With the financial reports in the books, it’s time to close out 2012. The good news is that GaAs device revenue closed 2012 up slightly to reach another record at slightly more than $5.3 billion. The small gain was driven by strong fourth quarter performance from the industry after a sub-par third quarter just about erased the gains for the entire year.
Handsets and smartphones, in particular, remain the driving force behind GaAs device revenue growth. The growth of smartphones with their increasing GaAs device content helped propel the handset segment to more than 50% of the entire market. Not surprisingly, the companies associated with handset devices remain the revenue leaders. Skyworks Solutions again saw their revenues increase faster than the market and they remain the largest GaAs device manufacturer, stretching their lead over TriQuint. On the pure-play foundry side, WIN Semiconductors continues their impressive growth trajectory and they have become the dominant company in this segment.
We expect a good uptick in cellular terminal shipments in 2013, along with smartphones continuing to capture market share. I am expecting this will propel GaAs device revenue growth in 2013 into the 8 -10% range. With some of the predictors I use to track the market, I think there are signs that this growth is taking root. For more details, clients of the GaAs service can access my GaAs Device Industry Closes up in 2012 Insight.
However, even with above average growth looking likely in 2013, all is not rosy for the GaAs device market, long-term. The first threat to growth comes from within. The dizzying number of LTE bands, coupled with a desire for the “world-phone” has given rise to the multi-mode, multi-band (MM-MB) PA. This has some serious repercussions, because this market is so price sensitive that it will not tolerate bigger and more costly parts, so these MM-MB PAs must be smaller and cheaper than the PAs they replace or it won’t make sense to use them. We’ve already seen substantial design and design-in activity, so these devices are beginning to see commercial traction.
The other, serious threat was unveiled at the recently concluded Mobile World Congress (MWC). Qualcomm fired the first shot across the bow with their pre-conference announcement of the “RF360”. The company calls this family of devices a complete, all-encompassing CMOS RF front-end subsystem. This subsystem consists of an antenna tuning IC, an envelope tracking (ET) IC for Qualcomm’s PA and a MM-MB CMOS PA fabricated using a silicon-on-insulator (SoI) substrate. This announcement sent stocks of the GaAs PA manufacturers plummeting to levels from which they are still trying to recover. Then at MWC, a whole host of companies announced their ET development efforts aimed at CMOS-based PAs in LTE handset applications. A detailed summary of these announcements and developments is contained in PA Market in Flux: CMOS PAs and Envelope Tracking Emerge as Major Themes at MWC 2013 from Strategy Analytics’ RFWC service.
These events and particularly the development on the CMOS front will certainly influence the growth trajectory for GaAs devices in the next several years and merit close attention. If you plan to attend IMS2013 in Seattle, stop by the panel session I will be hosting entitled “The Death of GaAs (?)” on Thursday, June 6th at 12:00PM. We’ve have some market overviews, short presentations from a number of GaAs and silicon-based device manufacturers and then a lively discussion. If you can’t make the IMS2013 conference, you can also catch up with me at CS MANTECH in New Orleans on May 13 – May 16. I’ll be presenting an overview of the 2012 GaAs market and I’d be happy to chat.
-Eric