compound semiconductors

Every time a transistor switches, it generates heat. Pack enough transistors together and you hit a wall: the chip melts before it computes. This thermal ceiling is why Splunk notes that "as physical and economic limitations are reached, the pace predicted by Moore's Law is slowing."Light solves this problem. Photons carry information without generating heat. Semiconductor Engineering details how heat dissipation and bandwidth bottlenecks make optical solutions the only viable path forward.But photonics introduces a different problem. Silicon has an indirect bandgap, which means it cannot emit light efficiently enough to produce lasers. Building photonic systems requires III-V compound semiconductors like indium phosphide (InP) and gallium arsenide (GaAs). These materials come with manufacturing constraints: InP substrates remain limited to 150mm, and GaAs wafers top out at 150mm, while silicon runs at standard industrial diameters of 200mm or 300mm. You cannot build a complete photonic system on silicon alone, so heterogeneous integration becomes mandatory. The result is that chief technology officers (CTOs) now manage two incompatible material systems, doubling technical complexity and supply chain risk.How Different Regions Are RespondingUnited States Intel has shipped 8 million photonic chips with 32 million integrated lasers. But the move that matters most is NVIDIA adopting TSMC-Broadcom co-packaged optics in its 2025 GB300 chips. When the dominant AI hardware company makes an architectural choice, competitors either follow or lose relevance.EuropeEuropean companies are solving their scale problem through consolidation. The market grew from €124.6 billion (2022) to a projected €175 billion (2027). Between January and June 2025, EPIC recorded 125 transactions worldwide, with European companies leading 50 of them. ZEISS established a new strategic business unit with €200 million in annual revenue across 6 countries. The strategy is to build on existing strengths in materials science and precision manufacturing.ChinaChina is building a parallel system designed for self-sufficiency. CHIPX produces 6-inch lithium niobate wafers with 110 GHz bandwidth, built despite U.S. export controls. This aligns with national policy: Xi Jinping chaired a February 2023 Politburo session focused on "basic research for self-reliance in science and technology." Optics Valley now hosts 5,000+ high-tech companies, targeting self-sufficiency within 4 years.Asia-PacificJapan, Taiwan, and India are combining strengths rather than building everything domestically. Japan committed $25.7 billion to semiconductor development between 2022 and 2025, and TSMC opened its first overseas R D facility there. India offers up to 50% capital support for photonics fabs and contributes 20% of global chip designers.The Next DecadeMarket projections vary wildly because the category spans everything from mature LED lightbulbs to emerging quantum computing systems. Mordor Intelligence projects growth from $1.75 trillion in 2025 to $2.39 trillion by 2030, while MarketsandMarkets forecasts $1.09 trillion to $1.48 trillion. This uncertainty matters because executives must commit billions in capital to technologies with decade-long development cycles.2025-2026The near-term focus is power efficiency. Traditional pluggable optical modules create 22 decibels of signal loss, requiring 30W per port to compensate. Co-packaged optics cuts power consumption by 3.5x. Ayar Labs' TeraPHY will deliver 8 Tb/s using UCIe standard packaging. In automotive, entry-level LiDAR drops to $200.2027-2032Quantum photonics moves from laboratory to commercial deployment. The market grows from $850 million in 2025 to $3.78 billion by 2030, with PsiQuantum partnering with GlobalFoundries to develop million-qubit systems by 2027. Unlike superconducting qubits requiring near-absolute-zero cooling, photonic qubits function at room temperature.2032-2035+The quantum market reaches $17.4 billion by 2035. Architectures combining analog, digital, quantum, photonic, and neuromorphic computing will require new transducer technologies, which means CTOs can no longer specialize in a single computing paradigm.Energy demand accelerates all of this. Data center electricity consumption will reach 945 TWh by 2030, and photonics can reduce that by over 50% by 2035.What This Means for LeadershipEach executive role faces a distinct version of the same problem: making decisions now about technologies that won't mature for years.Chief Executive OfficersCEOs face timing decisions with no clear answer. Adopt co-packaged optics in 2025-2026 and risk immature technology. Wait until 2028 and watch competitors capture market share. Japan's $25.7 billion commitment means smaller firms now compete against sovereign capital.Chief Technology OfficersCTOs must hold technical depth across incompatible domains. Silicon photonics, III-V materials, and thin-film lithium niobate each require different knowledge bases and supply chains. Most engineers specialize in one; photonics CTOs need working knowledge of all three while balancing 15-year development cycles against 2-year product roadmaps.Chief Financial OfficersCFOs must model returns on infrastructure that doesn't exist yet. The 50% power reduction from photonics changes total cost of ownership calculations, but boards need convincing before savings materialize.Corporate Boards Boards face a knowledge gap that affects governance quality. Most members don't understand why quantum-neuromorphic-photonic convergence matters at the business level. Leadership transitions signal consolidation is underway: IPG Photonics replaced its CEO in June 2024, Lumentum in February 2025.The Leadership ProblemFinding people who can run photonics companies is difficult because the field barely existed a decade ago. The technical knowledge lives in research labs. The business experience lives in traditional semiconductors. The people who combine both are rare.The broader market reflects this scarcity: over 330 R D vacancies appeared in the first half of 2025 alone. When technical roles are that hard to fill, executive searches require a global reach that most firms lack. In our searches, we regularly build single leadership teams by recruiting across China, Romania, Russia, the U.S., Germany, France, the UK, and India.The companies that figure out leadership first will have an advantage that compounds over years.About the AuthorsJan-Bart Smits is a Managing Partner at Stanton Chase Amsterdam. He serves as Global Subsector Leader for the Semiconductor industry and holds an M.Sc. in Astrophysics from Leiden University. David Harap is a Managing Director at Stanton Chase Austin with over 25 years of executive search experience. A Cornell University graduate and Father Kelly Scholar, he lectures at the University of Texas at Austin.

