March 21, 2007 – Compound semiconductor firms showed mixed fortunes in 2006, but in general ended the year with positive results, including profit margins approaching 35% for gallium arsenide (GaAs) device manufacturers, and >25% for some substrate and equipment suppliers at year’s end, according to data from Strategy Analytics.

“2006 was a good year for the industry with strong demand helping to drive revenues,” said Stephen Entwistle, VP of the research firm’s Strategic Technologies Practice, in a statement. “At the same time, companies adopted focused strategies that included divesting operations that did not tie in with their core business helping them to move towards profitability,” he added.

Companies in the telecoms sector still struggled with profitability, but the market for 2007 is picking up and looks promising, noted Asif Anwar, Strategy Analytics’ GaAs service director. Equipment manufacturers are finding strong demand from the LED sector, where positive margins were already being achieved despite lower revenues, he noted.