A US $6.1 billion opportunity through the end of the decade
MOCVD and MBE represent essentially 100% of the epitaxial tools used in the commercial production of the devices covered in this report. “The corresponding combined revenue opportunity for MBE + MOCVD is estimated to be around US $6.1 billion for the 2012-2020 periods,” says Dr Philippe Roussel, Business Unit Manager, Compound Semiconductors at Yole Développement.
LED is by far the single largest application for MOCVD. In 2010 and 2011, the MOCVD market experienced the largest investment cycle in its history driven by a combination of:
- Demand for LED backlit LCD TV
- Subsidies by the Chinese central and local governments
- Anticipation for the general lighting market.
This has put the market into a significant overcapacity situation that could take 12-18 months to absorb. The next investment cycle driven by lighting applications and expected to start in 2013 will be more limited than the previous cycle due to improvements in equipment throughput and yields. Following this cycle, further Cost of Ownership (COO) improvements offered by the next generation of MOCVD reactors should justify the replacement of 2-generation-old reactors installed during the 2010-2011 boom and drive a last small equipment cycle in the second half of the decade. By then, Power GaN will also represent a substantial upside for reactor makers.
Overall MBE use is heavily driven by R&D systems (>50% of the total market) and laser applications (telecom, industrial, medical, research) that are not covered in this Yole Développement’s report. “For the applications covered in this report, the MBE market will be essentially driven by the continuous growth in the cell phone and wireless applications that are making heavy use of GaAs based RF components,” explains Dr Roussel. Emerging applications like smart grid and the trend toward increasing connectivity and “intelligence” incorporated in many consumer products will provide further opportunities. However, alternative technologies (Si CMOS, LDMOS, SoS, HR SOI etc…) represent a potential threat and could capture shares of the GaAs RF market and reduce the opportunity for MBE. In addition, MOCVD is making progress in HEMT manufacturing. HCPV however could provide a small potential upside for MBE makers.
The Yole Développement’s report covers the trends in reduction of Cost of Ownership (COO) of MOCVD & MBE. The major technical & R&D trends are analyzed to highlight possible business impacts. Quantifications are provided for each application market by device, wafer start and equipment.
MOCVD and MBE equipment market are duopolies but many emerging players could change the landscape.
Aixtron and Veeco are leading in MOCVD, together representing 96% of the market in 2011. Production MOCVD are complex systems. Design and optimization require expertise in multiple fields including flow dynamics, thermodynamics, chemistry, mechanical and electrical engineering. Technological barriers to entry are fairly high. More than 15 emerging players have been identified but so far have been struggling to capture any sizeable share of the market. But the pressure is mounting and established MOCVD makers will need to maintain that technology gap to keep emerging competitors at bay. The main battlefield is that of total cost of ownership. Established MOCVD makers all have technology roadmaps to enable COO reduction of 3X - 4X within the next 5 years through a combination of improved yields, throughputs and precursor utilization efficiency.
For MBE, Riber and Veeco are the only 2 players offering large capacity / large throughput MBE production tools for volume manufacturing. Yole Développement’s analysts expect they will maintain this dominant position. However, there are about 10 other MBE manufacturers offering R&D , pilot or smaller scale production systems that also have a strong presence on the general MBE market (DCA, SVT, Eiko…).
The Yole Développement’s report includes a very detailed analysis of all technology trends and key cost drivers.
Overcapacity in MO precursor supply
The Metal Organic precursor market will also be essentially driven by LED applications. But MOCVD reactor technology improvements (yield, consumption, wafer size…) will lower the amount of TMGa and TMIn needed per cm² of epiwafer.
The 2010 metal organic shortage ended mid 2011 thanks to aggressive capacity expansion by leading suppliers. Further capacity expansion plans from established and emerging suppliers could come online within the next 3 years. “If executed as announced, we expect significant oversupply starting from 2012 that could continue through 2016 and beyond. This situation could put pressure on prices,” explains Eric Virey, Senior Analyst, LED, Yole Développement. Further MO synthesis technology improvements could provide opportunity for cost reductions. However, the usually volatile prices of raw Indium and Gallium also have a significant impact on cost.
The Yole Développement’s report provides Metal Organic precursor price, volume & revenue trends.