In a notable progression within the semiconductor industry this October, ROHM Semiconductor, a leading power device manufacturer in Japan, has announced a strategic move to further enhance its collaboration with TSMC (Taiwan Semiconductor Manufacturing Company) in the domain of Gallium Nitride (GaN) power semiconductorsThis collaboration entails that all of ROHM's GaN products will now be outsourced for production to TSMC, signifying a significant shift in their operational strategy.

Historically, ROHM depended primarily on its internal factories for manufacturing these devicesHowever, in recent years, the company has begun to delegate some of its products to TSMC for production—a detail that they had not made public until now

The latest development suggests that ROHM is transitioning towards a comprehensive partnership with TSMC, particularly focusing on the production of versatile 650V-rated products to cater to the surging demand within the marketThis strategy will not only help in scaling up their business but also enables them to leverage external resources effectively.

Industry analysts have pointed out that this move could potentially lower production costs for ROHM, as GaN materials, despite their superior performance characteristics, have been traditionally costlyShould this collaboration prove successful, it could instigate a significant reshaping of the market landscape, positioning the partnership between TSMC and ROHM as a pivotal milestone in the GaN industry, thereby accelerating advancements in technology and commercialization.

Additionally, this strategic move might indicate a shift in ROHM’s operational model from an Integrated Device Manufacturer (IDM) to a Fabless approach, highlighting the evolving dynamics within the semiconductor industry.

The Remarkable Properties and Wide Applications of GaN

The research and development of wide bandgap materials like GaN have evolved significantly over the years

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Unlike traditional silicon-based devices, wide bandgap semiconductors can achieve drastic performance enhancements, allowing them to operate under extreme temperatures and withstand higher power densities, voltages, and frequenciesThese advantages have made them highly sought after in the next generation of electronic systemsAmong various wide bandgap materials, GaN stands out, showcasing immense potential in both switching applications and radio-frequency power domains.

GaN is a direct bandgap semiconductor that has been primarily utilized in light-emitting diodes (LEDs) since its introduction in 1990. Its wurtzite crystal structure contributes to its high hardness and durabilityWith a bandgap of 3.4 eV and typical electron mobility rates ranging from several hundred to a few thousand cm²/(V·s), GaN can be employed in high-power, high-speed optoelectronic devices

Notably, GaN lasers can produce ultraviolet laser light (405 nm) without the aid of nonlinear semiconductor-pumped solid-state lasersThe significant contributions made by professors Isamu Akasaki from Nagoya University, Hiroshi Amano from Nagoya University, and Shuji Nakamura from the University of California, Santa Barbara, into GaN and solid-state lighting led to their receiving the Nobel Prize in Physics in 2014.

The emergence of the first microwave-capable GaN high-electron-mobility transistors (HEMTs) in 1993 marked a significant turning point, catapulting the third-generation semiconductors into microwave-RF development and application sectorsThe unique properties of GaN RF devices—high power handling, efficiency, linearity, and voltage operation—have rendered them ideal alternatives to traditional silicon (Si) and gallium arsenide (GaAs) devices, playing vital roles in military equipment, aerospace, and fifth-generation mobile communications (5G) technologies.

In fact, early strategic industrial development plans across major nations exhibited a clear inclination towards defense military applications

Currently, GaN-based HEMTs have achieved a remarkable leap in microwave RF technology compared to their predecessorsProminent global companies such as Cree (now Wolfspeed), Qorvo, MACOM, and Raytheon from the United States, along with Infineon from Germany, GaN Systems from Canada, Mitsubishi Electric from Japan, and NXP from the Netherlands, have laid substantial groundwork in GaN-based semiconductor RF devices, advancing manufacturing maturity in this domain.

Raytheon and Qorvo have developed GaN products meeting the highest manufacturing maturity assessment levels established by the Department of DefenseThe manufacturing processes for GaN RF devices have met optimal performance, cost, and capacity objectives, capable of supporting high-speed productionIn 2014, Raytheon announced the use of GaN modules in the advanced radar systems of the “Patriot” air defense system, while in 2021, it authorized GlobalFoundries to develop integrated circuits capable of processing 5G and 6G millimeter-wave signals, elevating GaN RF production capabilities to a new scale and enhancing cost efficiency.

Moreover, GaN showcases impressive electron mobility and saturation drift velocity, which contribute to its exceptional performance in RF and microwave electronic devices, especially in RF amplifiers for 5G communication systems

The requirements for RF devices in 5G base stations are substantial; traditional laterally diffused metal oxide semiconductor (LDMOS) cannot accommodate the high frequencies associated with 5G, while GaN technology extends frequency ranges beyond 40 GHz, rendering it ideal for 5G applicationsFurthermore, GaN's soft-compression characteristics allow for easier predistortion and linearization, achieving higher efficiencies compared to conventional devicesGaN's power density can be around four times that of LDMOS devices, with packaging sizes reduced to one-seventh or one-fourth of that of LDMOS, making GaN RF devices suitable for 5G infrastructure.

