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Editorial: Will There Be Another Shortage of Gallium in the Future?
 
... Gallium (Ga) is obviously one of the critical starting ingredients in the creation of gallium arsenide (GaAs) and gallium nitride (GaN), from which the core compound semiconductor materials for the compound semi (CS) and solid state lighting (SSL) industries are formed. When our good friend Norm Schumaker (the founder...
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SMI Receives Army SBIR Grant to Research Substrate Alternative for Advanced Infrared Sensors
Scott McMahan

August 25, 2006...Structured Materials Industries (SMI) of Piscataway, New Jersey USA, reports receiving an Army Phase I Small Business Innovative Research (SBIR) grant to develop an economical, large area substrate, Mg2Si, for use with an important infrared detector material known as MCT (HgCdTe, mercury cadmium tellurium). While MCT (pronounced “mer-cad-tel” by industry insiders) is utilized in military and civilian applications requiring the highest infrared sensitivities, the material has no readily available, economical large area substrate. SMI will attempt to use MOCVD processes to grow Mg2Si, which has a low lattice mismatch with MCT and can be grown on silicon. The goal of the project is to make a low cost, large area substrate material for MCT to help improve IR sensing capabilities of large area systems, improve quality of MCT deposition. In addition, SMI hopes to lower costs, improve throughput, and increase the percentage of space available on each substrate for deposition. SMI News Release.

In October 2003, Siva Sivananthan, president of EPIR Technologies and director of the Microphysics Laboratory at the University of Illinois at Chicago, and inventor of MCT, warned the House Armed Services Committee that while the United States has the most technologically advanced, night vision, infrared systems, the USA would not have the most advanced systems for long. The reason, he indicated is that the USA is entirely dependent upon foreign sources for substrates upon which the material can be deposited.

"You might be shocked to learn [that] there is not a single supplier of substrates for molecular-beam epitaxy-grown MCT devices in the United States," he told the House Armed Services Committee. "Funding decisions by our government have resulted in increased and now total reliance on foreign suppliers for these high-end infrared materials, making us hostage to the current political and business climates of foreign countries beyond our control. These foreign governments and businesses either are or may become indifferent to or even hostile to the security of the American people."

The end of the cold war brought with it a sharp reduction of government funding for military applications including night vision. In 1988 eight Universities were developing the technology, but as of 2003, only the University of Illinois was researching it. And the only MCT compatible substrates had to come from Japan. (Ref: House Armed Services Committee Manufacturing and Technology News). The military is finally taking Sivananthan’s warning to heart in funding the research at SMI.

SemiSouth Celebrates SiC Manufacturing Facility Opening

August 25, 2006...SemiSouth reported that it officially opened its new silicon carbide semiconductor manufacturing facility in Starkville, Mississippi USA. Additionally the company said it has completed much of the installation of the manufacturing equipment. The company held a Grand Opening at the Starkville site. SemiSouth indicated that II-VI Inc. also opened its SiC wafer processing clean-room within the SemiSouth Facility. Speaking at the opening ceremonies were U.S. Congressman Chip Pickering of Mississippi's Third Congressional District; U.S. Congressman Roger Wicker of Mississippi's First Congressional District, Mississippi State University President Dr. Robert Foglesong, and Dr. Carl Johnson, CEO of II-VI, Inc. The ceremonies were lead by Dr. Jeff Casady, President and CEO of SemiSouth Laboratories, Inc.

"The completion of this facility is a major milestone for both SemiSouth and the state of Mississippi," said Dr. Casady. "This opening marks the debut of the first major semiconductor (microchip) manufacturing facility in the state and provides a solid example of homegrown high tech economic development. This state-of-the-art facility is a proud example of how federal investment in University-based research and development, coupled with state support for high tech job growth, can lead to true high tech economic development in Mississippi. SemiSouth's success derives from the strong support of our federal, state and local government leaders and our solid base of private investors. Today's grand opening ceremony is an opportunity for us to pause and recognize the support of those individuals who have been instrumental in the company's success."

SemiSouth was co-founded five years ago by two Mississippi State University (MSU) professors spearheading SiC research and development activities at Mississippi State University (MSU). Since has received accolades for being such a promising venture including being named one of the top 5 most promising companies at the recent Semiconductor Venture Fair and one of the top 50 emerging technology companies in the USA by Dow Jones / Venture Wire. SemiSouth News Release

Evans Analytical Group Acquires Applied Microanalysis Labs

August 25, 2006...Evans Analytical Group, headquartered in Sunnyvale, California USA, a company that provide microanalytical surface analysis and materials characterization, reported that it has acquired Applied Microanalysis Labs, Inc. (AML). AML uses static and dynamic SIMS (Secondary Ion Mass Spectrometry) techniques to analyze III-V compound semiconductors for the data storage, biomaterial, and semiconductor industries. The company was founded by Dr. Yumin Gao, a recognized expert in compound semiconductor analysis.

