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DVD-R And WLAN Lead The Way

We've analyzed some of the emerging technologies and markets that will shape 2004, including recordable DVD, wireless LAN and wide-bandgap microelectronics. First, Michael Hatcher discusses the trends that will affect the overall compound semiconductor market.
The general semiconductor market certainly appears to be on the rebound. The World Semiconductor Trade Statistics (WSTS) organization s most recent figures show that total year-to-date sales for 2003 were 17.4% higher than the equivalent period in 2002. In particular, the second half of the year was very positive, with year-on-year growth of almost 26% in November. Of course, the vast majority of those figures come from sales of silicon devices. However, the WSTS figures also revealed that optoelectronics revenues were up 5.3% in November compared with October 2003.

For 2004, industry analyst iSuppli - whose figures include silicon and compound semiconductors - predicts a 17% rise in worldwide semiconductor revenues to $209 billion.

What does 2004 hold for the niche sectors in which compound semiconductor devices are used? In the major technology areas that contribute to the approximately $12 billion compound semiconductor market - GaAs IC applications, LEDs and optoelectronic components for optical data storage and telecommunications - there have been wildly fluctuating fortunes recently.

The optical telecom market meltdown that began in 2001 has had a dramatic effect, and the industry continues to suffer from the fallout with consolidations and mergers still commonplace. The feeling in the industry is that, while consolidation is set to continue, this market has now stabilized. For its part, iSuppli is predicting a recovery in the wired communications sector for 2004, which it believes contracted by 15% in 2003. "Wired communications was the only electronic equipment category to contract in 2003," it said. Meanwhile, industry analyst Communications Industry Researchers (CIR) believes that the falling cost of 10 Gbit/s systems will make it the key area to watch in the near term. It expects sales of active components used in 10 Gbit/s networks to reach $226 million this year.

Meanwhile, in becoming one of the fastest-selling consumer electronics products ever, DVD players have provided a rapidly-growing market for red laser diodes. This year, DVD recorders look set to follow the same rapid upward trend, with many of the major component manufacturers increasing volume production of red laser diodes this spring. Mitsubishi is ramping up production by 40% in April, while NEC Electronics has revealed to Compound Semiconductor that its NEC Compound Semiconductor Devices subsidiary intends to double its current red laser output for DVD players and recorders by the summer. Rohm has said that it will begin shipping half a million of its high-power (240 mW) lasers for 16x DVD writing per month from April.

And with prototype next-generation DVD players and recorders based on blue-violet laser diodes now being shown off by all of the major manufacturers, the long-term outlook looks even brighter.
A pivotal year for LEDsThe optoelectronics side of the compound semiconductor industry is also set to benefit from robust growth of the LED market. CIR has forecast that the global LED market will hit $3.2 billion this year, growing to $5.6 billion in 2008. And it looks like being a pivotal year: "Rapid cost-reduction will begin in 2004, which will enable unit volumes to soar," said CIR s report. It cites general illumination as the key growth application, echoing Strategies Unlimited s prediction in our December 2003 issue. Bob Steele of Strategies Unlimited believes that illumination applications will be worth around $200 million in 2004, and that this market will grow to $522 million through 2007. Blue is once again the key color of the future, with CIR expecting the high-brightness LED sector to surge from a market value of $1.6 billion next year to $2.64 billion through 2008.

One of the key applications for LEDs is the illumination of cell-phone handset screens, so continued growth in the handset market is important for LED manufacturers as well as GaAs IC producers.

If Nokia s latest results are anything to go by, then the market is still growing: the Finnish company saw cell-phone sales increase by 4% year-on-year in the final quarter of 2003. And Gartner Dataquest is expecting its figures to show that approximately 500 million cell phones were sold in 2003.

But for 2004 it looks as though wireless local-area networks (WLANs) will take over as the hot application area in wireless communications (see "Demand for GaAs ICs soars in wireless LAN market"). Although cell phones will undoubtedly remain the biggest overall market, revenues in the WLAN segment grew 140% from 2002 to 2003 as unit shipments rose by 214%. "Rapid price erosion is still a critical factor within this market, but the high volumes are allowing for revenue growth, even as prices fall fast," said In-Stat senior analyst Gemma Paulo.




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