Boston, MA - Strategy Analytics estimates that demand for SI GaAs bulk substrates increased by 16 percent year-on-year in 2005, in the report, "Markets for Semi-Insulating GaAs Substrates 2005-2010." With 2006 representing the starting point for trends towards multi-mode and multi-band cellular handsets that use increasingly complex multifunctional front-end modules, there will be significant demand for GaAs substrates over the 2006-2008 timeframe. The total SI GaAs substrate market will grow to $247 million by 2010.

In 2005, SI GaAs bulk substrate merchant supply continued to be concentrated in the hands of Freiberger Compound Materials, Sumitomo Electric Industries and Hitachi Cable. AXT continued its efforts to reestablish itself with users as a primary supplier of GaAs bulk substrates. Overall, Strategy Analytics estimates that AXT increased its market share by 2 percentage points in 2005.

"Despite this healthy growth, GaAs bulk substrate suppliers are facing some tough decisions right now," notes Asif Anwar, Director of Strategy Analytics GaAs and Compound Semiconductor Technologies service. "On the one hand, there is pressure to increase capacity to meet burgeoning demand over the next 18 months. On the other side of the equation is the danger that suppliers will put too much capacity in place now-which increases the risk of commoditizing the market in the future."

"It wouldn't surprise me if smaller volume customers are being turned away right now so that the market leaders can concentrate on the major consumers," observes Stephen Entwistle, Vice President of the Strategic Technologies Practice at Strategy Analytics. "As a result, we may see a significant change in market share in 2006, with AXT best positioned at this time to mop up excess demand."

Further analysis of the SI GaAs bulk substrate market is available to clients of the GaAs and Compound Semiconductor Technologies service in the report, "Markets for Semi-insulating GaAs Substrates 2005-2010," found at www.strategyanalytics.com.