“As of 2020, photonics and LEDs represent the main drivers for this markets.” asserted Ahmed Ben Slimane, PhD., technology and market analyst, specialized in Compound Semiconductors at Yole Développement (Yole). “In the past few years, the GaAs wafer market has been dominated by RF application. The total GaAs wafer market will increase from US$200 million in 2019 to more than US$348 million by 2025, with a CAGR (compound annual growth rate) of 10 percent.”
In this context, the market research and strategy consulting company Yole deeply investigates GaAs wafer and epiwafer technologies and related industries, and proposes its new technology and market analysis report: GaAs Wafer and Epiwafer Market: RF, Photonics, LED, Display and PV Applications 2020. In this study, analysts provide a deep understanding of the GaAs industry and define GaAs wafer and epiwafer market dynamics, including the identification and the analysis of the ecosystem and a technical description of GaAs wafer growth and epiwafer growth technologies. This study is segmented into “the big five” markets; RF, Photonics, LED, display and PV, along with market and technology trends and forecasts. Moreover, this report analyzes the impact of COVID-19 and proposes an updated wafer and epiwafer market forecast in addition to an overview of miniLED and microLED, VCSEL and EEL technologies.
What is the status of the GaAs industry? How will the market evolve? Who are the major players by market? Who are the key suppliers to watch and what technologies do they provide? What are the main technical challenges? Yole presents today their vision of the GaAs wafer and epiwafer industry.
According to Ezgi Dogmus, PhD, member of the Power and Wireless division at Yole, “RF is the historical market driver for GaAs wafers. In 2019 it represented 33 percent of market volume and 37 percent of market value. RF represents 67 percent of the GaAs epiwafer open market. GaAs RF demand is mainly driven by handset evolution, with the transition to 5G resulting in greater penetration of GaAs PAs for the high-end sub-6GHz phones.”
In parallel, photonics has a 5 percent share of wafer volume, corresponding to a US$24 million market. However, the photonics market will have a double digit CAGR2019-2025, with GaAs VCSEL technology strongly dominating this market. In this context, photonics applications represent 32 percent of the GaAs epiwafer open market.
With the transition of LEDs from low-end applications to high-end applications, such as horticulture lighting or automotive, LEDs still represent the highest GaAs wafer market volume with 41 percent share. Automotive will be the main driver for visible LEDs and IR LEDs, with a dynamic 6 percent CAGR envisaged from 2019 to 2025.
GaAs will find another source of growth in the display market, driven by hot new applications such as microLEDs. Yole analysts forecast the CAGR of the display market to be 19 percent in the 2019-2025 time frame.
In addition to the GaAs report 2020 edition, Yole is constantly following the evolution of the compound semiconductor industry with a dedicated market research tool, Compound Semiconductor Quarterly Market Monitor. On a quarterly basis, analysts combine all market data trends and deliver a powerful tool with accurate market indicators fully dedicated to the compound semiconductor industry. In addition to power SiC and power GaN, the Compound Semiconductor Quarterly Market Monitor will soon cover RF GaAs and RF GaN. Yole’s Compound Semiconductor Quarterly Market Monitor is published every beginning of March (Q1), June (Q2), September (Q3) and December (Q4).
This 2020 edition also takes into account the COVID-19 outbreak and its impact on multiple industries directly linked to GaAs-based technologies. Without doubt consumer and automotive market segments will be strongly modified by the crisis. Consequently, the compound semiconductor team from Yole decided to include three different scenarios in its GaAs technology and market report, especially focused on the market evolution and production recovery. In the mobile market segment, Yole predicts the most likely scenario is an estimated 20 percent production drop in 2020 as compared to 2019. Analysts also notice that some major OEMs, such as Samsung and Apple, have re-positioned their products. In fact, OEMs expect a shift from high end to middle end and even entry level smartphones, due to a reduction of household revenue. Regarding automotive applications, Yole forecasts a production drop around 30 percent .
From a supply chain point of view, the GaAs epiwafer supply chain is constantly changing. Ahmed Ben Slimane explained, “In the photonics market, the epiwafer business model is application dependent. In datacom, it is mostly integrated, dominated by Finisar, Avago and II-VI. However, for 3D sensing and other VCSELs (vertical cavity surface emitting laser) for smartphones, manufacturers prefer to outsource the epitaxy, a less complicated strategy adopted by Apple, which is supplied by IQE. IQE remains the biggest epiwafer supplier, with 61 percent photonic epiwafer market share in 2019. But, with increased adoption of 3D sensing, numerous players such as VPEC, II-VI, Sumitomo Chemicals and Landmark are ramping up their production.”
The RF GaAs epitaxy market is about 90 percent outsourced. Previously it was largely dominated by IQE, nevertheless it has lost share to the Chinese-Taiwanese supply chain. As of 2019, IQE and VPEC represent more than 80 percent of the RF epi market. The LED epiwafer market remains almost entirely integrated within very well-established companies like Osram, San’an, Epistar and Changelight.
In terms of GaAs wafer supply, Freiberger, Sumitomo Electric, AXT and Vital Materials lead the market in 2019. The top players have a bigger market share in high end applications, and due to stringent laser grade wafer specifications, they will keep their advantage for the next five to eight years. The outlook for new Chinese GaAs suppliers is challenging, they recently entered the market with low-end products for LED. However, their transition to high-end products and expansion out of China is risky due to potential IP infringement issue.