The compound semiconductor market size is expected to advance at a CAGR of 6.10% during 2022–2030, to reach USD 61,911 million by 2030.
The growth is primarily attributed to the rising demand for semiconductors in the data storage, automotive, and wireless communications industries. The fast integration of gallium nitride semiconductors in consumer products and the rising demand for the silicon carbide technology in power electronics are the key driving factors for the market. In addition, in its 2023 budget, the U.S. government has earmarked USD 25 billion for activities authorized by the CHIPS and Science Act and USD 21 billion for the three primary CHIPS and Science Act agencies: the Department of Energy’s (DOE) Office of Science, NSF, and NIST.
GaN has an important role in the development of the 5G technology by helping improve efficiency, thermal stability, and data transfer speeds. Gallium Nitrite semiconductors help handle high-frequency signals. GaN devices are used to improve the 5G base station performance. Improved thermal conductivity and efficiency at higher frequencies, greater robustness and reliability, and comparable performance in a smaller-size MIMO array are other advantages of the GaN-on-SiC technology. GaN improves the performance of power amplifiers for all transmission cells in the network (pico, macro, micro, and home routers), which might have a substantial impact on the rollout of 5G networks.
The APAC market is expected to advance at the highest CAGR during the forecast period. This can be attributed to the expansion of wafer foundry, fabrication, assembly, testing, and packaging facilities in various countries. Moreover, tech giants, such as Facebook, Google, and Microsoft, are opening data centers in the region.
The market growth is essentially positively influenced by the rapid urbanization and industrialization and the huge funding and support by governments and academic institutions for R&D on compound semiconductors. In India, for instance, under the Design Linked Incentive scheme, the government has sought 100 domestic companies’ applications.
Eventually, the Ministry of Electronics & IT received five companies' proposals to set up electronic chip and display production units with an investment of approximately USD 20.5 billion (INR 1.53 lack crore) in February 2022. In one of the related projects, in September 2022, Foxconn and Vedanta, in a joint venture of 40:60, announced that they will be establishing a semiconductor manufacturing unit, a display fab unit, along with a semiconductor assembling and testing unit, across 1,000 acres in Ahmedabad in Gujarat.
Further, the growth of the RF semiconductor industry in APAC is boosting the compound semiconductor market advance. For instance, GaAs semiconductors are used in several electronic devices, such as smartphones, the sales of which continue to skyrocket in the region. Additionally, the deployment of 5G services is picking pace in China due to the Made in China 2025 initiative, which has given 5G a transformative role in making the country a leader in a variety of cutting-edge technologies, including AI, cloud computing, and IIoT. This would propel the demand for advanced semiconductors in the region, as all these technologies depend on these components.
Moreover, China, India, South Korea, and Japan are continuously raising their defense budgets. The increasing need for military equipment, such as aerostat systems, is expected to impact the growth of the market in the region positively. Moreover, major compound semiconductor manufacturers, such as Intel Corporation and NXP Semiconductors, hold a muscular presence in APAC.
Some of the major players operating in the compound semiconductor market are Nichia Corporation, Samsung Electronics Co. Ltd., NXP Semiconductors, Qorvo Inc., Skyworks Solutions Inc., NVIDIA Corporation, STMicroelectronics, Canon Inc., Infineon Technologies AG, Mitsubishi Electric Corporation, Intel Corporation, and Taiwan Semiconductor Manufacturing Company Limited.