Developments in the GaN Supply Chain and Rapid Growth of Production Capacity

From the early 1980s, the third-generation semiconductors began gaining recognition, particularly in compound lighting applications, and have grown into a trillion-dollar market globally

Although the COVID-19 pandemic impacted the development of third-generation semiconductors in the past three years, the market continues to grow at an approximate compound annual growth rate of 10%. Recent innovations, such as deep ultraviolet LEDs, Mini-LEDs, and Micro-LEDs, have opened new application avenues within the optoelectronic sector, promising further expansion of market size.

In recent years, breakthroughs in GaN technology have been significantFor instance, German semiconductor giant Infineon successfully developed 300mm GaN power semiconductor wafer technology, significantly lowering production costs and paving the way for widespread commercial adoption of GaN technology.

As GaN technology matures and its application fields expand, the GaN industry chain is continually evolving

Companies are working diligently to enhance their supply chain from substrates, epitaxy, to power devices, RF devices, and optoelectronic devices.

In the perspective of Innovasea's prospectus, the GaN industry chain is segmented into upstream suppliers including equipment and raw material suppliers, with raw materials primarily concerning GaN substrates, categorized into sapphire, silicon, silicon carbide, and self-supported GaN substratesMidstream manufacturers of GaN power semiconductors handle design, manufacturing, packaging, and testing, incorporating both IDM and Fabless approachesDownstream, GaN power semiconductors are utilized in a diverse range of application scenarios, including consumer electronics, electric vehicles, data centers, photovoltaics, and energy storage.

Currently, numerous Chinese enterprises are involved in different aspects of the GaN supply chain

In the RF domain, companies like Weiwei Technology, Keheng Crystal, and GaN Aluminum Optoelectronics engage with GaN substratesAdditional companies such as Jingzhan Semiconductor, Juneng Crystal Source, and Innovasea focus on epitaxial wafersMeanwhile, companies such as Suzhou Nengxun, Sichuan Yifeng Electronics, and the Suzhou Institute of Nano-tech and Nano-bionics of the Chinese Academy of Sciences are making efforts to span multiple segments, aiming to establish a complete industry chain.

IDM or Fabless?

Currently, in the silicon-based semiconductor realm, two prominent operational modes are established: Fabless and IDMThe IDM model is characterized by vertical integration, where a company designs the chips and manages their production, packaging, and testing before selling the finished products

In contrast, the Fabless model focuses primarily on design; companies are responsible for integrated circuit design, testing, and sales, outsourcing wafer manufacturing, packaging, and testing to specialized foundry partners.

Within the GaN industry, various companies exemplifying the IDM model include Sanan Optoelectronics, Innovasea, Silan Microelectronics, Suzhou Nengxun, Jiangsu Nenghua, and Dalian Chip Crown TechnologyIn contrast, Fabless firms primarily comprise Huawei's HiSilicon and Anpec, while Haiwei Huaxin and Sanan Integration offer GaN device foundry services.

Many previously silicon-focused foundries have begun recognizing the vast opportunities within the GaN market and started positioning themselves in advance

For instance, TSMC, a leader in foundry services, has shown keen interest in the GaN industry, taking it on as a priority even over the rising prominence of silicon carbide (SiC). As early as 2020, TSMC announced a partnership with STMicroelectronics to expedite the development of GaN processes, integrating both discrete and integrated GaN components into the market.

As numerous GaN manufacturers begin collaborating with TSMC, much of the foundry business is currently dominated by GaN-on-Si technologyEven Samsung, a company that historically viewed TSMC as a competitor, is investing in the GaN domainTo address its wafer fabrication weaknesses, Samsung is nurturing new semiconductor startups within South Korea, including the establishment of IVworks, the nation's first foundry focused on 8-inch GaN-on-Si and 4-inch GaN-on-SiC epitaxial wafers funded with 8 billion Korean won.

Additionally, companies like UMC, Vanguard International Semiconductor Corporation, Win Semiconductors, Sanan Integration, and X-Fab have begun engaging in GaN foundry operations.

The IDM model emphasizes complete lifecycle control and vertical integration, making it suitable for technology and capital-intensive industries; meanwhile, the Fabless model concentrates on design and technical innovation, fitting smaller enterprises with limited resources

In practical application, companies should determine their operational model based on their technological capabilities, financial resources, and market positioningAs the semiconductor industry evolves and market demands shift, businesses should continually assess and refine their operational models to adapt to market changes.

To enhance competitiveness and ensure stable supply chains, GaN power semiconductor companies often align their resource and technological advantages to build a comprehensive system covering GaN power semiconductor design and productionHence, leading IDM power semiconductor companies have acquired various players in the GaN market to reinforce their positionsEarlier entrants into the IDM landscape can gain a competitive edge and long-term advantages.

The prospects for the GaN market are promising, leading to the emergence of numerous companies