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Technical Insight

All change for epiwafers

Despite a major re-shuffle in the epiwafer market, analysts predict a stable year for the compound semiconductor industry. Compound Semiconductor talks to Strategic Analytics directors, Eric Higham and Asif Anwar, to find out more.

As news of IQE's Kopin deal sinks in, where next for the III-V epiwafer industry? [Credit: IQE]

On January 10th this year, Wales-based IQE, struck a US$75m deal to buy the III-V epiwafer manufacturing business, Kopin Wireless, of US-based Kopin. The move boosts the epiwafer heavyweight's market share to some 50% and secures custom from Skyworks, AWSC, RF Micro Devices and TriQuint.

In recent reports, IQE chief executive, Drew Nelson, has said: “Our strategy is to supply as much as possible to as many as possible. That way, if Apple changes supplier, it doesn’t impact us too much.”

And indeed, its latest deal follows a long history of acquisitions aimed at achieving market dominance. While the business started life as an MOCVD outfit, it merged with US-based epitaxy business QED in 1999 to gain a firm MBE presence.

Subsequent acquisitions including Emcore's MOCVD arm, MBE Technology, Wafer Technology, Galaxy Compound Semiconductor and finally RFMD's MBE business built the company's market share in both epiwafer segments, but only delievered market dominance in the MBE sector. Not any more.

“I think this now arguably puts them as number one in MOCVD as well as the clear and dominant leader in MBE,” says Strategic Analytics analyst and director, Eric Higham. “If market share percentages remain the same as 2011, IQE holds around twice the share of the second place supplier in the epitaxy world, so yes, they have just become very dominant.”

Higham's colleague, Asif Anwar, agrees adding: “This acquisition definitely cements IQE's  and solidifies its position in the MOCVD market segment. The only competitor left now is VPEC.”

MBE tool: IQE's key strength no longer lies in just MBE-made wafers, the Wales-based wafer maker now leads the III-V market in MOCVD fabrication too. [Credit: IQE]

So what impact will IQE's muscle have on the compound semiconductor industry? The company can now just as easily perform MOCVD processes as it can MBE, supplying the necessary wafer for whatever device.

As Higham points out: “Being so strong in both epitaxial deposition techniques could give the business the necessary critical mass to capture even more market share. They'll be seen as the proverbial one-stop shop, this is not something I would have predicted.”

But Anwar does not expect businesses will see the epiwafer market as an IQE monopoly. “IQE's strategy has always been to acquire a company but then run that business as it was,” he says. “For example, MBE Technology retained the good relationships it had with its suppliers and customers, I am assuming that the same will take place with Kopin.”

Death to the pHEMT?

But will IQE's successes in grabbing MBE epiwafer market, largely to fabricate pHEMT switches, prove short-lived as the likes of SkyWorks and RFMD trade the technology in for SOI. Ultimately, RFMD's MBE sale signalled the firm's preference for the SOI handset switch.

Not so. As Higham emphasises, some companies, such as TriQuint, are sticking with pHEMT for switches.

“Our studies show that the biggest decline in pHEMT has taken place already,” he says. “Yes, we're anticipating slower growth than we will see for the MOCVD segment, but still some growth. Lots of equipment is installed and it wouldn't make sense to abandon this.”

Indeed, Anwar believes components makers will continue to use both SOI and pHEMT switches for the foreseeable future, selecting which technology is best for a specific application and market. Still, MOCVD-made HBT devices is where the action will be.

Multi-mode, multi-band wireless handsets now require broadband performance, a demand that will only fuel the growth of compound semiconductor technologies, rather than silicon-based devices.

“RFMD recently bought Amalfi to hedge its bets and meet a demand for silicon-based power amplifiers,” says Anwar. “But as you go to higher and higher frequencies and more linearity, that plays to the advantage of compound semiconductor technologies.”

Maintenance on MBE tool at IQE Bethlehem PA facility. [Credit: IQE]  

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