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The global compound semiconductor market size was valued at USD 37.35 billion in 2023. The market is projected to grow from USD 39.68 billion in 2024 to USD 72.89 billion by 2032, exhibiting a CAGR of 7.9% during the forecast period.
Compound semiconductors consist of two or more elements from the same or different groups of the periodic table. They are produced using a variety of deposition methods, including chemical vapor deposition, atomic layer deposition, and others. These semiconductors exhibit distinctive characteristics, such as high temperature and heat resistance, improved frequency response, high sensitivity to magnetism, and faster operation and optoelectronic capabilities.
The market growth is expected to be driven by the constant evolution of 5G networks and growing demand for LEDs in consumer electronics. However, the cost and standard of the compound materials are lower on average than those of basic semiconductors, which may limit their demand. But there is anticipated growth in the demand for these semiconductors within the defense sector due to the need for easier operation of radio frequency devices. This could present opportunities for portfolio expansion and investments. Moreover, the rapid adoption of high-speed and high-frequency communication systems is increasing the market share.
The COVID-19 pandemic had a significant impact on the demand for compound semiconductors, affecting various aspects of supply chains, demand patterns, and industry dynamics. Several semiconductor manufacturers encountered difficulties in acquiring essential raw materials, parts, and machinery, resulting in delays in production and higher operational expenses. However, the industry's ability to adapt and innovate, coupled with ongoing technological advancements and emerging applications, positioned it for recovery and growth in the post-pandemic era.
Advanced Design Capabilities of Generative AI for Compound Semiconductors to Fuel Market Growth
Generative AI could substantially affect the market growth as this technology presents a chance to elevate design capabilities, enhance performance, increase reliability, and stimulate innovation in energy efficiency and sustainability. Gen AI can accelerate the discovery of new materials with desired properties, potentially leading to advancements in GaN, SiC, InP, and other types and technologies. It can simulate and predict material behavior under various conditions, helping optimize their performance.
Furthermore, AI algorithms can optimize the design of devices based on these materials. For instance, generative AI can design more efficient power electronics using various types of compound semiconductors or improve the performance of photonic devices by optimizing their structure and material composition.
Rapid Adoption of LiDAR Technology to Emerge as Key Trend
LiDAR technology is becoming increasingly important in high-resolution applications, such as autonomous vehicles, industrial automation, and environmental monitoring, utilizing laser light sources to measure distances with great accuracy. The crucial components in efficient and high-performance laser diodes used in LiDAR systems include compound semiconductors, such as gallium nitride (GaN) and indium phosphide (InP).
There is a growing demand for advanced semiconductor materials with greater power output, ability to operate at higher temperatures, and improved reliability as LiDAR systems are being utilized in various industries. These semiconductors possess these traits, leading to their increasing adoption in the next generation of LiDAR systems.
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Prospective Application of GaN in Development of 5G Infrastructure to Aid Market Growth
The efficiency, performance, and value of 5G wireless base stations depend significantly on GaN solutions. GaN-on-SiC offers substantial improvements in efficiency and performance compared to Diffused Metal-Oxide-Semiconductor (LDMOS) for 5G base stations. Additionally, GaN-on-SiC brings advantages, such as improved thermal conductivity, increased robustness & reliability, enhanced efficiency at higher frequencies, and comparable performance in a smaller MIMO array.
The deployment of next-generation 5G networks is expected to be significantly influenced by the incorporation of GaN technology in power amplifiers for all transmission cells in the network, including pico, micro, macro, and home routers.
Lack of Standardization in Development of Compound Semiconductors to Hinder Market Expansion
The implementation of standardized manufacturing processes can optimize the compound semiconductor supply chain by ensuring that different components are compatible and decreasing the risk of material uselessness. Without standardization, manufacturers may have to manage numerous supply chains or incur significant expenses to customize products to fulfill specific requirements. Additionally, the lack of standardized manufacturing processes can result in inconsistent production, which also prevents manufacturers from entering the market. These factors, stemming from the lack of standardization, act as a barrier to the compound semiconductor market growth.
Enhanced Features of GaN Boosted Its Adoption
Based on type, the market is segmented into GaN (AIGaN, INGaN), SiC, GaAs, InP, and others.
In terms of share, the GaN segment dominated the market in 2023. The growth of the segment is fueled by the superior performance characteristics of this semiconductor in power electronics, RF/microwave applications, and LED lighting. Moreover, ongoing advancements in manufacturing efficiency and cost-effectiveness will also boost the use of GaN. As these trends continue, GaN is expected to play an increasingly important role in shaping the future of semiconductor technology across multiple industries.
The InP segment is anticipated to register the highest CAGR during the forecast period. InP is highly valued in optoelectronic devices, such as photodetectors, lasers, and Photonic Integrated Circuits (PICs). Photodetectors based on InP offer high sensitivity and low-noise performance, which are essential for optical communication systems. This type of semiconductor is also being explored for emerging technologies, such as quantum computing, where its ability to manipulate individual photons through its optoelectronic properties is advantageous.
Advancements in Compound Semiconductor Technology Boosted Its Use in Development of LEDs
Based on product, the market is segmented into LED, optoelectronics, power electronics, and RF devices.
In terms of share, the LED segment dominated the market in 2023. Advances in semiconductor technology have driven the development of LEDs with improved efficiency, brightness, and color range. LEDs are replacing halogen bulbs and there is a high demand for fluorescent and incandescent lights in both commercial and domestic settings. The automotive industry widely utilizes LEDs due to their superior brightness compared to traditional lighting, and the growing adoption of LED lighting is expected to have positive effects on the compound semiconductor industry’s expansion. In 2021, the International Energy Agency (IEA) reported that approximately 50% of buildings worldwide were using LEDs for illumination.
