Global Compound Semiconductor Industry Poised for Growth Through 2028
Global, Tuesday, 24 December 2024.
The compound semiconductor market is set for significant growth, driven by demand for energy-efficient electronics and materials like gallium arsenide and gallium nitride.
Market Growth Trajectory
The global compound semiconductor market, currently valued at USD 50.55 billion in 2023, is projected to reach USD 140.38 billion by 2032, growing at a CAGR of 12.1% [6]. This remarkable expansion is being fueled by several key drivers, including electric mobility, 5G deployments, and data center expansions [1]. The industry is witnessing particular momentum in materials such as gallium arsenide (GaAs), gallium nitride (GaN), and silicon carbide (SiC), which are crucial for next-generation power semiconductor applications [1].
Regional Development and Innovation
In Europe, significant developments are underway to strengthen the compound semiconductor ecosystem. The UK’s compound semiconductor industry, which currently generates £9.6 billion in revenues and employs 15,000 people across 200 companies [2], is pushing for the establishment of a ‘super cluster’ to maintain competitiveness. This initiative includes a proposed £305m Semiconductor Challenge Fund, with £150m earmarked for specialized projects including quantum photonic integrated circuits [2]. Meanwhile, Asia Pacific continues to dominate the global market with approximately 35% market share [6].
Technology Advancement and Industry Collaboration
The industry is seeing breakthrough developments in advanced packaging technologies, particularly in 3D architectures. Major companies are working on hybrid bonding techniques that are expected to scale below one micron, enabling more efficient AI chips [4]. This technological progression is crucial as the industry faces increasing demands for energy efficiency, with companies focusing on bringing components closer together to optimize performance [4]. The sector is also witnessing significant advancement in thermal management strategies, which has become a critical consideration in modern chip design [4].
Future Outlook and Challenges
While the growth outlook remains strong, the industry faces several challenges, including economic slowdown, geopolitical instability, and high manufacturing costs [1]. A particular concern is the concentration of critical materials supply, with China controlling 98% of gallium and 60% of germanium production [6]. However, opportunities are emerging in several areas, including LiDAR adoption in automotive applications and data center expansions driven by AI requirements [1]. The industry is also benefiting from power efficiency legislation and the development of next-generation power semiconductor materials [1].