I’ve reported that the GaAs device market growth slowed considerably in the second half of 2011 (2011 GaAs Device Revenue Falters after Strong Start), dropping the overall revenue increase in the GaAs device market to 6%. This was well below 2010’s 35% growth, but is right in line with the historical growth rate of the market. Despite the market returning to historical averages, some companies did significantly better than the market. The Strategy Analytics GaAs and Compound Semiconductor Technologies Service (GaAs) Insight, “Skyworks Remains the Largest GaAs Device Manufacturer,” explores 2011 GaAs device revenue results and growth trends, as well as revenue performance of leading device manufacturers, like RFMD, Skyworks, TriQuint Semiconductor, Avago Technologies, Renesas Electronics, Hittite and WIN Semiconductors.

The two companies in our top ten GaAs device manufacturers that showed the fastest growth in 2011 also illustrated two of the most important trends in the GaAs device industry in 2011: diversification and outsourcing. Skyworks Solutions, the largest GaAs device manufacturer had a stellar year in 2011, reporting revenue increases of 27%. This growth, well in excess of the market appears to be a testimonial to Skyworks’ efforts at diversifying their smartphone customers, products, technology and market applications. Skyworks is widening their lead over rivals TriQuint, RFMD and Avago Technologies.

The second company showing much stronger revenue growth than the GaAs device market in 2011 was WIN Semiconductors. WIN checked in with revenue nearly 37% higher in 2011! The growth at WIN Semiconductors reflects their commitment to expansion and it illustrates an increasing desire by GaAs device manufacturers to outsource their foundry operations. Companies with foundries, as well as start-ups are looking closely at the “fab-less” or “fab-lite” outsourced business model as a method to increase the range of process technologies that can be offered and provide a capacity buffer without the need for large levels of capital investment. WIN has taken advantage of this trend to easily become the GaAs device industry’s largest pure-play GaAs foundry.

Eric

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As GaAs device manufacturers announce their financial results for the 2011 calendar year, it is becoming clear that while the industry grew, the growth was not on par to 2010’s banner year. In addition, announcements from compound semiconductor manufacturers Skyworks, RFMD and Freescale all point to revenue declines to close 2011. The Strategy Analytics GaAs and Compound Semiconductor Technologies Service (GaAs) viewpoint, "Compound Semiconductor Industry Review January 2012: Microelectronics," captures product, technology, contract and financial announcements for these companies, as well as others such as Fujitsu, ANADIGICS, Agilent, Hittite Microwave, TriQuint Semiconductor, Avago, Soitec, Analog Devices and Microsemi.

While it always pays to be vigilant to spot trends in the GaAs market early, we do not think there is cause for concern, just yet. Even though we are seeing revenue growth rates slow from some of the larger compound semiconductor manufacturers in the fourth quarter, some of this is attributable to seasonality. With handset manufacturers driving so much of the GaAs device market, it is not surprising to see demand spike in the third quarter as handset OEMs prepare for the holiday season. 

Even with the revenue declines in the fourth quarter, consumer demand for applications and data consumption continues to increase sharply. As operators implement new frequency bands and more sophisticated modulation schemes to try to keep up with the demand, the value of GaAs devices incorporated into handsets and mobile networks is increasing. While we believe these top-level trends will continue to drive growth, smartphone growth is slowing as early adopters have already jumped aboard the bandwagon. This, couple with increasing market share from silicon-based technologies will act to modulate GaAs growth in 2012. At this point, Strategy Analytics expects 2012 revenue growth for the GaAs device industry to be close to the historical average of 6%

This viewpoint summarizes financial, product, contract and employment developments from leading compound semiconductor device suppliers from January 2012. These announcements address a variety of commercial and military applications that use gallium arsenide (GaAs), gallium nitride (GaN), Silicon carbide (SiC), silicon germanium (SiGe) and complementary metal-oxide-semiconductor (CMOS) technologies.

Eric

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