I recently attended CS MANTECH in New Orleans and GaN was the favorite topic of the presenters. Nearly 50% of the presentations and posters at the conference mentioned GaN in the title. Now, GaN is not a new topic, but it’s been interesting to watch as the interest level increases down the supply chain, from the equipment manufacturers to the device manufacturers to the material and manufacturing equipment manufacturers. It’s been fun to watch, it’s like realizing that someone who has been close to you for a long time has suddenly assumed a much more important relationship.

Befitting a manufacturing conference, many of the GaN presentations addressed improving manufacturing readiness and making GaN devices more producible. We also heard reports of process and reliability improvements. A couple of things were abundantly clear from the presentations: government funding and collaboration between the public and private sector is still a driving force behind GaN developments and most of the development activity in the RF sector is for GaN-on-silicon devices.

This makes perfect sense as GaN technology tries to complete the transition from “great potential” to a proven, commercially viable technology with widespread adoption. GaN has been the “next big thing” for a long time but for a variety of reasons, devices have not gotten much traction outside of military applications. From the presentations I saw, this portion of the supply chain is hard at work to remove concerns about GaN manufacturing, reliability and repeatability.

I have just updated my GaN forecast and it can be found on our website: GaN Microelectronics Market Update 2012-2017. I found a market that is still driven by aerospace and defense applications and funding, but slowly seeing commercial adoption of the technology. I am forecasting that the overall market will grow strongly, with a CAAGR of 28% through 2017. As I did my research, it became clear that many commercial market segments are getting close to a point of inflection in GaN adoption, but most aren’t quite past that point just yet. There continues to be strong adoption of GaN devices in CATV infrastructure applications and wireless infrastructure applications are now seeing growth. Other RF commercial applications like microwave and millimeter wave radios and VSAT or Satcom networks present intriguing opportunities for the advantages of GaN and it looks like those segments will be contributing nicely to GaN device revenue in the near future.

The most interesting opportunity for GaN devices looks to be the power management segment. This is presently a very large market and the anticipated increase in data consumption and concern for energy efficiency should support continued growth of this market segment. GaN-on-silicon is the technology of choice for these applications. Manufacturers are already producing low cost GaN devices that are very competitive with the cost of the incumbent silicon-based technology, while easily surpassing the performance. I am forecasting that this segment will see explosive growth, with a CAAGR of slightly more than 90% over the forecast period.

I haven’t forgotten the aerospace and defense segment! The big uncertainty in this segment in the near future is the sequestration process in the US. This has added substantial uncertainty to the US DoD budget, but we remain optimistic that even if this issue is not resolved, GaN will still grow in these applications. We believe that with more scrutiny on where the budget dollars are spent, systems will become more sophisticated and this will mean more electronics content. Aerospace and Defense applications have accepted the technical superiority of GaN for quite some time. We think GaN will continue to capture share from other technologies and the net result will be more GaN content, even in the face of shrinking US DoD budgets.

Look at the report if you have a moment and please feel free to share your thoughts. This remains an extremely dynamic market with product, process and manufacturing developments occurring quickly. With so many commercial market segments being close to volume adoption of GaN devices, the overall market is likely to remain very dynamic and exciting, so stay tuned!

-Eric

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 6^th 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

While I try to get current with product and financial announcements, I thought I’d spend a moment discussing some of the news from the July to September quarter. The two recently published reports: “Compound Semiconductor Industry Review July - September 2012: Microelectronics” and “Compound Semiconductor Industry Review July - September 2012: Optoelectronics, Materials & Equipment” highlight financial, product, contract and employment announcements from the compound semiconductor industry. The executive summaries of both reports focuses on the financial aspects of the industry and both segments are facing some challenges. The microelectronics segment appears to be trending upward, but it is still challenged to reach the revenue levels the industry saw in 2011. With the close of 2012, I see no reason to change my stance that when the revenue is counted, we will see a slight growth, but growth nonetheless.

On the optical side of the house, the picture is much fuzzier. The LED industry is still reeling from subsidies that have slowed and is plagued by a dramatic decrease in price, even in the face of slow unit growth. This is not only affecting the LED industry, but the material and equipment portion. Solar power continues to see a lot of political momentum as the best thing for the environment, but companies are still struggling to make money. The report has almost as many companies reorganizing and shutting down operations as those that are increasing capability, so the best direction for the industry is still not clear.

