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31 July 2006


Analysts forecast market growth for SI GaAs bulk substrates

Strategy Analytics’ report "Markets for Semi-Insulating GaAs Substrates 2005-2010" estimated that demand for SI GaAs bulk substrates increased by 16% year-on-year in 2005. It added that 2006 will see a trend towards multi-mode and multi-band cellular handsets, using increasingly complex multifunctional front-end modules. This trend will lead to increased demand for GaAs substrates over the next two years, and the report concludes that the total SI GaAs substrate market will grow to $247m by 2010.

In 2005, SI GaAs bulk substrate merchant supply was concentrated in the hands of Freiberger Compound Materials, Sumitomo Electric Industries and Hitachi Cable, while AXT made efforts to reestablish itself with users as a primary supplier of GaAs bulk substrates, says the report. Strategy Analytics estimates that AXT increased its market share by 2 percentage points in 2005.

"Despite this healthy growth, GaAs bulk substrate suppliers are facing some tough decisions right now," notes Asif Anwar, director of Strategy Analytics GaAs and Compound Semiconductor Technologies service. "On the one hand, there is pressure to increase capacity to meet burgeoning demand over the next 18 months. On the other side of the equation is the danger that suppliers will put too much capacity in place now-which increases the risk of commoditizing the market in the future."

"It wouldn't surprise me if smaller volume customers are being turned away right now so that the market leaders can concentrate on the major consumers," observes Stephen Entwistle, Vice President of the Strategic Technologies Practice at Strategy Analytics. "As a result, we may see a significant change in market share in 2006, with AXT best positioned at this time to mop up excess demand."

Visit: http://www.strategyanalytics.com