The power electronics segment is anticipated to register the highest CAGR during the forecast period. This growth is attributed to the compound semiconductor's ability to operate at high temperatures, voltage, and frequency. Additionally, various key players in the market are adopting business strategies. For instance,
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Consumer Electronics Segment Dominates Due to Miniaturization, Form Factor, and Energy Efficiency
Based on industry, the market is categorized into consumer electronics, telecommunications, energy and power, automotive, aerospace and defense, and others.
In terms of share in 2023, the consumer electronics segment dominated the market. Compound semiconductors enable the development of smaller, lighter, and more compact devices. This is crucial in consumer electronics where there is a constant demand for thinner smartphones, lightweight wearables, and sleek laptops. The ability of these semiconductors to handle higher voltages and currents in smaller packages contributes to device miniaturization. Additionally, the efficiency gains achieved with these semiconductors are critical in consumer electronics, where battery life and energy consumption are significant concerns. GaN and SiC components, for instance, enable more efficient power conversion and management, leading to longer battery life in smartphones, tablets, and laptops.
The energy & power segment is expected to record the highest CAGR during the forecast period. Semiconductors are essential in advancing technologies across the energy & power sector, enabling more efficient energy generation, distribution, storage, and utilization. The compound semiconductor materials can be used in devices for photovoltaics, power electronics, EVs, and energy storage systems. Their continued development and application contribute significantly to achieving sustainability goals and improving the overall efficiency of energy systems.
Based on geography, the market is studied across North America, South America, Europe, the Middle East & Africa, and Asia Pacific.
Asia Pacific Compound Semiconductor Market Size, 2023 (USD Billion)
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Asia Pacific held a major compound semiconductor market share in 2023. Low manufacturing costs are responsible for decreasing the overall operational expenses and increasing profits. Anticipated growth of the electronics manufacturing industry in the region is likely to boost the product demand in the coming years. In addition to this, the increasing growth of the 5G infrastructure in nations such as China is fueling the demand of the market. According to the 2023 report from the State Council of the People’s Republic of China, approximately 3.22 million 5G base stations were constructed by the end of October 2023 in China, representing 28.1% of its total mobile base stations.
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Europe is estimated to grow at the highest rate during the forecast period. This market is thriving with significant growth opportunities due to the region's robust manufacturing capabilities, technological advancements, and diverse industries. Italy, France, and Germany are the most prominent automotive manufacturing hubs across the globe. This has resulted in the high demand for advanced semiconductor chips in the region. Moreover, rising automation in semiconductor chip manufacturing to boost the production capacity of microchips will fuel the growth of the market.
North America is expected to register the second-highest growth rate in the market during the forecast period. The region's expertise in advanced technologies and research in semiconductors provides a conducive environment for the market’s development. The swift implementation of 5G networks in the U.S. will boost the need for high-functioning compound semiconductors, such as gallium nitride (GaN) and silicon carbide (SiC), which are essential for the 5G infrastructure.
The Middle East & Africa is expected to register a significant growth rate in the market during the forecast period. The region is investing heavily in infrastructure development, including the establishment of industrial zones, technology parks, and special economic zones. These initiatives aim to attract foreign investments, foster local manufacturing capabilities, and create a conducive environment for compound semiconductor manufacturers to set up their operations.
South America is poised for significant growth during the forecast period. As urbanization and the expansion of energy & power infrastructure in the region progress, the need for ICs that can facilitate electricity generation, such as turbines and solar power plants is increasing.
Market Players to Use Various Business Growth Strategies to Expand Their Reach
Some of the key companies operating in the market are focusing on providing advanced compound semiconductors by offering higher electron mobility, greater design flexibility, and unique properties in their product portfolio. These organizations are entering acquisition deals with other small and local firms to increase their business reach and global footprint. Many other strategies, such as investments, mergers & acquisitions, and partnerships will also contribute to an increased demand for these semiconductors.
The report provides a detailed analysis of the market and focuses on key aspects, such as leading companies, leading types, products, and industries. Besides, it offers insights into the market trends and highlights key industry developments. In addition to the factors mentioned above, the report encompasses several factors that have contributed to the growth of the market in recent years.
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ATTRIBUTE | DETAILS |
Study Period | 2019-2032 |
Base Year | 2023 |
Estimated Year | 2024 |
Forecast Period | 2024-2032 |
Historical Period | 2019-2022 |
Growth Rate | CAGR of 7.9% from 2024 to 2032 |
Unit | Value (USD Billion) |
Segmentation | By Type
By Product
By Industry
By Region
|
According to Fortune Business Insights, the market is projected to reach a valuation of USD 72.89 billion by 2032.
In 2023, the market value stood at USD 37.35 billion.
The market is projected to record a CAGR of 7.9% during the forecast period.
In 2023, the consumer electronics segment led the market.
The prospective application of GaN in the development of 5G infrastructure is aiding the market’s growth.
Texas Instruments Inc., Qorvo, Inc., Skyworks Solutions Inc., Broadcom Inc., Taiwan Semiconductor Manufacturing Company Limited, NXP Semiconductors N.V., Infineon Technologies AG, Renesas Electronics Corporation, Wolfspeed, Inc., and ams-OSRAM AG are the top companies in the global market.
In 2023, Asia Pacific held the largest market share.
Europe is expected to exhibit the highest growth rate during the forecast period.
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