Industry Reader Comment.

Tom Hausken, PhD
Director, Photonics and Compound Semiconductors
Strategies Unlimited
www.strategies-u.com

The Compound Semiconductor industry has been regarded as an emerging sector for a number of years but there is a sense that this may change. What do you think has occurred to enable this market growth?

The compound semiconductor market is significant—many billions of dollars. It is used as a material for products ranging from lasers for DVD players and telecom networks to electronics for mobile phone handsets and base stations, to high-brightness LEDs for flat panel displays and lighting, to solar cells based on CdTe and other exotic materials, to night vision goggles for soldiers. It’s much more than an emerging sector. It has grown steadily over many years, and will continue for many more.

Will Compound Semiconductor remain a niche industry?

I dispute that it is a niche, considering its size in the billions of dollars and the vital role it plays in many products. If you compare compound semiconductor sales to silicon, then yes, it will always be a much smaller segment. This is largely because silicon is so incredibly cost-effective for so many things. You use compound semiconductors for electronics only when you need greater performance, and this is usually for smaller volume applications where even silicon is expensive. For everything else, silicon is cheaper.

That said, products based on compound semiconductors will see strong growth in sales in coming years, especially from high-brightness LEDs as well as from thin-film solar cells. The overall revenues of compound semiconductor products will become more significant compared to silicon. Not more—more significant.

Cost of materials has always been a concern in this sector. What ways do you see the industry driving down cost and are there areas that you feel could be improved in cost savings?

Everyone has their favorite fabrication technology, whether it’s putting GaN on silicon, or organic semiconductors for roll-to-roll solar cell manufacturing. I’m agnostic about that. The biggest driver from the market point of view is finding a high volume application to drive down manufacturing costs for other applications. This has already happened in some segments. GaAs chips are cheap enough that they appear in mobile phone handsets, but the margins are thinner there, too.

Other drivers are things like industry standards, or government incentives, such as those driving solar cell installations in Germany and Spain.

What I’m not a big believer in is larger wafer sizes. That may be a good move in some cases, but it has be right. A lot of products just don’t merit it. Even in silicon.

What areas of application do you believe will be the most successful for the CS industry?

If successful means the most profit over the longest period, maybe military applications would come out high on the list. Or SiC transistors for power management. It’s hard to say.

A very important segment to watch is high-brightness LEDs. This is set to grow over 50% this year, to $20 billion by 2014. That’s huge growth, all thanks to compound semiconductors.

While recognizing that no-one has a crystal ball, where do you see the industry in three years time? Five years time? Ten years time?

The strong growth in high-brightness LEDs will be the biggest news for this decade. Perhaps mobile phone handsets was the big news of the last one. Solar cells and power transistors will also be important. Since each of these uses a different substrate material, it’s hard to generalize across the whole industry. There will continue to be many suppliers, each specializing in different products. It’s a very fragmented market.

What areas of microelectronics do you believe will only be addressed by Compound Semiconductors?

Two key areas:

High frequency power amplifiers. This means GaAs, GaN, and InP electronics for handsets, base stations, and various wireless and wireline communications applications, and other microwave range applications.

High power transistors for power management. This means mainly SiC but maybe also GaN power transistors for things like hybrid cars, motors and generators, server farms, and possibly even consumer electronics.

What issues do you believe are important for this industry and market sector? Based on your company and your personal perspective?

There are a few big issues that are beyond just manufacturing or product marketing, particularly those that relate to government policy. Government incentives and energy prices are critically important to solar energy and LED lighting. Or disincentives, such as the coming ban on inefficient incandescent lamps. Improved product standards also help LEDs to gain acceptance by customers. Night vision supplier FLIR has done well during the years of the Iraq and Afghanistan wars, despite the current recession. The expansion of the iPhone and roaming Internet service is pushing wireless providers to upgrade their network infrastructure. These are hugely important factors