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Digital cable turns GaAs onto $100m market

Cable network upgrades will increase chip demand over the next five years, but sales could dwindle once every network provider is HD-ready.

Annual sales of GaAs components for digital cable networks will reach $109 million by 2012, as operators push to deliver more high-definition television signals to our homes.

Additional network rollouts will drive an 11 percent annual growth rate in demand for GaAs chips, from the $72 million recorded in 2007, according to a new report from market analysts Strategy Analytics.

Components sold into the industry generally fall into one of two areas: those destined for set-top boxes or modems, and those that will be deployed in the network s wider infrastructure. Customer premises equipment (CPE) uses a greater proportion of the sector s discrete GaAs devices, whereas cable infrastructure drives the demand for MMICs.

“Anadigics is widely regarded as the leading supplier of GaAs components to both the cable infrastructure and cable CPE market,” said Asif Anwar, Strategy Analytics GaAs market expert. “Other companies targeting this space with GaAs and other components include Freescale, NXP and TriQuint.”

The report says that digital cable has increased penetration of GaAs technologies into cable infrastructure market over the past few years. The compound semiconductor is better able to deal with digital s higher frequencies and the resultant requirement for improved linear performance than silicon.

Infrastructure currently accounts for 57 percent of GaAs demand from cable networks, and this will grow to 67 percent by 2012. As well as market-share expansion on the network scale, this is also due to competition from silicon components that limits GaAs to less than 5 percent of its addressable market in CPE.

“GaAs demand will grow in set-top boxes, driven by multiple tuners,” said Stephen Entwistle, vice president of Strategy Analytics strategic technologies practice. “However, silicon technologies will continue to dominate, limiting the overall compound annual average growth rate for [discrete] GaAs devices to no more than 5 percent over the next five years.”

Although the report says infrastructure demand will remain robust until 2012, once complete HD networks are in place Entwistle suggests that rate of growth may slow.

“The infrastructure can be in the ground for years before anybody attaches a set-top box to the end,” he said.

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