Indium Phosphide Wafer Market Size, Share & Trends Analysis Report By Diameter (8 Mm Or 2", 2 Mm Or 3", 100 Mm Or 4” and Above), By End-User Industry (Consumer Electronics, Telecommunications, Medical, Other end-user industry applications) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global indium phosphide wafer market size was valued at USD 161.50 million in 2023. It is estimated to reach USD 515.72 million by 2032, growing at a CAGR of 13.77% during the forecast period (2024–2032). The Indium Phosphide Wafer market has grown in recent years due to a variety of factors. The surging use of optoelectronic devices and their advancements drive the global indium phosphide wafer market. Additionally, the increasing prevalence of electronic gadgets such as smartphones and tablets is contributing to the expansion of the market, as these devices require Indium phosphate (InP) for their functionality. Furthermore, the surging construction of data centers worldwide is estimated to create opportunities for the market's growth.

An Indium Phosphide (InP) Wafer is a semiconductor material made up of indium and phosphorus atoms that is widely used in the manufacture of high-speed electronic and optoelectronic components. InP wafers have distinctive properties such as high electron mobility, high breakdown voltage, and the ability to operate at high frequencies, making them ideal for use in telecommunications, fiber optic communications, and photovoltaic cells.

InP wafers are typically made with techniques such as metal-organic chemical vapor deposition (MOCVD) or molecular beam epitaxy (MBE), which allow for precise control over the material's composition and structure. These wafers are then processed and fabricated into a variety of electronic components, including high-electron-mobility transistors (HEMTs), laser diodes, photodetectors, and ICs. InP-based devices' high performance and reliability have resulted in their widespread use in cutting-edge technologies such as 5G networks, satellite communications, and high-speed Internet infrastructure.

Highlights

The 100 mm or 4" and above dominates the diameter segment.
Telecommunication dominates the end-user segment.
Asia Pacific is the highest shareholder in the global market.

Market Dynamics

Global indium phosphide wafer market drivers

Increasing use of optoelectronic devices

Electronic components called optoelectronic devices detect and regulate light and convert electrical information into infrared or visible energy or the opposite. Recent advancements in the field of optoelectronics, like plasmonic nanostructures, optically active quantum dots, microscopic light bulbs, perovskite transistors, laser-powered 3D display technology, low-cost 3D imaging, and Laser Li-Fi, are anticipated to bring about a quantum shift in the dynamic applicability areas of optoelectronic apparatus.

In order to satisfy the diverse needs of their clientele, companies are diversifying their range of products. For instance, in April 2022, the Everlight line of optoelectronic devices now includes IR LEDs, photodiodes, and phototransistors, which are offered by distributor Transfer Multisort Elektronik (TME). New IR LEDs are among the portfolio's additions. They may produce up to 150mW of output power. The LEDs support a wide range of varied input voltages up to 4.0V, and there are possibilities for emission angles between 20 and 160 degrees. These factors drive the market growth.

Increasing adoption of smartphones and tablets

The skyrocketing adoption of smartphones and tablets is a primary driver for the Indium Phosphide (InP) wafer market. In 2023, global smartphone users are expected to reach 4.96 billion, representing a staggering 61.2% of the world's population, with projections indicating 5.44 billion users by 2025. This growth can be ascribed to affordable smartphone options in emerging markets such as China and India and the global development of Internet connectivity.

Additionally, the rise in smartphone shipments is expected to lead to a corresponding increase in mobile phone demand for indium phosphide (InP) semiconductors. Smartphones require more InP wafers because they need multiple frequency bands to support 3G and 4G networks. The increasing demand for tablets also contributes to market expansion. Numerous local market participants, such as Micromax in India and Xiaomi in China, have begun introducing tablets in their respective countries, and the number of such vendors is expected to increase during the forecast period.

Global indium phosphide wafer market restraint

Competition from other substitutes

The semiconductor silicon wafer is the foundation of the electronics industry and the main component of many microelectronic devices. These items are being used in various devices due to recent developments in the technological landscape, electronic mobility, and digitalization. Due to the demand for smaller devices, the need for more functionality from a single device has also dramatically increased, driving up the price of the silicon wafer.

Furthermore, compared to silicon, gallium nitride (GaN) is a wide-bandgap semiconductor material with superior characteristics and performance, including high efficiency, quick switching, excellent thermal management, and a small footprint and lightweight. Consequently, these factors are expected to restrain the market growth.

Global indium phosphide wafer market opportunities

Growing construction of data center

The widespread use of cloud services has raised the demand for data centers in recent years. With the increase in the data center, the demand for the InP wafers may be increased. Some major companies in the data center market also plan on investing heavily in hyperscale data centers. In June 2021, Equinix announced plans to build 32 hyperscale data centers in some of the world's major markets. With a total capacity of 600 megawatts and more than USD 6.9 billion in investment, the company aims to tap new markets and gain a better position in the growing landscape of hyper-scale data centers.

