III-V compound semiconductors – combining materials in groups III and V of the periodic table – were once an obscure corner of the chips market, used mainly in LED lighting. But III-V compounds are the building blocks on which smartphone technology is based and demand will increase as 5G devices replace 4G, and as satellite communications and autonomous driving take off.
Silicon is by far the most high-profile semiconductor material, with silicon chips known for their computational power. But the strength of III-V compound chips is in communications and they will be increasingly used in consumer products and commercial uses from data transmission to video conferencing.
The compounds include gallium arsenide – gallium from group III and arsenic from group V – plus indium phosphide and gallium nitride.
They are less mature than silicon and harder to control during manufacture, so their maximum diameter is only half that possible with silicon, which makes production more expensive. But these compounds can operate at the higher frequencies that 5G is adopting. They also have higher bandgap, so can withstand higher voltage, and a signal amplified by a III-V compound chip can travel further than with a silicon chip.
These advantages make III-V compounds suitable for three major applications:
- Radio frequency: they are in the power amplifier that strengthens a smartphone signal so that it reaches another distant device, such as a base station.
- 3D sensing: face ID technology uses III-V compounds for the laser source because they emit light.
- Optoelectronics: the fibres that relay data over long distances generally have a laser-based transceiver at one end sending light signals to a photodetector at the other end – and both can incorporate III-V compound semiconductors. New smart devices will further boost everyday data consumption.
We see the III-V compound semiconductor foundry market for these three applications rising from USD1.8 billion in 2020 to USD3.4 billion in 2023. Emerging technology such as smart cars and satellite communications will deliver explosive growth: from almost nothing last year they could comprise 10 per cent of the market by 2023.
Most cars currently have little III-V compound content except LED lighting. Technology in future smart cars could connect them to other vehicles, pedestrians, traffic lights and other objects. In particular, LiDAR – light detection and ranging – will be essential for autonomous driving, allowing vehicles to create 3D images of objects hundreds of metres away.
Typical autonomous driving LiDAR uses up to 128 channels for light emitting and detecting, each needing a laser diode and a photodetector that could be made of III-V materials.
Meanwhile, Wi-Fi 6 routers – ideal for internet-of-things applications, linking lighting, smart switches, door locks, thermostats and cameras – will need connectivity components that increasingly include III-V compound chips.
And we believe III-V compound radio-frequency components will play a key role in improving satellite communication, which is currently slow and unstable with high latency. Low Earth Orbit satellites will provide communication to rural areas, but will require the higher power and high frequency available using III-V compound chips.
First published 7th July 2021.
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The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s) whose name(s) appear(s) as author of an individual section or sections of the report and any analyst(s) named as the covering analyst(s) of a subsidiary company in a sum-of-the-parts valuation certifies(y) that the opinion(s) on the subject security(ies) or issuer(s), any views or forecasts expressed in the section(s) of which such individual(s) is(are) named as author(s), and any other views or forecasts expressed herein, including any views expressed on the back page of the research report, accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Davy Hsu
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