GaAs Substrate Vendors Face Capacity Dilemma
Burgeoning demand for semi-insulating GaAs material is presenting substrate vendors with a tough dilemma, according to the latest report from Strategy Analytics.
The market research firm says that after growth of 16 per cent to reach a market value of $129 million in 2005, demand will continue to be strong until at least 2008 as advanced cell-phone handsets devour ever more GaAs content.
6-inch substrates currently account for 52 per cent of total market revenue.
"Despite this healthy growth, GaAs bulk substrate suppliers face some tough decisions right now," said Asif Anwar, director of the consultancy's GaAs and compound semiconductor technologies service.
"On the one hand there is pressure to increase capacity to meet demand over the next 18 months. On the other, [there] is the danger that suppliers will put too much capacity in place - which increases the risk of commoditizing the future market."
Earlier in the year, there were fears of a shortage of 6-inch semi-insulating GaAs material expressed by some suppliers. However, according to other sources in the industry, that situation has now eased.
While there is not a shortage of material currently, it is likely that customers requiring relatively small GaAs substrate volumes for niche products will find it harder to secure orders, and have to wait for larger customers to be satisfied.
But with major RFIC manufacturers such as RF Micro Devices and Anadigics continuing to ramp production volumes, the total market for semi-insulating GaAs substrates is now expected to reach $247 million by 2010.
If there is a squeeze on the supply of 6-inch material, the main beneficiary is likely to be AXT, the California-based company with operations in China and a large available capacity.
According to Strategy Analytics, AXT already increased its market share by two percentage points in 2005. "We may see a significant change in market share in 2006, with AXT best positioned at this time to mop up excess demand," said Stephen Entwistle, VP of strategic technologies at the market research firm.
Markets for semi-insulating GaAs substrates 2005-2010 is available from the Strategy Analytics web site.