While the financial aspect is very important, it has masked some very interesting product development trends in both segments of the industry. It should come as no surprise that GaAs is under fire from other compound semiconductor technologies like GaN and SiGe, but also increasingly from silicon CMOS-based processes. The breadth of companies developing these applications is growing. On the microelectronics side, the report captures an announcement from Amalfi Semiconductor that they shipped their 100 millionth CMOS PA. Javelin also announced a CMOS PA design win in a Samsung 3G phone. The success of the CMOS PA manufacturers has been pretty evident. In the past year or so, Axiom Microdevices (Skyworks) and now Amalfi (RFMD) have been acquired by larger “GaAs manufacturers” as these companies make a relatively small defensive bet on CMOS technology as a hedge against their stakes in the nearly $3 billion handset PA market.

However, the CMOS target is not just handset PAs. The reports also capture RFaxis announcing seven new products aimed at high-volume markets as part of their “turn off the GaAs” campaign. Fujitsu announced a CMOS-based power detector and Silicon Labs and Avago announced a CMOS optocoupler. Even companies closely associated with GaAs are expanding their silicon offerings with Skyworks announcing a driver for LEDs and Hittite expanding their silicon-based ADC and clock generator offering.

So, the battle is on. The reality is that there is no perfect technology and the market selects the best solution. I’ve been saying that while silicon has a number of advantages, don’t count GaAs out just yet, especially where performance targets are steadily increasing. In a shameless plug, if you plan to attend IMS2013 in Seattle, stop by for a panel session entitled “The Death of GaAs (?)” that I will be chairing. I’m sure we will have a lively session discussing many of the same issues that I’ve raised here!

Eric

As we get set to close the book on 2012, I thought I’d share some observations about the trends and results for the compound semiconductor industry. First and foremost, it hasn’t been a banner year, but the GaAs device market looks like it will eke out a small gain. Through three quarters, revenue in the device industry is showing a very small gain. On a positive note, many of the large GaAs device manufacturers have stated they are optimistic about their calendar fourth quarter prospects. This makes me optimistic the GaAs device industry will come close to the 2% growth I forecast at the beginning of the year. In addition, the GaAs revenue “pressure curve” (a concept I introduced in the “At the Halfway Point of 2012: GaAs Device Industry Shows Small Gain “ blog) has shown an upward trend with a value greater than 1 the past two quarters. Essentially, the pressure curve is a rolling average, so a value greater than 1 indicates growth and with companies optimistic about Q4, it wouldn’t be surprising to see another upward tick in the indicator.

This indicator fits well with our latest forecasts. The inescapable conclusion is growth in the handset market is still the single largest driver for the overall GaAs device market. This “growth” isn’t just unit growth, it also relies heavily on smartphone penetration since these devices contain more GaAs content than lower tier devices. After a flat year in 2012, our latest forecasts show much healthier growth in handsets and power amplifiers in 2013. The unit growth will be important because as smartphones become more prevalent, the rate of growth is slowing. Return to healthy growth for handset PAs, which make up more than 50% of the overall GaAs device market, bodes well for growth in 2013.

Most of the growth in the GaAs device market in the last 18 months can be attributed to handsets, as the network side of the market has been flat. While a tentative global economy probably is not helping, the time for increasing network investment would seem to be nearing. Data consumption continues to increase dramatically and this is placing a burden on all the networks, whether they are wireless or wired. In the upcoming year, I plan to update research on the wired CATV/broadband and fiber transport networks, along with developments in the wireless backhaul, infrastructure and VSAT networks to get a better understanding of the trends and drivers in these areas, so stay tuned for those updates.

As a final thought, I’d be remiss if I didn’t mention GaN. This technology continues to attract a significant amount of interest in the compound semiconductor industry. It finally appears that we are getting commercial adoption of GaN-based devices and we can see the point of inflection for volume. CATV amplifiers continue to lead this commercial adoption, but we are hearing about more activity for GaN in wireless infrastructure, VSAT, high power electronics and even point-to-point radio applications. The tricky part is determining exactly where we are in relation to the point of inflection. I’m not completely sold on the hype (again), just yet, but I am willing to concede there is much more activity than a year ago. This is another topic that I will be diving into early in 2013 to get a better sense of the market.

