Compound Semiconductor Market Report 2024 (Global Edition)

MARKET DYNAMICS

KEY DRIVERS

• Rising Demand for Compound Semiconductor Epitaxial Wafers in LED Technology is boosting the Compound Semiconductors Market Growth

Epitaxial wafers are semiconducting composite substrates used in multiple applications such as photonics, microelectronics, and photovoltaics. Global industrial growth is being aided by the extensive usage of compound semiconductor epitaxial wafers in LED lighting technologies. LED lighting is gradually replacing conventional lighting in the commercial, industrial, and residential sectors because of growing need for energy-efficient lighting solutions that help reduce power usage. Most LED lights have many I.C.s. in them. These I.C.s are now produced using epitaxial wafer chips rather than silicon wafers because of their improved efficiency. In order to enhance the semiconductor wafer's performance, the producer covers this compound semiconductor wafer with an epitaxial layer. The electrical properties of the silicon wafer increase as the epitaxial layer grows over it, boosting LED lighting's power capacity and, to some extent, the market's growth. For instance, in 2023, India's LED witnessed a significant improvement which helps rural lives by reducing electricity consumption from 24% to 5%. This has allowed school children to continue their studies, shopkeepers to keep their doors open longer, and families to delay meals. The transition has also led to the deployment of two million solar home systems and over 14,000 micro and mini-grids, bolstering rural electrification. The government's Unnat Jyoti by Affordable Light Emitting Diode (UJALA) scheme in 2015 provided affordable LEDs to domestic consumers, including those in rural areas, offering energy bill savings of INR 19,000 crores per year. This LED transformation is a beacon of hope, demonstrating how sustainable development and access to affordable energy can be achieved while saving money and preserving the planet. (source:http://(https://www.hindustantimes.com/ht-insight/economy/lighting-the-way-how-indias-led-revolution-is-brightening-rural-lives-101700111456190.html) Thus, Rising Demand for Compound Semiconductor Epitaxial Wafers in LED Technology is boosting the Compound Semiconductors Market Growth

• The advantage of Compound Semiconductors over Silicon-Based Technology drives demand for Compound Semiconductor

Compound semiconductor-based technology is favored over silicon-based technology worldwide. Compared to silicon, compound semiconductors have superior electrical characteristics. Examine the compound semiconductor epitaxial wafer's increased electron mobility and higher saturation electron velocity. Compound semiconductors have a broader energy bandgap, which helps to protect them from overheating. Additionally, especially at high frequencies, they often generate less noise in electrical circuits than in silicon devices. Because of their enhanced characteristics, compound semiconductor epitaxial wafers are a good option for higher-frequency radar systems, cellular phones, microwave links, and satellite communications. The growth of the market is driven by the advantages of compound semiconductors over silicon. For instance, in 2023, Researchers from the Center for Integrated Nanostructure Physics at the Institute for Basic Science in South Korea discovered a way to manipulate electronic noise in semiconductors. The researchers used vanadium in a properly layered semiconductor to create fluctuations and electronic noise. This noise can be used for random number generation, dithering, stochastic resonance, and defect characterization. Random Telegraph Noise (RTN), a form of electronic noise found in MOSFETs and other nanoscale transistors, can be used to generate random numbers, improve measurement precision, detect weak signals, and characterize defects. (source:http://(https://www.powerelectronicsnews.com/potential-applications-in-semiconductors-of-unwanted-electronic-noise/) Thus, the advantage of Compound Semiconductors over Silicon-Based Technology drives demand for Compound Semiconductor

Restrain

• High cost linked with compound semiconductor material leads to Compound semiconductor control

The market for compound semiconductors needs to overcome several challenges in order to expand and thrive. Compound semiconductors sometimes require complex manufacturing processes, like epitaxy and specialized wafer fabrication techniques, which can increase production costs as compared to elemental semiconductors like silicon. Certain compound semiconductors rely on expensive or rare components, which could increase material costs and create problems in the supply chain. Compound semiconductor fabrication can be more complex and challenging than that of elemental semiconductors, requiring specific knowledge and tools. It can be challenging to integrate compound semiconductor devices with current technologies because of variations in material properties, thermal management, and suitability for established manufacturing methods. For instance, in November 2022, Setting up a semiconductor fabrication plant in India was complex process that involves various factors such as sourcing lithography tools, having suitable infrastructure, and determining the technology node buyers aim for. Compound semiconductor fabrication, which typically involves three phases, can cost up to $40 million. However, silicon fabrication is crucial for the government's semiconductor mission. The cost of setting up a silicon fabrication plant depends on the technology node buyers aim for, as lithography equipment determines the range of technology nodes that can be worked with. (source:http://(https://analyticsindiamag.com/how-much-does-it-cost-to-set-up-semiconductor-fab-in-india/). Furthermore, the difficulty is exacerbated by the fact that producing chips and keeping up with technological developments has become incredibly expensive in the past years, making semiconductor manufacturing a niche industry accessible only to the wealthiest. For example, TSMC increased its projected capital expenditure for 2021 by up to 63% to $28 billion, but Samsung is allocating roughly $116 billion for a ten-year initiative aimed at overtaking its arch-rival from Taiwan.(source:http://(https://www.cnbc.com/2021/01/15/tsmcs-2021-capital-spending-plans-could-pressure-earnings-analyst-says.html).Thus, High cost linked with compound semiconductor material leads to Compound semiconductor market control.