Furthermore, the government bodies' steps to incentivize hyper-scale data centers are also driving their construction of data centers and creating opportunities for local and internal InP wafer vendors to provide products according to the customer's requirements. For instance, in April 2021, the Ministry of Electronics and Information Technology (MeitY) India announced its plans to develop a scheme to incentivize investments in hyperscale data centers and increase the current capacity by over 10-fold in a short period.

Regional Analysis

Asia-pacific dominates the global market

Based on region, the global market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

Asia-Pacific is estimated to be the most significant global indium phosphide wafer market shareholder during the forecast period. The Asia-Pacific region commands a significant share of semiconductor foundries globally, with major companies like TSMC, Samsung Electronics, etc. South Korea, Taiwan, Japan, and China have a significant market share in the region. The significant research and partnership growth further bolsters the market growth rate. For instance, LioniX International (LXI) and the Institute of Microelectronics Chinese Academy of Science (IMECAS) have agreed to extend their Photonic Integrated Circuit (PIC) platform partnership by actively enhancing the functionality and offering both platforms.

Furthermore, the growing 5G investments are analyzed to expedite the demand for the market during the forecast period. For instance, in March 2020, DOCOMO began offering limited 5G commercial services in Japan's main cities. The corporation intends to spend over USD 7 billion by 2025 to extend its network across 97% of the nation's inhabited areas. It plans to set up 5,001 base stations in the 28GHz band and 8,001 base stations in the 3.7GHz and 4.5GHz frequency bands. Therefore, the factors above propel the regional market growth.

Europe is estimated to grow at a significant pace over the forecast period. The surging demand for semiconductors in advanced automation, artificial intelligence, and Internet of Things (IoT) applications is expected to exprdite the market's growth during the forecast period. Since volumetric implementations of semiconductors drive the demand for indium phosphide wafers, the telecommunication and medical sectors may present more significant potential than other industries. In 2013, the European Commission established a public-private partnership on 5G technology, known as the 5G-PPP, to expedite research and innovation in this field. The European Commission allocated a sum of over EUR 700 million in public funding to facilitate this endeavor as part of the Horizon 2020 Program.

Furthermore, according to a 5G and future telecommunications plan unveiled by government ministers, France plans to invest about EUR 1.7 billion in its 5G market by 2025 via public and private investments. The objective is to hasten the development of 5G, especially new use cases, to encourage acceptance and strengthen the technology's impact on other industries. Consequently, all these factors are estimated to boost the market growth.

Segmental Analysis

The global indium phosphide wafer market is segmented by diameter and end-user industry.

Based on diameter, the global indium phosphide wafer market is bifurcated into 50.8 mm or 2", 76.2 mm or 3", and 100 mm or 4" and above.

The 100 mm or 4" and above segment owns the highest market share over the forecast period. Recent progress in high-speed optical communication systems has increased the fabrication scale of devices, such as HBTs (Heterojunction Bipolar Transistors) and OEIC (Optoelectronic Integrated Circuits). These devices require semi-insulating Fe-doped InP substrates that are larger in diameter (4") and higher in quality to enhance device performance and reduce costs. Currently, 4-inch InP single crystal substrate and processing technology have started to realize industrialization. In the coming years, a 4" single crystal InP substrate is expected to replace the 2" substrate and become the main product in the market. Furthermore, Semiconductor Wafer Inc. is one of the major players in the market that provides MBE (Molecular-beam Epitaxy)/ MOCVD (Metal Organic Chemical Vapor Deposition) epitaxial growth of custom structure on InP substrate for microelectronics, optoelectronics, and RF Microwave applications, in diameters ranging up to 4".

Based on end-user industry, the global indium phosphide wafer market is segmented into consumer electronics, telecommunications, medical, and other end-user industry applications. 

The telecommunications segment dominates the global market during the forecast period. InP is commonly employed for telecommunications applications. An InP can produce highly efficient lasers, sensitive photodetectors, and modulators. InP is also used to generate laser signals and convert and identify those signals back to their electronic form. Some of the applications of InP for telecom or datacom included long-haul optical fiber connections over far distances, company networks, data centers, wireless connections for 3G, 5G, and LTE base stations, and satellite communication. InP-based telecommunication and data-communication systems offer higher energy efficiencies and lower environmental impact than incumbent systems, such as copper. The capacity to cope with the ongoing surge in storage demands and expansion of data transmission is becoming crucial. Communication networks worldwide operate through InP lasers connecting switches and routers within and between data centers and the Internet.

Recent Developments

• May 2024- EMCORE Corporation has completed a transaction to sell its Chips business and indium phosphide (InP) wafer fabrication operations. The sale was made to HieFo Corporation for a total purchase price of $2.92 million. 
• March 2024- Coherent Corp., a prominent supplier of compound semiconductors and advanced optical networking solutions, has recently achieved a significant milestone by successfully setting up the world's first 6-inch indium phosphide (InP) wafer production capability. This achievement was made possible at Coherent Corp.'s wafer fabrication facilities located in Sherman, Texas, and Järfälla, Sweden.