As I sharpen my pencil for 2013, I’d like to wish everyone a very safe and happy holiday season and a prosperous New Year!

-Eric

I hope everyone had a chance to attend the GaAs Market Trends & Results webinar I hosted last week. If not and you are interested, please click on the link to view the replay. The RF GaAs supply chain remains very dynamic, with some interesting trends driving the substrate and device portions of the market.

As I’ve mentioned in previous blogs and presentations, the top-level driver for GaAs devices continues to be the increase in data consumption. Some of the latest estimates have mobile data consumption growing at rates approaching 100%, which means IP data consumption will double every year from 2009 – 2016! Even with this impressive growth, these estimates claim mobile data will still be less than 10% of total IP data in 2016. This is important, because while wireless applications continue to drive the GaAs industry, the wired broadband, CATV and transport networks and enterprise applications are also growing and represent opportunities for GaAs devices.

One of the advantages of GaAs is the performance makes the technology useful for a wide variety of commercial and defense applications. So, while the entire industry must continually pay homage to the handset portion, the diversity of applications does help buffer some of the market instabilities. The result for 2011 was another year of revenue growth in the GaAs market. This roughly 6% growth raised GaAs device revenues to about $5.2 billion. Neglecting an essentially flat year in 2009, GaAs device revenues have grown since a decline in 2004, so things have been good in the GaAs supply chain.

There are some storm clouds on the horizon, however. Handset opportunities represent more than 50% of all GaAs device revenue and the broader handset market does not grow explosively. The GaAs market has been helped by the shift toward feature phones and smartphones that have much higher GaAs content and the introduction of more and different frequency bands of operation. Many of the large handset device OEMs have converted from GaAs to SoI for handset switches, turning the handset GaAs opportunity increasingly into a power amplifier opportunity. Since handset switches are very inexpensive, this conversion has not had much effect on GaAs revenue, but the quantity reduction has had a definite impact on the bulk and epitaxial wafer manufacturers. We’ve seen reductions in demand and an upswing in MOCVD production at the expense of MBE devices.

In addition, we’ve all gotten used to larger smartphones that accommodate bigger screens, but you’ve probably noticed a trend toward thinner phones. To meet the demands of more frequencies and form factors, the device OEMs are releasing multi-mode, multi-band amplifiers that allow a single device to replace multiple existing PAs. Given the price and volume pressures from the handset market, it is unlikely that the multi-mode amplifiers will be larger or more expensive than the amplifiers they will replace, so this looms as a potential issue for the substrate and device markets.

However, even with the storm clouds, the GaAs device market has proven to be very resilient. As long as the performance requirements for the various applications keep increasing, GaAs has historically proven to be up to the challenge. Even with smartphone growth slowing (still strong, but slowing), the avalanche of data consumption is driving things like new Wi-Fi standards, higher frequencies for wireless backhaul, “small cells” in wireless infrastructure and higher data rates in transport networks. All these developments should give a boost to the GaAs supply chain.

Since we are almost through 2012, I should add a thought or two about where the market appears to be headed. It looks like we will see some growth in 2012, but at a much lower rate than the historical average of 6%. On a positive note, in a previous blog (At the Halfway Point of 2012: GaAs Device Industry Shows Small Gain ), I introduced the idea of “pressure curves”. While the results are not complete yet for calendar Q3, initial indications show the GaAs market is growing. This, coupled with positive guidance from some of the larger GaAs device OEMs for calendar Q4, may mean we are in for a bit of a rebound, so stay tuned.

-Eric

I attended the recently concluded SCTE Cable-Tec Expo and came away impressed with the amount of system and component development activity in this industry. What started as a solution for homes that could not get adequate over-the-air broadcast TV signals, has become intertwined with cable-based broadband data services as service providers look to capture an increasing share of the “triple-play” of voice, video and data. The lines of distinction among the service providers is also getting blurry as traditional voice operators like AT&T and Verizon in the US offer broadband and TV services and cable operators like Comcast and Time Warner Cable offer broadband and VoIP voice services, in addition to the traditional TV offerings

The convergence of triple-play services also brings the challenge of designing networks that are scalable enough to deal with the explosion of data consumption. Several of the presentations referenced “the Nielsen Curve” that plots the maximum downstream data rate over time. This curve shows a very steady 50% yearly increase from the 300 bps performance in 1982 to 12Mbps in 2007. A couple authors were arguing that we are now in an era of “wideband” cable modems and the data rates have actually been increasing faster than 50% for the past few years!