Opportunities

• The ongoing evolution of technological advancement will further create opportunities for compound semiconductors market

Superconductors, carbon nanotubes, and compound semiconductors like GaN will be used in next-generation smart technology. Demand for these technologies will rise as the market develops, which will raise demand for GaN and other semiconductors. 
Furthermore, Compound semiconductors are very good in amplification of power, especially GaN. Their ability to maintain efficiency while delivering high power outputs makes them perfect for 5G base station and rollout applications. Millimeter-wave frequencies are used by 5G technology to provide extremely fast and low-latency communications. Compound semiconductors with low noise characteristics and high electron mobility, including indium gallium arsenide and gallium arsenide, are ideal for these kinds of uses. This will assist the market for compound semiconductor epitaxial wafers by increasing the efficiency of smart infrastructure, lowering expenses, and extending the lifespan of equipment. For instance, Global 5G smartphone shipments reached 2 billion units in Q4 2023, a record reached within five years. The technology's affordability and availability improved, with 70% of shipments coming from developed markets like China, the U.S., and Western Europe. Major brands like Apple and Samsung dominated the market, shipping over one billion units cumulatively. The narrowing price gap between 5G and 4G chipsets and reduced component costs allowed manufacturers to launch entry-level 5G devices. The iPhone 12 series accelerated 5G adoption, reaching 200 million units in Q4 2023. Developed markets are nearing saturation, with 5G smartphones contributing to 80% of total shipments. (source:http://(https://www.thehindu.com/sci-tech/technology/gadgets/5g-smartphone-shipments-surpass-2-billion-globally-in-q4-2023/article67881695.ece).Thus, the ongoing evolution of technological advancement will further create opportunities for the compound semiconductors market.

Impact of COVID-19 on the Compound Semiconductors Market

Global Compound Semiconductors markets experienced unprecedented disturbances as a result of the COVID-19 pandemic. There were additional losses and difficulties during this time. Disruptions in the supply chain hampered market operations. The markets for tier one and tier two major players have changed during the pandemic. The COVID-19 has, nevertheless, had an effect on the compound semiconductor market. There are significant losses that occurred in areas like Asia Pacific and North America. Additionally, compound semiconductor plants in South Korea were forced to close for forty-five days. Significant losses have been incurred in the Asia-Pacific area as a result. Moreover, there is a serious disturbance in the supply system in Mexico. In the market for compound semiconductors, another difficulty is the low production rate. For instance, In 2021, The global chip industry faced a supply crisis due to an unexpected surge in demand during the Covid-19 pandemic. Lead times have slowed to 15 weeks, with Broadcom Inc.'s lead times reaching 22.2 weeks. This has impacted major companies like General Motors and Volkswagen, and has pushed Taiwan Semiconductor Manufacturing Co. and Samsung Electronics to the top of investor and government agendas. Industry players are warning of longer-than-anticipated deficits, potentially well past the summer. Samsung has also warned of a "serious imbalance" globally. Nio Inc., a Chinese EV company, has suspended production due to shortages. (source:http://(https://www.bloomberg.com/graphics/2021-semiconductors-chips-shortage/)
Moreover, The COVID-19 epidemic has led to a surge in the demand for compound semiconductors, including transistors, power semiconductors, and integrated circuits (ICs), which is driving the market expansion in key areas. Rather, the COVID-19 pandemic created a variety of obstacles for the market, such as a lack of skilled labor and project delays or cancellations as a result of global lockdowns, either partial or complete. Furthermore, the increase in demand for consumer and industrial electronics solutions following COVID-19 is expected to bolster the market opportunity for compound semiconductors.
Furthermore, Post COVID-19, The demand for semiconductors has increased over the past decade due to increased smartphone usage and computing power. Automotive electronics are expected to account for 45% of a car's manufacturing cost by 2030, with semiconductor-based components costing $600 by 2030. Chipmaking capacity has kept pace with sales growth, but advanced manufacturing has become concentrated in the hands of fewer players. An imbalance is particularly apparent in 200 millimeter wafers, which produce lower-end chips required in various sectors. The pandemic has led to sharp swings in orders, affecting chipmakers' ability to match capacity with demand. 
 

Our study will explain complete manufacturing process along with major raw materials required to manufacture end-product. This report helps to make effective decisions determining product position and will assist you to understand opportunities and threats around the globe.

The Global Compound Semiconductor Market is witnessing significant growth in the near future.

In 2023, the Gallium Nitride (GaN) segment accounted for noticeable share of global Compound Semiconductor Market and is projected to experience significant growth in the near future.

The IT & Telecom segment is expected to expand at the significant CAGR retaining position throughout the forecast period.

Some of the key companies Taiwan Semiconductor Manufacturing Company , Intel Corporation and others are focusing on its strategy building model to strengthen its product portfolio and expand its business in the global market.

Frequently Asked Questions (FAQs)