As we approach the start of a new year, it is worthwhile to review what happened in 2013. The year started with a bit of uncertainty. December 2012 closed with a flourish and based on that, the coming year seemed very promising. As the year has unfurled, things just keep getting better with each development more exciting than the last. As I attended conferences around the world, conversations were spirited and culminating with the SCTE conference in Atlanta; show floors were buzzing and participants were extremely upbeat about future prospects.
How has this optimism translated to results? This is a case where reality has exceeded expectation as the market has grown strongly throughout 2013. The optimism that started at the close of 2012 carried through the year. Through September, each quarter of 2013 has exceeded the same quarter in 2012. Revisiting the “pressure curve” I introduced in a previous blog, we can see the above average growth for the first three quarters of 2013. Even though most of the large GaAs device manufacturers are forecasting some flatness in revenues for the last calendar quarter, this will still put the growth of the market right around the 10% growth rates I was forecasting at the beginning of the year.
Now, the question is where do we go from here? As the pressure curve shows, growth in the GaAs device market has been cyclical, but remarkably consistent with the first quarter of a calendar year showing the lowest growth. Despite that, I think the GaAs device market will see growth in the mid-single digits in 2014. This should be on par with historical averages and this growth will continue to be driven by cellular terminal growth. We should see some network growth this coming year as China continues to deploy higher speed mobile networks.
Like anything, there are challenges to be faced by the market. The themes and drivers from 2013 will continue into 2014. The biggest challenges to the market in 2014 will continue to be multi-band GaAs PAs reducing the size of the devices and the BOM value in handsets and competitive PA technologies, most notably CMOS capturing market share from GaAs devices. I hosted a panel session at IMS2013 in Seattle where we discussed the threat of silicon-based technologies to GaAs. Many of the panelists pointed out that the sentiment of “if it can be done in silicon, it will be done in silicon” is not always the case. They point to the low cost of GaAs devices, the high costs of silicon mask sets and the performance advantages of GaAs. This very important battle will continue in 2014.
On a positive note, the “small cell” wireless infrastructure architecture should see deployment momentum picking up in 2014. Since the backhaul, broadband and transport networks are becoming intertwined with wireless infrastructure, GaAs content will increase with small cell deployments. Even though GaAs content in cellular terminals is under pressure, developments like carrier aggregation, MIMO and active antennas will be promising for increased GaAs content. The GaAs device market has proven to be nothing if not resilient and as long as system requirements continue to get more challenging, GaAs will continue to play an important role.
If you are reading this blog, then you have an interest in GaAs developments and you know I will be monitoring and analyzing developments in this area very closely in what will be an exciting year in 2014.
-Eric