There are several ideas about the proper architecture (or mix of architectures) required to handle this 50% (or higher) increase in downstream data rates that is being fueled by video, higher internet data speeds and more TV channels. The other aspect of the architecture challenge is what to do about the return or upstream signal. As user experience becomes more interactive, the data requirements increase on the upstream path, as well.

The new architecture ideas include running fiber as deep into the network as possible. While this solves the bandwidth problem, several of the large MSOs pushing this approach are having a hard time making the business model work, despite healthy numbers of subscriber additions. Networks that use EPoC (Ethernet PON over Coax) and DPoE (DOCSIS Provisioning of EPON) offer transport advantage over more traditional HFC networks without the cost of “fiber deep”. The industry is discussing changing the traditional 5-42 MHz return path bandwidth and in what portion of the spectrum to locate this additional bandwidth. In conjunction with this discussion invariably comes the discussion to extend the band to 1.2 GHz, from thecurrent1GHz (or below) physical plant. Finally RFoG (RF over Glass), where RF signals are transported over fiber (allowing the MSOs to maintain much of their HFC headend and back office equipment is still being touted as a viable option. Also in the mix are network concepts like SDV (switched digital video), node-splitting and hybrid gateways.

So, there are many options available to get to a stated goal of 2.5Gbps downstream and 1Gbps upstream cable data rates. There were a couple of presentations that did modeling to show that with the proper mix of existing technologies (node-splitting, SDV, hybrid gateways and the appropriate phase-out of analog channels), operators can accommodate the expected high-speed data, video-on-demand, HD and IP video) for the next decade with a 1 GHz physical plant! The dilemma for operators and equipment manufacturers is to determine the appropriate mix to satisfy their particular mix of SD, HD and analog TV channels, as well as accommodating broadband data rates and planning for DOCSIS3.1 and the eventual move to an all-IP network: a difficult choice indeed!

However, other than making for a dynamic environment in an industry known mostly for stability, why do we care? How the architecture discussion plays out will have major implications for compound semiconductor opportunities in this market segment. As fiber goes deeper into the network, whether this is directly through fiber to the premises deployments or increasing use of PON architect, fewer RF components may be required. Advances in GaN technology by companies like ANADIGICS, RFMD and TriQuint may also limit the compound semiconductor opportunity in this market. In addition, how does the industry answer the frequency split/extension question? Many of the return path products are designed to meet the 5-200 MHz option being discussed and the downstream path components routinely have bandwidth above 1 GHz different solution will create more development work.

Stay tuned for more in-depth analysis of this market and I do look forward to the days of 2.5Gbps downstream data rates!

-Eric

I recently posted the results and forecasts for the GaAs epitaxial substrate market. The Excel data model is entitled "GaAs Epitaxial Substrates 2011-2016" and the accompanying Forecast and Outlook report is "Markets for Semi-Insulating GaAs Epitaxial Substrates: 2011 - 2016". Our survey results indicate GaAs epitaxial production saw a small (between 2-3%) gain in 2011. This small gain was the result of opposite trends in the two major epitaxial processing techniques, however. As I have been reporting, the demand for pHEMT devices dropped significantly, decreasing by nearly 7% in 2011. The primary reason for this appears to be several large GaAs device manufacturers converting from GaAs to silicon-on-insulator for handset switches. An increase of about 9% in MOCVD processed wafer demand was able to offset the decline in MBE wafer epi and the overall market rose slightly. MOCVD wafers are closely associated with HBT devices used for handset PAs and this underscores the important role these types of devices play in the overall GaAs device market.