Leading experts gathered at the Power and Opto Semiconductor Forum at SEMICON Taiwan 2022 last year to discuss the growing importance of the devices in semiconductor innovation as the chip industry works to develop a robust compound semiconductor ecosystem.

Atomic Layer Deposition (ALD) players are poised to seize a new growth opportunity after the chip shortage pushed manufacturers to announce fab capacity expansions worldwide. Driven by the wafer production volume increase, ALD solutions are now expected to grow and enter the MtM devices market.

The ESG MarketElectronic Gases represents the largest percentage of the spend on chemicals and materials by semiconductor producers. Taken altogether, the spend on Electronic Gases was almost $6 billion worldwide in 2018. Recent critical shortages of key gases have impacted the industry tremendously and, in some cases, has also limited output. The Electronic Specialty Gas (ESG) market, while a small segment of the global gas market, is one of the most complex and least understood market segments of the electronic chemicals and materials landscape. Linx Consulting estimates that the ESG market totaled nearly $3.4 billion in 2018, up from roughly $3.1 billion in 2017 with a growth rate of 10 percent last year. Growth was driven by rising demand and the increasing use of higher-value products in applications such as etch and specialized deposition. ESGs are used in the manufacture of electronic devices that are subsequently assembled in systems and in a variety of processes such as film deposition, film etching, substrate doping and chamber cleaning. The devices – semiconductors, LEDs, and displays – are processed on larger substrates, and then separated before assembly.Key differentiators for ESGs are not only the technical complexity of the gases and mixtures supplied, but the purity and consistency demands placed on the gas supply. Product purity and consistency, often at the limits of analytical capability, must go hand in hand with rigorous application of statistical process control in manufacturing and absolute delivery reliability. ESGs include fluorocarbons, hydrocarbons, deposition precursors, dopants, corrosives (halides/hydrates) and rare gas mixtures.The key end-use markets for ESGs include semiconductor wafer fabrication, flat panel display (FPD) manufacture, compound semiconductors / LEDs production and Photovoltaics cell manufacture, as illustrated below in Figure 1. Figure 1 - ESG Market by End-Use Applications Source: Linx Consulting The semiconductor industry is the largest user of ESGs and has the most diverse ESG requirements in terms of products, package sizes and purity requirements. The semiconductor industry uses all the different specialty gases produced. Purities are typically 4N and above and the packages can range from small cylinders to tonner/Y packages to tube trailers. The ESG market is global, with key demand centers in China, Europe, Japan, Korea, Southeast Asia, Taiwan and the United States. The Flat Panel Display (FPD) community is the second largest user group for ESGs. However, the breadth of ESG products used in FPD fabs is much more limited than in the semiconductor industry. Key product applications include silicon sources, dopants, oxidation and nitridation sources, chamber cleans, and etchants. ESG use has grown with the development of the FPD industry across both TFT-LCD segment and AMOLED segment, with many large end users in Korea, China, Taiwan, and Japan. Korea and China boast large ESG supply infrastructures geared towards serving the FPD industry. Early on, these countries targeted the development of the FPD industry and the associated value chain, so there has been large-scale development of required ESG products such as NF3 and silicon precursors. When we review the markets in aggregate, coupled with the geographic intensity of the electronics industry in Asia, it is unsurprising that a vast majority of the ESG market would be in Asia, as illustrated in Figure 2, below.Figure 2 - ESG Market by Key RegionSource: Linx Consulting Key ApplicationsThe applications for ESGs can be readily tied to major thin film fab processes that are commonly used in the microelectronics industry. The processes include dielectric and metal etch, dielectric deposition, metal deposition such as titanium or tungsten, deposition of non-silicon materials such as hard masks etc., dopants for thermal diffusion methods and ion implantation, reactor chamber cleaning; as well as some other specialty applications. This is illustrated in Figure 3 below. Figure 3 - Applications for ESGsSource: Linx Consulting Clearly there is a close tie-in for ESGs into thin film deposition (CVD and chamber cleaning) and etch processing. In the future, the industry will increase its use of ESGs with novel deposition and etch processes. New applications may include lower temperature deposition, high deposition rate processes, flowable CVD films for high aspect ratio structures, and high selectivity deep etching with greater uniformity. All these processes improve device performance and will rely on ESGs and rare gases as enablers. Outlook for ESGsOverall, we believe that the ESG market will grow at a compound rate of about 6 percent over the next five years. Currently the largest six suppliers – Versum Materials, SK Materials, MTG/TNS, Air Liquide, Linde/Praxair, and KDK – control about half of the overall market, with about 50 suppliers accounting for the other half of the market. We anticipate that as the industry continues to grow, we will continue to see changes in the supplier base with both continuing consolidation and new regional suppliers emerging as unique technologies and value-added capabilities enter the market.For More InformationThis article is based on insights and analysis from Linx Consulting’s Electronic Specialty Gas report. The annual report is considered the leading industry source for comprehensive information about demand for specialty gases used in the electronics industry. We track more than 60 different ESG products used across the global semiconductor, flat panel display, solar and compound semiconductor industries.For more information, please contact [email protected], or Mike Corbett at +1 973 698 2331, Mark Thirsk at +617 273 8837, or Andy Tuan + 886 952 111222, or visit Linx Consulting.Interested in engaging with the electronic materials supply chain? The Electronic Materials Group (EMG) is a SEMI technology community representing SEMI member companies that provide substrates, polymers, metals, organic and inorganic materials, chemicals, and gases developed for electronics manufacturing. Linx Consulting has been a longtime member and supporter of the SEMI Electronic Materials Group.Mike Corbett is managing partner and Andy Tuan is managing director, Asia, at Linx Consulting.