Strong Demand For Epi-wafers Favors Primary Suppliers

Boston, MA -- Strategy Analytics' latest analysis on the GaAs epitaxial substrate market, "Markets for SI GaAs Epitaxial Substrates 2004-2009," forecasts that that the epitaxial wafer market will grow by 11 percent year-on-year in 2005 versus 2004. Strategy Analytics forecasts robust demand moving forward with a CAAGR of 8 percent through 2009, driven by healthy demand for GaAs HBT and pHEMT devices from the cellular handset market.

The North American region represents the best opportunity for epitaxial wafer companies but displacement of primary suppliers in this region remains a challenge for Asian and European suppliers. In Japan, where domestic suppliers dominate, this situation is repeated and is exasperated for MBE suppliers by primary output of MBE material based on captive capabilities.

"Our analysis indicates that primary relationships with a key GaAs device producer can often account for 60 to 70 percent of the total output of an epitaxial wafer supplier," observes Asif Anwar, Director of the GaAs service at Strategy Analytics. "In many cases, long term relationships in the industry mean that second tier suppliers are currently faced with a glass ceiling which has proven difficult to break."

"We've noted for some time that substrate supply closely follows regional GaAs device production," adds Stephen Entwistle, Vice President Strategic Technologies Practice. "With North American companies leading the world in GaAs device production, it is no surprise that the North American epi-wafer suppliers that have benefited from the establishment of these primary relationships."

SOURCE: Strategy Analytics, Inc.