Compound Semi Substrate Market Set to Surge with 17% CAGR by 2029

The compound semiconductor substrate market is expected to reach $3.3 billion in 2029, with a 17% CAGR between 2023 and 2029, according to a report by Yole Developpement.

Substrate players in the market are consistently developing new strategies to diversify their product portfolios and enhance their market presence.

Compound semiconductor technologies, such as SiC, GaN, InP, and GaAs, have emerged as transformative influences across various industries.

SiC has established dominance in the automotive sector, particularly in the domain of 800V EVs, driving a billion-dollar market. Meanwhile, GaN power electronics is expanding its presence in both the consumer and automotive fields.

Yole predicts a billion-unit opportunity in smartphone OVP (Over Voltage Protection). RF GaAs aligns itself with 5G and automotive connectivity, while RF GaN establishes its presence in defense, telecommunications, and space industries, targeting high-power applications.

In the realm of photonics, InP and GaAs are leading the way. InP is experiencing a resurgence fueled by AI applications, while GaAs photonics sees more modest growth influenced by various market dynamics. The adoption of MicroLEDs is gradual, despite their potential.

“The compound semiconductor industry is on the cusp of transitioning to larger diameter substrates. In the Photonics sector,” says Yole’s Ali Jaffal, “AI is driving the demand for high-data-rate lasers, which could accelerate the transition to 6” InP substrates.

On the other hand, GaAs is exploring 8” manufacturing for microLED, which is competing with OLED. It faces yield and efficiency challenges, questioning its success, but is gaining momentum with substantial investments.”

Suppliers of GaAs and InP substrates, including Freiberger, Sumitomo Electric, and AXT, play a central role in the transition to larger diameter substrates. Photonics is part of this story, and the Power and RF markets further complement this narrative.

Wolfspeed is leading the change by supplying SiC substrates for power electronics applications. It has recently transitioned to larger 8” wafer fabs and is expanding its material capacity in line with its strategic vision.

Coherent, another leading player, focuses on photonic devices and dominates the SiC substrate market for both power and RF applications. It has made a number of strategic alliances, such as with SEDI in RF GaN, to reinforce its position and has started supplying power SiC devices. Following these actions, it covers the whole value chain from substrates to advanced devices.

The landscape of the compound semiconductor market is continuously evolving, with multiple innovations on many fronts and strategic partnerships.

“Compound semiconductor technologies are advancing across sectors, notably in the booming SiC industry,” says Yole’s Taha Ayari. “While 6” wafers are still standard, Wolfspeed’s $1.2 billion investment in MHV fab is pioneering the transition to 8" wafer size. Other efforts focus on improving SiC wafer yield and supply, with innovations like engineered substrates from Soitec and Sumitomo Mining. Power GaN sees a shift to 8-inch GaN-on-Si, driven by expansion at Innoscience, STMicroelectronics, and Infineon Technologies.”

“RF GaN-on-Si is benefiting from synergies with the relatively more mature Power GaN to enter the telecom market and compete with established RF GaN-on-SiC technology,” says Yole’s Aymen Ghorbel. Additionally, major changes in the RF GaN ecosystem, such as Wolfspeed RF business being acquired by Macom, could impact the RF GaN industry.”