outstrip commercial market growth rates

by Asif Anwar | Oct 01, 2014

Demand for GaAs devices from the military market will outstrip the growth rates we will see from the commercial sector. Growing momentum behind the use of solid-state technologies for radar, electronic warfare and communications in the military sector will drive demand for GaAs devices at a CAGR of over 13 percent. This compares to an overall CAGR growth of under 5% for the overall GaAs market through 2018 as the commercial market for GaAs devices comes under pressure from new architectures and competing technologies.

There is still uncertainty in this sector as the United States works through its budget and sequestration issues. Because of these uncertainties, Strategy Analytics is anticipating a decline in US Defense spending in the next few years before a rebound toward the end of the 10-year forecast period. This expected slight decline in US spending over the next several years will be offset by growth in all other geographical areas. The Asia-Pacific region will see the fastest growth and this will be driven primarily by activities in China. Despite some uncertainties, global defense spending reached nearly $17B in 2013 and this is anticipated to grow to $21.2B in 2023 (as outlined in the “Opposing Trends in North America and Asia-Pac will Dictate Defense Spending Outlook”).

Defense spending has long been a patron of the compound semiconductor industry. Many of the fundamental processes used for commercial and military devices trace their origins to defense funding. GaAs devices have played an important role in defense applications and we remain optimistic that GaAs device revenue will grow, despite the spending uncertainty. We believe that changing battlefield philosophies and a shift toward more asymmetric conflicts will place a premium on electronic capabilities. System requirements are increasing in response and we believe this will usher in an era of strong growth for GaAs devices.

In contrast, while GaAs will continue to be an enabling technology with increasingly sophisticated smartphones ramping up the GaAs device content as well as growth in non-cellular markets, there will be serious challenges in the future as increasing competition from technologies like silicon and GaN, along with new system and PA architectures slow the future growth rate in the commercial GaAs device market to below historical averages.

Clients of Strategy Analytics Advanced Defense Systems (ADS) service have full access to the reports and associated data model.

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