Digital GaAs market is dead, says research firm

LONDON, England -" The digital market for gallium arsenide chips is dead according to Strategy Analytics Inc., a market prediction and analysis company. From a high point of $600 million in 2000, merchant revenues from digital GaAs ICs collapsed to $55 million in 2002, the company said.

As a result in 2002 the GaAs integrated circuit market was reduced not only in terms of number of overall companies actively pursuing the market, but also in terms of the total available market opportunity, the company said. The collapse in digital was offset by the GaAs monolithic microwave integrated circuit (MMIC) market, which expanded 7 percent compared with 2002, Strategy Analytics said.

The firm said the GaAs MMICs market reached $1.7 billion in 2002, and RF Micro Devices accounted for 24 percent of this total market. However, Skyworks, with a market leading position in cellular power amplifier modules, is set to challenge RF Micro Devices' overall position as the leading vendor of GaAs ICs. Other leading companies in this sector of the GaAs industry include TriQuint, M/A-COM, Matsushita and Anadigics, Strategy Analytics said. "The market for MMICs will continue to provide growth for the GaAs industry, with the cellular opportunity remaining an important revenue stream. Penetration of GaAs technology in cellular handsets will continue to increase, but it will be emerging markets such as WLAN and auto RADAR that will provide renewed opportunities for the GaAs industry," observed Asif Anwar, a senior analyst at Strategy Analytics.

For digital applications, Strategy Analytics noted that market leaders such as Vitesse and Fujitsu are exiting the digital GaAs IC market. Vitesse announced it would shut down its wafer fab in Colorado Springs, Colorado, after it was unable to find a buyer for the plant (see July 22 story).