- 24th October 2006-

iWLAN and WiMAX GaAs device to dominate

Strategy Analytics reports has published new assessments of the WiMAX and WLAN markets, “GaAs Device Demand from WLAN Market: 2005-2010” and “WiMAX Market Forecast: 2005-2010”.

It sees GaAs chip demand from these application sectors will see further good growth; demand will reach the billion dollar point by 2010. This means it will run a close second to handset market.

With WiMAX market remaining in the early part of its commericla cycle, GaAs chips will dominate specific functions in the RF module and demand will grow at a massive 69%. Meanwhile, the WLAN market will continue to ramp and move in due course to higher frequencies and multi-mode and multi-band architectures playing to the advantages of linearity, efficiency and high frequency capabilities from GaAs.

Asif Anwar, Director of the Strategy Analytics GaAs and Compound Semiconductor Technologies service, said: “In terms of GaAs demand, the WiMAX and WLAN markets will emulate the cellular handset market. Without expecting all-GaAs solutions, we do predict that amplifiers and switches will be the primary market for GaAs technology, with silicon technologies dominating the transceiver and baseband markets.”

Chris Taylor, Director of the Strategy Analytics RF & Wireless Components service, adds: “The adoption of MIMO and 802.11n, which require multiple PAs, transceivers and more complex front-end modules, will have a big impact on GaAs demand. While WiMAX will still be in an early stage of rollout in 2010, certification of WiMAX equipment has started and coverage areas have begun to expand beyond basic trials, providing a real target market for GaAs suppliers.”

Finally, Strategy Analytics has commented on the leveraged buyout (LBO) debt load of Freescale's RF business. It suggests that the Freescale LBO could force the company to assume much larger debt than NXP (formerly Philips Semiconductor) or Avago Technologies (formerly part of Agilent), two recent semiconductor LBOs.

The proposed LBO of Freescale puts the future of the company's RF products in doubt. Earnings inadequate to cover interest payments could easily lead to dismantling of Freescale. This could put Freescale's RF and wireless products at particular risk, given that these products benefit from Freescale's complete platform solutions.

Chris Taylor said: "At the proposed price of $40 per share, the Freescale LBO could generate more than $11 bn in debt for the company. Servicing this debt will prove a challenge unless the company can maintain the growth and profitability that it experienced in Q2 '06 without letup."

Asif Anwar, adds: "After this LBO, we are particularly concerned about Freescale's ability to fund the development of new RF products, such as power amplifiers for W-CDMA handsets and platforms for UWB and ZigBee."

Web: www.strategyanalytics.com