Despite the small increase in epitaxial wafer demand, the market revenue grew by almost 20% to nudge jsut past $600 million. The supply chain disruption that spiked pricing in the GaAs bulk substrate market also seemed to have had the same effect on the epitaxial wafers. This price increase is likely a one-time event and epi wafer pricing will return to a more typical price reduction curve starting this year. This, coupled with the slow growth period the entire GaAs market will be in for the next several years will lead to a declining market value through 2016.

The good news is there will be slow growth in device, epi and substrate demand, fueled primarily by handset growth in general and the continued penetration of smartphones. Driven by handset growth, it is not surprising that we believe MOCVD wafer production will increase through the forecast period. What may be surprising is I expect MBE wafer demand to also increase, albeit at a much slower rate than the MOCVD production. I think most of the transition from GaAs to silicon-on-insulator has already taken place and it is unlikely that excess MBE process capacity will remain idle. I think it is far more likely that this MBE and pHEMT capacity will be re-tasked to other high performance markets and this will create the opportunity for some growth.

-Eric

Just back from Montreal and the IMS2012 Conference. There were a lot of interesting products and technical topics being discussed during the week, but I’d like to focus on the breakfast session entitled “Where are the Emerging RF Market Opportunities for GaN?” that we sponsored in conjunction with Microwave Journal. First off, I’d like to thank the participants from Cree, Nitronex, NXP, RFMD, TriQuint and UMS for their time, effort and input. I’d also like to thank the more than 130 attendees that took time from their schedules to hear some of our latest market forecasts and GaN product developments from the participating companies.

GaN market development has benefitted greatly from funding and research derived from the military industry. In our latest GaN market research, GaN Microelectronics Market Update 2010 – 2015, we conclude that military applications will continue to account for the lion’s share of the GaN market. Even with commercial applications starting to emerge, we are forecasting military markets will still account for slightly more than 2/3 of the estimated ~$180 million GaN market in 2015.

The panelists all did a great job of describing actual GaN products developed at their respective companies. They also confirmed that the properties of GaN make it well suited for products addressing EW, radar and communications applications, by highlighting products with some combination of high power, high efficiency and wide bandwidth performance. Of note were S-band 240W transistors from Cree with 60% PAE, 50W GaN-on-Si MMIC amplifiers from Nitronex operating from 0.8 – 2.2 GHz with 55% PAE, a 500- 2500 MHz amplifier from NXP with between 50 and 75W CW output, 50 – 1000 MHz 15W amplifiers from RFMD with more than 60% PAE, 10W PAs from TriQuint that operate from 2 – 18 GHz and 15W X-band PAs from UMS. The examples just mentioned are only the tip of the iceberg, so please visit the websites of these companies to see the depth and breadth of their product offerings and the extent of their GaN development efforts for military applications.

The presentation of commercial products also proved to be quite interesting. Initially, it seemed power conversion products in automotive applications and power amplifiers in infrastructure applications would lead GaN penetration into commercial markets. When we surveyed the industry for the GaN forecast referenced above, it seemed clear these applications were not seeing any significant GaN adoption. However, it appears that the infrastructure situation may be changing quickly as a couple of the panelists mentioned GaN capturing market share from LDMOS in macro and small cell applications. The efficiency and bandwidth performance of GaN seem to be offering enough of an advantage to achieve design wins. It should be noted that not everyone agreed that GaN, even with the performance advantages (that the LDMOS developers are working hard to minimize) was close enough to LDMOS in price to capture significant market share. So, this is certainly a dynamic market segment that we will be watching closely.

In our research, we found GaN amplifiers for CATV applications are seeing significant adoption. Our panelists agree, with most of them mentioning products for these applications. For CATV infrastructure applications, the higher efficiency of GaN-based amplifiers reduces the power consumption and OPEX, by extension. The other dimension for GaN into this market is in green-field applications (primarily), the networks can use fewer amplifiers to maintain the necessary power levels to the users. We anticipate this will be one of the fastest and largest commercial RF applications for GaN in the future.

Thanks, again to everyone who participated and attended this event. While military applications will continue to grow and drive fundamental development, I think we are on the verge of rapidly increasing commercial adoption of GaN. While CATV, infrastructure, Satcom and conversion applications are the likely initial candidates, many other applications are currently under evaluation. Keep an eye on the Strategy Analytics website as we continue to update our forecasts and thoughts on the GaN market!

Eric