28 April 2023
The compound semiconductor market was $38.552bn in 2022 and is rising at a compound annual growth rate (CAGR) of 6.1% to $61.911bn in 2030, forecasts a report published by P&S Intelligence. Growth is ascribed primarily to the rising demand for silicon carbide (SiC) devices in power electronics.
GaN dominant among electronics applications
However, the market is currently dominated by gallium nitride (GaN), which has a market share of over 30%, and this situation will remain unchanged in the years to come, it is reckoned. High breakdown voltage and low conduction resistance are maintained by GaN, allowing the miniaturization of equipment and high-speed switching. Furthermore, due to their compactness, high electron mobility and densities are easily supported by GaN devices.
Moreover, compared with silicon variants, the advantages of GaN devices such as higher energy efficiency, faster device speed, lower costs, high power density, operability at higher temperatures, higher frequency and higher operating voltage are likely to drive market progress.
In addition, the penetration of GaN in RF devices in power applications is likely to intensify market growth, due to the demand for smartphones, tablets, laptops, gaming consoles, surveillance systems, computers, TVs, networking equipment, and IoT devices. Along with this, rapid infrastructure development is driving demand for power amplifiers.
Also, rising demand for ADAS (advanced driver assistance systems) around the globe can be seen as a growth opportunity for players in the optoelectronics sector. For example, both the USA and the European Union (EU) have mandated that all new vehicles be installed with forward-collision warning systems and autonomous emergency braking systems.
Power electronics largest application sector
The power electronics sector dominated the compound semiconductor market in 2022 and is expected to remain the largest application sector over the next few years, due to the increasing use of compound semiconductors in smart-home appliances and cutting-edge consumer electronics, it is reckoned.
GaN has become a significant building block for power electronics, helping to improve the energy efficiency of LEDs, mobile devices, and other appliances.
Moreover, SiC devices have three times the thermal conductivity and ten times the breakdown electric field strength of silicon-based devices. These features reduce the complexity and cost of the device, improve its reliability, and allow it to be used in several high-voltage applications, such as solar inverters, power supplies, and wind turbines. The market for silicon carbide power devices is growing significantly because of the rising demand for power electronics, including in the aerospace & defense sector.
In addition, the electric vehicle (EV) market is a key growth driver because semiconductors are essential to modern EVs. In the same way, military systems, sensor systems, solar power inverters, wind turbines and many other types of system are increasingly being equipped with SiC devices. Seeing the rising demand, in August 2022 Infineon Technologies AG and II-VI Inc signed a multi-year agreement for SiC wafers.
Telecoms to be largest application in future
The telecoms category comprised the largest share, of 44%, in 2022, and is expected to remain the largest over the next few years. The increasing use of gallium arsenide (GaAs), silicon germanium (SiGe), indium phosphide (InP) and gallium nitride (GaN) compound semiconductor devices in mobiles and other wireless communication products is boosting market growth. This is itself due to the growing demand for 5G networks, which will transform the wireless communication sector.
Demand for higher bandwidths is rising because of booming mobile data usage, which implies greater stress on networks for the availability of the wireless spectrum. Mobile data traffic is expected to reach 10 Exabytes per month by 2025.
The telecom sector is therefore looking for extremely high-frequency bands, which fulfill the need for large bandwidths and high data rates. For instance, AT&T Inc introduced its millimeter-wave 5G network with the launch of the Galaxy S20 Plus and S20 Ultra by Samsung Electronics Co Ltd in March 2020.
Additionally, the high speed and efficiency of compound semiconductors over silicon are the main driving factors for the former’s use in enhanced communication devices. Moreover, the advancement in multiple emerging technologies, such as the Internet of Things (IoT), artificial intelligence (AI) and machine learning, is driving demand for semiconductor technologies.
Moreover, GaAs devices are frequently used in power switches, amplifiers and cell phones. Further growth in the usage of GaAs in wireless communications would be due to its superior speed and efficiency over silicon. The material is also widely used in the aerospace & defense sector for a broad range of applications, such as power supplies for space equipment and aircraft, VLF transmitters, and solid-state relays and contactors. In this regard, increasing defense spending and rising usage of electronic components in fighter jets, tanks and armored personnel carriers are expected to drive market growth.
North America over 22% of compound semiconductor market in 2022
North America has a significant position in the of compound semiconductor market, generating over 22% of revenue in 2022, and is expected to remain dominant over the next few years. Demand is rising mainly because of measures of the US and Canadian governments to enhance their military capabilities and communications infrastructure. Therefore, players are increasing their investment in order to boost the output of smart devices for telecom, consumer electronics, and IT applications. For example, in May 2022, JX Nippon Mining & Metals USA Inc received financial help from Japan Bank for the construction of a new establishment in Arizona, USA.
Device demand in Europe to grow at a steady rate
European is expected to grow at a steady rate, led by the UK, which dominated the compound semiconductor market in the region in 2022 and is projected to do so during the forecast period.
Germany is the fastest-growing market in Europe because of the improvements in the automobile sector, which drive the use of microelectronics. In this regard, the electrification of vehicles, introduction of AI and digitalization are the main factors driving growth in Germany.