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Natural disasters cause GaAs substrate market to flounder

The disruptions in the gallium arsenide bulk substrate supply chain caused by the Japanese earthquake and tsunami in 2011 have decreased GaAs substrate revenue substantially

Slow growth in the GaAs device market in 2012, coupled with new developments and competitive technologies in cellular power amplifiers dropped demand for semi-insulating GaAs bulk substrates.

What's more, wafer pricing is returning to normal levels after a pricing spike caused by the 2011 earthquake and tsunami in Japan. This, coupled with falling demand drove market revenue to double digit declines.

The recently released Strategy Analytics GaAs and Compound Semiconductor Technologies Service (GaAs) spreadsheet model and Forecast and Outlook report, "Semi-Insulating GaAs Substrate Markets: 2012-2017", forecasts that total demand for semi-insulating (SI) GaAs bulk substrates from manufacturers such as Freiberger Compound Materials (FCM), Hitachi Cable, AXT, Sumitomo and Dowa fell by nearly 10 percent from 2011 levels.

The report estimates that this demand resulted in roughly $193 million in revenues in 2012. The forecast indicates demand will return to slow growth and reach nearly 32300 ksi in 2017. The slow growth in demand, coupled with substrate pricing dropping to more normal pricing profiles will cause revenue to decline to an estimated $189 million in 2017.

"The GaAs device market struggled to a small gain in 2012. This and the ongoing conversion to multi-band cellular PAs that replace several single-band devices both conspired to reduce GaAs bulk substrate demand", notes Eric Higham, Director of the Strategy Analytics GaAs and Compound Semiconductor Technologies Service (GaAs).

He adds, "As multi-band PA architectures become even more prevalent in cellular architectures and silicon-based technologies continue to gain market share, this segment will be challenged to find growth."

Asif Anwar, Director in the Strategy Analytics Strategic Technologies Practice (STP) continues, "The disruptions in the GaAs bulk substrate supply chain caused by the Japanese earthquake and tsunami in 2011 seem to be working their way out of the system. While this is good for the companies involved, the effect has been to drop substrate pricing back to pre-earthquake levels and this, coupled with lower demand has decreased substrate revenue substantially."

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