Booming comm-IC markets increase GaAs use
03/01/1999
Booming comm-IC markets increase GaAs use
Conservative estimates from Teal Group Corp., Fairfax, VA, show that 1017 or more new commercial communications satellites, valued at about $50 billion, will be launched by 2008 (see table). Combining military, civil, and commercial Earth imaging satellite launches, the ten-year tabulation approaches 1700 and $180 billion.
Marco C ceres, lead analyst for Teal`s World Space Systems Briefing, says, "The mobiles and broadbands are really what is pushing the market to levels we`ve never seen before. When second-generation mobiles and the first significant groups of broadbands start coming online early in the next century, the number of commercial communications satellites launched will easily surpass 100 annually."
The largest segment (44%) of the commercial communications satellite market will consist of about 449 mobile communications satellites, including artificial "constellations" formed by Motorola`s Iridiums, Loral`s Globalstars, and Orbital Sciences` Orbcomms.
About 38% will consist of about 384 broadband multimedia satellites. Bill Gate`s Teledesic "Internet-in-the-Sky" satellites will account for at least half of the broadbands. Other "constellations" includes Hughes` Spaceway, Lockheed Martin`s Astrolink, Loral/Alcatel Espace`s CyberStar/ SkyBridge, and Motorola`s Celestri.
The implications of these enormous investments for the semiconductor industry is a significant increase in application of related products, particularly gallium arsenide (GaAs) solar cells used on satellites and communications ICs.
A technologist at Aixtron, (Aachen, Germany), a manufacturer of GaAs production equipment, notes, "Solar cells made from GaAs are almost untouched by the aggressive radiation faced in orbit, which is not true for silicon cells. While GaAs solar cell production is more expensive, its efficiency is more than double that of silicon and its reduced weight plays an important role in launches."
As new satellites become operational, mobile communications and broadband direct-to-home TV broadcasting, Internet access products, and related IC consumption will grow dramatically. Ravi Krishnan, senior market analyst at Integrated Circuit Engineering Corp., Scottsdale, AZ, says, "Communications-IC revenue should increase by double-digit rates annually for the next five years. The communications market`s relative newness and fast-moving nature has created a value-added arena with less pricing pressure and more opportunity for product differentiation than other sectors."
According to ICE data:
About 20% of the $11.5 billion that US venture-capital firms invested in 1997 was directed toward communications and networking. Capital has also come from technology giants like Intel, TI, National, and Lucent. For example, Lucent has invested $100 million in new wireless, networking, and other communications companies. Moreover, Harris Semiconductor is concentrating more on devices for the cellular base-station, central office, PBX, satellite communications, wireless LAN, and wireless local-loop markets. National targeted ComCore Semiconductor in order to gain digital signal processing (DSP) technology and design skills to make chips for networking and broadband applications.
Wireless applications are driving the communications-IC industry, particularly the DSP market, where more than 50% of it overall and 73% of the revenue in the programmable-DSP segment come from communications.
1998 saw key efforts to acquire communications-based firms as a means of striking it rich in this segment. Prominent ones include the purchase of GEC-Plessey by Mitel. Besides extra fab capacity, GEC-Plessey provides Mitel with products and expertise in cell phone, GPS, wireless LAN, set-top-box, and RF circuits.
In one of 1998`s hottest IPOs, Broadcom, a seven-year-old maker of chips for high-speed communications, and cable and satellite TV, raised more than $80 million and doubled its share price in the first day of trading. First-quarter sales of $35.3 million more than double the previous quarter`s $17.3 million.
Krishnan says, "The communications-IC business is appealing because few of its subsegments are dominated by large, entrenched players. And opportunities to add value in technology are shifting to the semiconductor level." - P.B.