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

I have just released our latest GaAs bulk substrate market updates. The data model, “SI GaAs Substrates Markets: 2011-2016” and the Forecast and Outlook,“Semi-insulating GaAs Substrate Markets: 2011 – 2016” show that slow growth in the GaAs device market in 2011, coupled with a shift away from GaAs technology for handset switches dropped demand for semi-insulating GaAs bulk substrates by 4%. The other major driver for the GaAs bulk substrate market in 2011 was the devastating earthquake and tsunami that hit Japan. With so much of the supply chain located in this region, the accompanying disruption seems to have raised substrate prices and the overall market value as a result.

This certainly is not how you hope to see revenue growth in a market and this set of circumstances will be short-lived as the Japanese people continue working diligently to restore the country back to “normal”. The supply chain disruptions seem to have largely settled out and I expect the market to revert to slow growth and a more traditional price erosion curve beginning this year. I am optimistic the GaAs bulk substrate market returns to growth in 2012 because GaAs device manufacturers are seeing some growth in revenue and demand and most of the conversion of handset switches to SoI has already taken place.

The survey results indicate demand for GaAs bulk substrates reached slightly more than 32100 ksi in 2011. Even though the demand dropped by 4%, the market value increased by 12% to reach nearly $230 million. This revenue increase appears to be a singular event tied to the earthquake and tsunami aftermath. My forecast indicates demand and revenue will return to slow growth with demand reaching nearly 39000 ksi and revenue growing to slightly more than $240 million by 2016.

Eric

Meet Strategy Analytics at EUROPEAN MICROWAVE WEEK 2011

We'll be there from Monday 10th - Wednesday 12th October

European Microwave Week is here again and this year Strategy Analytics has three days covered.

On Monday and Tuesday you have opportunities to meet with Asif Anwar** or Steve Entwistle** when the subject for discussion is entirely open for your choice ranging perhaps from questions of alternative strategies facing your company to the prospects for technologies and products emerging at this year's event. Arrange Meeting

On Wednesday you are invited to register for The 2011 Defence and Security Forum* at which Asif Anwar will be presenting his paper "The Impact of Budget Constraints on Future Defense Technology Investment"during the 12:30 'Lunch & Learn" session.  Asif will ask you to consider his assertion that ... despite current global economics ...

"... the desire for technology differentiation will lead to continued opportunities in emerging electronic platforms supplemented by a focus on upgrading existing capabilities." 

We therefore invite you to click here to arrange meetings and/or register for The 2011 Defence and Security Forum.

*Organised by Microwave Journal and the EuMA

**Asif Anwar is Director of Strategy Analytics' Advanced Defense Systems service

**Steve Entwistle is Vice President of Strategy Analytics' Strategic Technologies practice.

Best regards,

Steve Entwistle

Join Strategy Analytics for breakfast in Rome, Italy on September 30th during European Microwave Week. To register for the breakfast, go to http://www.strategyanalytics.com/default.aspx?mod=eumw We'll be presenting key findings from the Strategy Analytics Advanced Defense Systems (ADS) and GaAs and Compound Semiconductor Technologies (GaAs) services at an invitational breakfast meeting during European Microwave Week, 2009 in Rome, Italy (28th September to 2nd October). The focus will be on defense market demand for GaAs (gallium arsenide) and GaN (gallium nitride) semiconductors. This invitational complimentary session will provide attendees with an overview on a range of topics including: •    GaAs and GaN market status and future trends •    Defense market demand trends •    A case study - analyzing component demand from defense platforms You can register for the breakfast at http://tinyurl.com/saEuMW. Hope to see you there!  Follow us on Twitter http://twitter.com/sentwistle1419