Aug 29, 2016: Technavio analysts forecast that the global gallium arsenide (GaAs) wafer market will grow at a CAGR of close to 13% during the forecast period between 2016-2020. Technavio hardware and semiconductor analysts highlight the following three factors that are contributing to the growth of the GaAs wafer market:
- Increasing adoption of smartphones
- Rising penetration of LEDs in general lighting
- Need for increased network bandwidth
Increasing adoption of smartphones
The growth of smartphone shipments to more than 2 billion units in 2020 from 1.4 billion units in 2015, will drive the demand for GaAs wafers during the forecast period. Consumers’ demand for mobile data is insatiable and is increasing drastically in many countries. Accessing mobile data in large volumes drains mobile batteries faster than usual.
This has compelled mobile handset manufacturers to use efficient power amplifiers that contain GaAs content. In order to accommodate increasing demand for data (both broadband and mobile data) and ensure proper quality of service, network operators are developing sophisticated wired and wireless networks, architecture, and devices. This will increase the demand for GaAs wafers for network infrastructure. The increase in mobile data consumption also indicates a rise in the number of mobile handsets containing GaAs content.
Some smartphone vendors such as Kyocera are focusing on the manufacture of solar-powered smartphones. “GaAs is considered to be the most efficient semiconductor for the production of solar energy. GaAs-based solar cells offer an extended battery life for smartphones. GaAs-based solar cells can convert 30%-35% of energy from light into electricity, and they are lightweight as well. As a result, the production of smartphones powered by GaAs-based solar cells will influence the market in a positive way,” says Asif Gani, a lead analyst at Technavio for semiconductor equipment research.
Rising penetration of LEDs in general lighting
The increase in demand for lighting sources has resulted in a surging demand for electricity. As lighting consumes 20% of the global electricity production, the governments of countries such as China, Japan, India, and Brazil are focusing on promoting energy-efficient lighting technologies. In countries such as Canada, governments have banned the use of incandescent bulbs, which has resulted in the higher adoption of LED lighting technologies. In addition, spreading awareness about power saving and energy management has triggered the adoption of energy-efficient technology. GaAs is the most widely used semiconductor for LED manufacturers.
Rising demand for LEDs drive global gallium arsenide wafer market
China had the largest LED industry in the world and accounted for approximately 30% of the world production, as of 2015. The main reason for the high concentration is tax benefits and subsidies offered by the Chinese government to encourage the production of innovating lighting solutions.
Similar initiatives are being taken by governments around the world. This exponential rise in the adoption of LEDs around the globe is a huge driver for the GaAs wafer market during the forecast period.
Need for increased network bandwidth
The growth in internet bandwidth is fueled by two factors: the proliferation of mobile computing devices with advanced capabilities (such as smartphones, tablets, and wearables) and the emergence of disruptive technologies that shift the bandwidth usage by altering the way users access the network.
With the emergence of new mobile telecommunication standards such as 4G and 5G, consumers are now opting for higher bandwidth applications and services. Mobile data traffic is increasing due to factors such as high demand for bandwidth-based services and applications and growing market for handheld devices. At present, 2G and 3G networks account for a large share of mobile data traffic globally. By 2019, the share is likely to decline to less than one-third of all mobile data traffic due to the uptake of 4G, which is about ten times faster than 3G. In addition, the trend of individuals using their handheld devices to access high-quality digital content on the internet is increasing.
Large enterprises and IT professionals are adopting cloud storage, increasing the usage of cloud services such as Microsoft Office 365, Google Apps, and SAP. This results in elevated bandwidth demand and network requirements. Technavio estimates a 500% increase in bandwidth demand due to growing inclination toward cloud services during 2016-2020.
“Thus, the emergence of next-generation connected devices, along with the rise in the use of cloud services, will compel vendors to increase the GaAs content in smartphones, pushing the market’s growth during the forecast period,” says Asif.