4 inch substrates still dominate GaAs market
Market research firm Strategy Analytics predicts that the global semi-insulating (SI) GaAs substrate market will grow by 43 percent, in terms of area, over the next five years.
Sales of SI GaAs substrates, which are used by the microelectronics industry for the manufacture of devices such as power amplifiers and switches, are expected to rise from 14 million square inches in 2004 to 20 million square inches in 2009.
Worldwide SI GaAs revenue will increase by 9-10 % per annum, says Asif Anwar, director of Strategy Analytics GaAs service.
In 2003 SI GaAs sales generated $136 million, and if revenue increases follow Anwar's prediction, this market will be worth over $200 million by 2009.
Freiberger Compound Materials, which has the second largest share of this sector, is continuing to make gains on market leader Sumitomo Electric. The shipments from these two manufacturers, along with those from third-placed Hitachi Cable, accounted for over 90% of all wafers shipped in 2004.
According to Anwar, in general average selling prices are continuing to decline by at least 5% year-on-year. However, falls in the price of 6 inch wafers have "flattened out", partly due to an increase in the cost of raw gallium.
Although 2003 was expected to be the cross-over year from 4 inch to 6 inch material, sales of 4 inch substrates still account for 50% of the market.
4 inch substrate sales have been buoyed by an increase in manufacturing volumes at RF chip maker Skyworks. Japan-based Eudyna is also producing its devices on a 4 inch line, even though the company has both 4 inch and 6 inch facilities.
Anwar says that a rise in the use of HBT technology for power amplifiers for cell phones is increasing demand for substrates produced by vertical gradient freeze (VGF) technology. AXT exclusively uses this technology, and Sumitomo and Freiberger use both the VGF and the liquid encapsulation Czochralski (LEC) technique, but Hitachi Cable only uses the LEC method.
Although AXT only had a 6% share of the SI GaAs market in 2004 Anwar believes that the company should not been "written-off". He says that AXT is pricing its products aggressively, and has good cash reserves.