“Dr. Gao is a recognized world leader in characterization of III-V semiconductor materials, particularly including GaN-based LED structures,” said EAG Executive Vice President of Operations, Dr. Mike Edgell. “Dr. Gao's proven commitment to excellent customer service, combined with high quality analyses, is an ideal match to the EAG business model, ” Dr. Edgell continued. “The addition of Dr. Gao and his colleagues to the EAG team further strengthens our leadership position in the III-V characterization field, enabling EAG to continue offering improved technical capability and insights to customers in support of both production control and materials development activities. SIMS continues to be a powerful technique for providing high sensitivity quantitative analysis of silicon and compound semiconductor materials. Increased instrument capacity gained through the acquisition of AML further cements EAG's position as the industry leader in SIMS-related analytical services." EAG News Release

DOE to Fund Kyma and Rensselaer Researchers to Improve Green LEDs and GaN Technology

August 23, 2006...Makers of green LEDs are green with envy over the efficiency and performance of state-of-the-art blue and red LEDs, or so it would seem. A team from Kyma Technologies and researchers at Rensselaer Polytechnic Institute have won funding under the US Department of Energy (DOE) Solid State Lighting Core Technologies Program. (Ref: March 22 Coverage). The winning proposal, co-led by professors Christian Wetzel and E. Fred Schubert of Rensselaer Polytechnic Institute is entitled, “High Performance Green LEDs by Homoepitaxial MOPVE.” The company hopes to improve green LED performance and efficiency by making improvements in the quality of native polar and non-polar gallium nitride (GaN). LIGHTimes SecondPage Members can click here to view the extended version of this article.

NEC Boasts Highest Output Power Amplifier for 3G Base Stations

August 23, 2006...NEC Corporation of Tokyo, Japan, reported developing a compact gallium nitride (GaN) power transistor amplifier and GaN power amplifier (PA). The company touts the power amplifier as the world’s highest output power level of 400 Watts. The transistors used for this amplifier are made on a GaN epitaxial wafer, which was developed under the NEDO "High-Power, High-Frequency Gallium Nitride Device Project," and manufactured by Toyoda Gosei Co, Ltd.. The company said it features low distortion characteristics for 3G base stations. The development was the result of research project headed by professor Yasushi Nanishi of Ritsumeikan University. Company News Release

Skyworks Touts PAs That Power Smallest Camera Flip Phone
CompoundSemi News Staff

August 23, 2006...Skyworks Solutions Inc. of Woburn, Massachusetts USA, announced that its power amplifiers will power Cingular's GSM/GPRS Pantech C300 multimedia messaging handset. According to Skyworks, the handset is the smallest camera flip phone available today, weighing just 2.5 ounces, with an area one-third the size of a US dollar bill. The phone offers an impressive array of features that Skyworks says are usually featured on phones twice its size. It has bright, large font color screens, a video graphics array (VGA) camera with flash and zoom in liquid crystal display (LCD) mode, multimedia messaging for photos, text, and sound, customizable MP3, MIDI, and iMelody music ringtones, Yahoo! mobile instant messaging, high-speed data transmission availability using GPRS, 10 megabytes (MB) of usable memory for storage and e-mail.

With more and more multimedia features packed into smaller and smaller phones, designers are increasingly focused on form factor, battery life and system cost to be able to accommodate such multimedia features. Skyworks says that their PAs and front-end modules (FEMs) are ideally suited to support extremely compact, power-efficient and low-cost application. Brian M. Daly, vice president of marketing for Mobile Platforms at Skyworks, stated, "Our power amplifiers provide the required functionality and exceptionally small form factor for designing compelling ultra-thin phones that appeal to consumers of all ages around the world." Company News Release

SMI Receives Phase I SBIR Grant from DTRA to Develop More Reactive Coatings for Projectiles and Munitions
CompoundSemi News Staff

