Pulsed RF Power Semiconductors Continue to Accelerate as Defense Spending and Air Traffic Control Improvements Increase

Although growth for high-power Radio Frequency (RF) semiconductors for pulsed applications has been in the mid-single digits for the last few years, 2019 has shown a further increase and overall Compound Annual Growth Rate (CAGR) will near 10% for the current five-year period. First, let’s define what we mean by pulsed RF power semiconductors. In this case, it means commercial and defense related avionics using pulsed RF and Sub- 1 GHz, L-Band and S-Band radar.

There are actually two segments that ABI Research has defined for these applications: one is for military/defense and the other is for commercial avionics and air traffic control. Both segments cover similar pulsed applications and frequencies (<4 GHz).

The chart below shows the breakout for revenue among the four classes of pulsed high-power RF devices for 2018:

It is important to note that ABI Research categorizes both of these areas as “non-discretionary,” in that the defense side of things must move forward as a nation’s security is at stake and, on the commercial/civilian side, air travel safety and the efficient running of the civilian air traffic system is a must-do as well.

In August of 2018, an important event for defense-related funding occurred: the National Defense Authorization Act for Fiscal Year 2019 (NDAA for 2019) was signed into law. The act is a far-reaching funding mechanism for defense related activities, operations, and system/equipment for 2019. The total funding level is US$717 billion, which will increase incrementally to US$718 billion for 2020.

This will continue to be an important driver for defense electronics, which will see healthy increases at both the system and equipment levels. Included in this funding will be new military sub-1 GHz, L-Band, and S-Band radar projects along with upgraded transponder systems.

The other extremely important aspect of this continuation in a healthy and stable funding mechanism is that it is not simply another continuing resolution that has, in a sense, only band-aided the issue on and off for several years.

While the NDAA for 2019 and the budget for 2020 are for U.S.-based defense spending its effects will ripple worldwide as offshoots of many U.S.-based programs can drive foreign procurement as well.

These two market segments have similarities and differences but a unified approach to both of them would be the best course of action as the device technologies used are practically the same. The following specific recommendations are warranted as well:

• Carefully review potential and actual trade tariffs that are on the horizon. Many of these are buried in the fine prints of tariff lists. For example, among the list of potential E.U. tariffs on U.S. products is a 50% tariff on microwave amplifiers. While this applies to all RF power segments, it is important to realize that the military and air traffic control pulsed RF power device segments are not immune.
• It is important, as ABI Research has mentioned before, to stake a position in gallium nitride (GaN). This technology will drive S-Band radar and the other pulsed sub-segments as well.
• Many vendors will be going after these two segments, but bear in mind that other vendors are as well. Do not overestimate your potential share and set expectations realistically.
• Any operating agreements or foreign investments, in both directions, will need to be fully vetted for internal/external modifying forces before proceeding. In some cases, it may make more sense to delay these international agreements until the trade situation quiets down.
• When selling or transferring potentially sensitive technology offshore, make sure that compliance with export restrictions has been carefully reviewed. It is likely that regulators will review these with higher scrutiny. This can especially apply to pulsed RF power semiconductors. Regulators watch this class of product carefully.
• Be aware of current acquisitions, consolidation, and technical agreements that could reshape the industry. Cree/Wolfspeed’s acquisition of Infineon’s RF Power operation is a good example.
• System and equipment manufacturers will be ready to invest in longer term projects and procurement as the underlying funding mechanism is more stable. Be ready to grab this opportunity as program lifetimes can last for decades in some places.

The above is discussed in detail in a the ABI Research Market Data report High Power RF Semiconductors for Pulsed Applications (MD-PRPS-19) and the companion narrative High Power RF Semiconductors for Pulsed Applications for the L-Band, S-Band, Avionics, and Sub-GHz Markets (AN-5089).