With the development of various high frequency and high power applications, the scale of compound semiconductor market continues to expand, and the corresponding chip design and manufacturing business has attracted the attention of more and more practitioners and capital, showing a good development trend.

Compound semiconductor mainly refers to the second and third generation of semiconductor materials and processes, among which the second generation is represented by gallium arsenide (GaAs) and indium phosphide (InP). Compared with the first generation of semiconductor materials (mainly silicon), they have the advantages of high electron mobility and high photoelectric conversion efficiency, which is very suitable for the manufacture of photoelectric and radio frequency devices. The popularity of mobile phones led to the growth of GaAs power amplifiers (PA), ushering in the maturity of second-generation semiconductor materials. In recent years, the third generation of compound semiconductors represented by silicon carbide (SiC) and gallium nitride (GaN) are extremely hot. However, no matter at present or in the future, the second generation of compound semiconductors represented by GaAs are still the main materials for PA used in radio frequency devices, especially mobile phones and other mobile devices, occupying most of the market share.

According to ResearchInChina, the global GaAs component market is expected to grow from $9.519 billion to $16 billion between 2018 and 2025, with a compound annual growth rate of 7.7%.

The biggest advantage of InP is that it has a higher power density than GaAs. This compound property makes InP better than GaAs in 5G millimeter wave band and B5G (Beyond 5G) sub-terahertz (THz) band. It is also widely believed in the industry that INP has the potential to become a popular option for the mainstream material of PA in the future.

The application of GaAs

Compared with silicon, the main advantages of GaAs are high temperature resistance (the highest operating temperature can be about 350 degrees Celsius), radiation resistance and high luminous efficiency. Based on these characteristics, GaAs is mainly used in three fields: radio frequency (RF), photoelectric, LED, in addition, photovoltaic (PV) also has a certain scale of application. According to Yole's statistics, the share of GaAs in RF, opto-electronics, LED and PV applications was 37%, 12%, 50% and 2% respectively in 2019, and is expected to increase to 28%, 18%, 53% and 1% in 2025.

In terms of radio applications, with the arrival of 5G era, 5G mobile phones are becoming more and more popular. In addition, wireless networks (such as Wi-Fi) are becoming more and more popular, and the requirements for performance and network speed are constantly improving. The radio frequency modules in these systems must contain key components such as PA, radio frequency switch and low noise amplifier (LNA), among which PA is a device that amplifies wireless communication signals, and the amplified signals are eventually transmitted from mobile phones or base stations. PA is a high energy consumption device of communication equipment. Most RF PA is manufactured based on the GaAs material process.

The number and unit price of PA in 5G mobile phones have increased significantly compared to the 4G era. In 5G sub6GHz frequency band, GaAs HBT is still an important technology of PA, 5G adds millimeter wave frequency band, and GaAs pHEMT is an important technical route. In short, the big cake of mobile phone PA will still be dominated by GaAs in the future.

In the aspect of mobile phone base station, a large amount of PA is also used, mainly LDMOS (silicon material), GaAs and GaN. Compared with GaAs and LDMOS, GaN has the advantages of high frequency and high output power. However, GaAs will still be the mainstream technology of base station in the future due to its reliability and high cost performance. According to Yole's statistics, LDMOS and GaN materials will show a declining relationship, while GaAs will maintain a relatively stable market share. Specifically, in 2025, LDMOS will decrease to 15%, GaN will increase to 45%, and GaAs will account for about 40%. Under the condition that the proportion of PA GaAs materials in base stations is stable, the construction of 5G base stations globally in the next few years will bring stable market demand to the upstream GaAs industry.

Historically, GaAs has been used on a small scale in optoelectronics, mostly in data communication applications, but since Apple introduced 3D sensing in its iPhone X in 2017 and the adoption of GaAs vertical Resonator surface-emitting lasers (VCsels) on Android, The VCSEL market led to a surge in GaAs wafer and epitaxial wafer production.

In iphones, VCSEL is primarily used for face recognition. VCSEL has the advantages of small original field divergence Angle, high modulation frequency, and easy to realize large-scale array and photoelectric integration. It can be widely used in optical communication, 3D sensing, facial recognition, vehicle lidar and other scenes, and it is not easy to be replaced by other technologies in the short term. The global VCSEL market will grow from $1.1 billion in 2020 to $2.7 billion in 2025, driven by the increasing penetration of 3D facial sensing in mobile phones and the demand for high-capacity fiber optic communication lasers. Therefore, the optoelectronics field represented by VCSEL will become the main growth engine of GaAs market.

In addition to VCsels, photodiodes are also important applications of GaAs in the field of optoelectronics. A photodiode is a small electronic semiconductor device used to convert light into current, and a GaAs photodiode is a semiconductor optical sensor widely used in a variety of monitoring and high-speed fiber optic receivers. Consumer electronics (smoke detectors, optical disc players, infrared remote devices, etc.) and medical devices (computed tomography detectors, pulse oximeters, etc.) are the main drivers of the GaAs photodiode market. According to Maximize Market Research, the market size of GaAs photodiodes is expected to reach $268.79 billion in 2027, with a compound annual growth rate of 4.23% from 2019 to 2027.