August 23, 2006...In one MOCVD application that you rarely hear about, Structured Materials Industries (SMI) has received a Phase I SBIR grant from the Defense Threat Reduction Agency (DTRA) to explore MOCVD and sputter processes to develop enhanced lethality coatings. In other words, the company will develop MOCVD and sputter process techniques to increase the realizable energy of a projectile or of the munitions’ structural components. The technology, based on the release of thermal energy of metal/metal-oxide powders, will use the thin films produced through MOCVD and sputtering techniques to facilitate controllable reactivity of the coatings. The release of metal/metal-oxide powders is well understood. The company hopes to use the precision of technologies such as MOCVD and PVD to produce thin films that have physical properties that make them more reactive. Company News Release

EDGE Technology Still Has Its Place, ABI Research Says
CompoundSemi News Staff

August 21, 2006...EDGE technology can not provide all the features of mobile broadband, and has therefore been downplayed by the industry. However, ABI Research’s latest report on the wireless component industry predicts that EDGE handsets will reach about 14 percent of the total mobile phone market in 2006 with approximately 148 million shipments. Furthermore, ABI contends that currently many carriers who do not have licenses for 3G and are waiting for 4G technology, will choose EDGE technology. One reason they cite is that it comes closer to providing complete geographic coverage on a wide scale than WiMAX, LTE, or HSUPA.

Principal analyst Stuart Carlaw points out that, "EDGE is downplayed in the market because it cannot really provide a mobile broadband experience and is therefore not seen as being at the cutting edge of cellular handset evolution; it is viewed purely as an evolutionary step on the GSM ladder, and industry attention is very much focused on the newer technologies such as W-CDMA and HSDPA. That view is further compounded by the fact that operators do not actively report EDGE numbers in the public domain." ABI Research News Release

IQE Completes Acquisition of Emcore's Epi Business
CompoundSemi News Staff

August 21, 2006...IQE reports completing the acquisition of Emcore’s US epi foundry business, called the Electronic Materials Division (EMD). The acquisition was completed after shareholders approved the settlement of funds with Emcore. The acquisition cost a total of $16 million with 13 million of it in cash and $3 million in financing at 7.5 percent annual interest rate to be paid in equal payments in each of next four fiscal quarters. Emcore says it expects $9 to $11 million profit from the sale.

The IQE says the acquisition positions it as the leading global outsource supplier of wireless components including: pseudomprphic high electron mobility transistors (PHEMTs), heterojunction bipolar transistors (HBTs), integrated bipolar field effect transistors (BiFETs) and gallium nitride (GaN) technologies. IQE’s Directors believe that the new customer base and the new product offerings will help increase revenues. IQE now boasts the largest production capacity epi foundry in the industry.

Dr Drew Nelson, President & CEO of IQE plc commented, “We are very happy to have completed this acquisition, which represents a key step forward in IQE’s development as the leading outsource wafer supplier worldwide to the global semiconductor industry. The joining of the two companies allows IQE to offer a truly one stop wafer outsource service to its customers, with a complete range of current and next generation products. This transaction assures EMD’s current customers that as part of a larger wafer outsource group all the necessary resources are in place to fully support the joint customer base as their wafer demands continue to grow.” IQE News Release IQE’s products reportedly include components used in wireless infrastructure, optical communications, optical storage (CD, DVD), laser optical mouse, laser printers & photocopiers, thermal imagers, leading edge medical products, barcode, high efficiency LEDs and a variety of advanced silicon based systems.

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Commentary & Perspective...

Will There Be Another Shortage of Gallium in the Future?

August 22, 2006...Gallium (Ga) is obviously one of the critical starting ingredients in the creation of gallium arsenide (GaAs) and gallium nitride (GaN), from which the core compound semiconductor materials for the compound semi (CS) and solid state lighting (SSL) industries are formed. When our good friend Norm Schumaker (the founder of Emcore and Molecular Imprints) suggested the theme for an interesting CS News/LIGHTimes editorial might be exploring the prospects and probabilities of another international shortage of gallium starting material, we turned to gallium raw material expert, Terry Guckes, for the answers.

Terry Guckes is an independent consultant who has recently joined other CS experts in pursuit of opportunities further up the supply chain towards the burgeoning field of SSL. Prior to 2006, Terry served as corporate officer and Vice President of Electronic Chemicals for GEO Specialty Chemicals in Cleveland, Ohio. In his many years with GEO, Terry was instrumental in GEO's becoming the primary supplier of gallium and gallium chemical derivatives. While we don't want to create an uproar among today's or tomorrow's suppliers of gallium, nor undue concern among users, we do think Terry's input and perspective is as illuminating as the materials and end products ultimately produced with gallium.