LED is an important branch of GaAs application. Especially in recent years, the rapid development of Mini LED and Micro LED has greatly expanded the application scenario of LED display technology and brought new growth space for GaAs.

Leds, made of compounds containing gallium, arsenic, phosphorus and nitrogen, are commonly used light-emitting devices that efficiently convert electrical energy into light. Conventional LED is mainly used in general lighting, outdoor large display screen, etc. Mini LED is mainly used for HDR, shaped display and other backlight applications, suitable for mobile phone, TV, car panel and e-sports laptop and other products; The concept of Micro LED is very different from the previous two. It can be used in wearable watches, mobile phones, car displays, augmented reality/virtual reality, displays and televisions. Mini LED is an improved version of LED backlight, which can greatly improve the LCD picture effect, while the cost is relatively easy to control, and is expected to become the mainstream of the market. Micro LED is a new generation of revolutionary display technology with qualitative improvement in picture quality. If it is mass-produced, it will promote the rapid growth of GaAs market.

Industrial pattern

In terms of GaAs chip manufacturing, the industry leaders are still dominated by IDMs, including Skyworks, Qorvo, Broadcom/Avago and Wolfspeed in the US, and Infineon in Germany. These IDMs, such as Avago and Skyworks, send their products to contract factories when they run short of capacity. Avago's main contract manufacturer is WIN, Skyworks's contract manufacturer is AWSC, and Qorvo has sufficient capacity and mainly produces its own products and also provides contract manufacturing services.

Skyworks and Qorvo account for 31.6 per cent and 29.7 per cent of the market respectively, while GaAs foundry leader Wenmao has just 9.2 per cent.

In recent years, the proportion of wafer foundry of compound semiconductor is constantly increasing. However, because compound semiconductor is difficult to manufacture silicon wafer in terms of structure, composition and defects, there are not many enterprises that can provide high-level wafer foundry. At present, the global GaAs wafer foundry is mainly concentrated in Taiwan and the United States. With 90 per cent of the global market share between Wenmao, GCS and Hongjie, Wenmao leads the global GaAs foundry sector with 71 per cent of the market, according to Strategy Analytics.

At present, the main customers of GaAs foundries are IDM giants such as Avago and Skyworks. A few years ago, Avago sold its Colorado plant to GaAs contract manufacturer Wenmao.Avago also took a stake in Wenmao.Avago became a majority shareholder in Wenmao.Avago supplies most of its HBT products to Wenmao.Gaas. All these show that IDM capacity outsourcing has become a trend and the compound semiconductor foundry market is growing rapidly.

The development of OEM business is largely due to the fact that GaAs technology and market have developed to a very mature stage, especially the continuous standardization of its substrate and device technology, product diversification, and the increase of corresponding design enterprises, which makes the demand for OEM business constantly increase. This is similar to the development trajectory of the logic device generation industry.

With the popularization of 5G, the corresponding orders of high-performance RF and power devices have increased significantly. The over-expectation of orders has strained the production capacity of GaAs wafer foundry factories. With the large-scale application of 5G, the demand of this market will further increase, and leading manufacturers' capacity will enter the full load cycle, bringing business opportunities for compound semiconductor manufacturers in mainland China. In the domestic GaAs OEM field, the overall number of players is not large, and it is very rare to provide high-level OEM business, mainly SAN 'an Photoelectric, Haite high-tech and other few enterprises. Among them, SAN 'an Optoelectronics, as a leading enterprise in the field of domestic compound semiconductor, has built the first 6-inch GaAs and GaN epitaxial wafer production line in China and put it into mass production.

In terms of process technology, compound semiconductor is very different from memory and logic devices, because the former is oriented to RF, high voltage, high power, optoelectronics and other applications, and does not pursue very advanced process nodes, GaAs devices are mainly 0.13μm, 0.18μm and above processes, Qorvo is developing 90nm process. Processes below 60nm are generally not required in this field.

In addition, due to GaAs substrate size limitations, current production lines are dominated by 4 - and 6-inch wafers.

conclusion

In terms of material properties, the second generation of compound semiconductors, represented by GaAs, is significantly better than the first generation of semiconductor materials, silicon, especially in the field of radio frequency and optoelectronics applications. At the same time, compared with SiC, GaN and other third-generation compound semiconductor materials, GaAs also has obvious advantages in process maturity and cost performance, especially in the field of low and medium voltage applications.

In conclusion, GaAs and InP will still occupy the majority of the current and future compound semiconductor market, while SiC and GaN will gradually expand their market share in high-power applications.

In terms of GaAs chip manufacturing, the development trend is similar to that of logic chips (represented by cpus, Gpus and other processors), that is, the proportion of wafer foundry is gradually increasing, while the market share of IDM is declining. However, in the foreseeable future, IDM will still occupy half of the world, rival with wafer foundry.