According to Terry, "The gallium shortage in at the turn of the century was more of a result of a 'bubble' or 'spike' than a true case of actual market demand in final products outstripping supply." An anomaly, if you will, that not-so-coincidently can be compared to what happened to the telecom stocks on the Nasdaq exchange around the same time. About half of the world's production of gallium goes into cellphones, and Terry recalls that "certain projections" in 2001 were for cellphone sales to hit about 600 million units and by 2003 for sales to be about 1 billion units. Compare that to cellphone sales for 2006, which are currently projected to be around 940 million units. As he puts it, "The hugely overinflated end product demand sent a tsunami back through the supply chain for capacity and raw materials, and gallium in particular. GEO was selling virgin gallium at twice its rate of production in part of 2000 and 2001. GEO's cupboard of gallium, like its competitors', was beginning to get pretty bare."

Like a tsunami, the incoming tidal wave of orders was followed by a dramatic and catastrophic outgoing falloff of demand. "At about the same time as demand fell off a cliff, the Aluminum Company of China (Chalco) brought on-stream a massive increase in virgin capacity, helping to drive prices down to historic lows, which have continued pretty much through today. Other producers also contributed to the overcapacity situation. Had GEO continued with its planned 100 ton expansion in Australia, the situation for producers would have been even more dire. Fortunately, we at GEO at that time slowed, and eventually halted, our expansion plans."

While almost all gallium users have enjoyed the low prices of recent years, the question now is... What will happen in the future?

Will there be a real shortage where demand really is bigger than supply? Terry Guckes reports that the good news is, "Probably not... assuming we don't have another crazy spike in demand." He notes that total nameplate capacity for virgin gallium today is in the 160-170 ton/year range, and at least twice the market demand. Gallium is most commonly recovered as a by-product of the Bayer Process where bauxite is converted to alumina for smelting into aluminum metal. Minor amounts of gallium are also recovered in primary zinc refining operations. According to Terry, "Total alumina production in 2000 was around 60-65 million tons/year, and has been rising steadily and more rapidly given an insatiable world demand. Combining these levels of alumina production with the average level of occurrence of gallium, and the percentage recovery using technology similar to that employed by GEO, the maximum worldwide production of virgin gallium in this timeframe would have been around 820 tons/year."

The picture for gallium users is even brighter. In the Alcoa 2005 Annual Report on page 1, Alcoa has projected that consumption of aluminum is expected to double between 2006 and 2020. "Because of the almost linear relationship between aluminum production and alumina demand, this means we can expect alumina production to also approximately double in this timeframe. Assuming Mother Nature does not have any anomalies in store in regard to the level of gallium contained in the bauxite that will feed this alumina demand, the maximum world capacity should be greater than 1600 tons/year by 2020, and at least 20 times the current demand. And this does not include any huge growth in supply from zinc production or other sources," notes Terry. Can another shortage occur? "You bet," he cautions. "But that appears unlikely, given the wounds still healing from the last bubble.

" What about the growth in the number of PA's and switches in cellphones, and rise in GaN device in high brightness and blue spectrum LEDs, and advanced GaN electronics? Won't that heat up demand? Terry cautions that it will, indeed. "But on the non light-emitting side, it will be balanced by the type of chip shrinkage that has held overall gallium demand pretty much in check for a number of years. Even if there was to be a significant, integer-multiple type of growth in demand, with a very rough forecast gallium producers should have plenty of time to tap the available capacity." And on the light emitting side, we've come to rely on Strategies Unlimited of Mountain View, California for truly accurate market forecasts for GaN materials, HB-LEDs and all blue spectrum LEDs (whether true high brightness or of low to medium brightness). so as long as Bob Steele of Strategies is on the job, the numbers there should be bankable.

Will prices rise? Terry expects they will, but Bob Steele noted that "One nice feature of nitride LEDs in this regard is that gallium is used only in the very, very thin deposited layers, and not in the substrates, as is the case of GaAsP, GaP, InGaAlP, AlGaAs, etc. where a lot of gallium is consumed. So gallium consumption shouldn't be much of an issue for the blue, green and white devices.”

So there doesn't seem to be any reason to panic. As Terry concludes... "As long as the crystal ball that marketers use to forecast demand never again gets as cloudy as it was in 1999-2001, gallium users should be in good shape." For more details... or simply to chat with Terry Guckes to share and compare your anticipation of the prospecting going on further up the SSL supply chain... (which is where Terry is now headed) you can contact him in Ohio at: tel +1 440-666-5771 or by email at: tlguckes@yahoo.com. If you have opinions that either support or differ from Terry's assessment, let me know and we'll consider doing a follow-on treatment of the topic.

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