SAN JOSE, Calif. — In the late 1990s, a handful of startups from Taiwan entered the gallium-arsenide (GaAs) foundry business to capitalize on what was expected to be a boom in the arena.

The island’s startups envisioned a world in which OEMs and chip makers would outsource their GaAs production requirements. The model somewhat resembled the silicon foundry industry, which evolved and exploded back in the early- to mid-1990s.

Over time, however, the GaAs foundry business has become a niche. It has also consolidated to a large degree following lower-than-expected sales. In fact, two GaAs foundry vendors are completely off the radar screen, while two others recently merged.

And over the long haul, only a few companies will survive in the sector, said Ralph Quinsey, president and chief executive of GaAs foundry and device specialist TriQuint Semiconductor Inc. (Hillsboro, Ore.). “The gallium-arsenide foundry business is a good market,” Quinsey said in an interview, “but we think there is room for only one or two companies.”

The overall GaAs foundry industry is a $100 million business. For years, the demand for the GaAs foundries has come from higher-end radio-frequency (RF) products, such as broadband chips, power amplifiers and wireless local-area networking devices.

Still, many believe that GaAs is a technology that is still waiting to take off after decades of promises. Not surprisingly, TriQuint dismissed the notion, claiming the technology is being used for mainstream applications.

“Gallium arsenide still holds the dominate position for power amplifiers in the handset market,” Quinsey insisted. “Also in wireless LANs, GaAs has a dominate position in the power amp and has taken over some technologies in the space.”

And in some applications like power amps and other RF designs, GaAs has some advantages over silicon germanium (SiGe) and even silicon, he said. “The advantage of GaAs over SiGe is cost,” he said. “In silicon, the technology is getting more complex and expensive.”

But still, GaAs is a relatively small market that is able to support only a few foundries. Not long ago, though, the GaAs foundry business consisted of TriQuint and a number of startups from Taiwan, such as Advanced Wireless Semiconductor Corp. (AWSC), Global Communication Technology Corp. (GCT), Hexawave Photonic Systems Inc., Suntek Compound Semiconductor Corp. and Win Semiconductors Corp.

The companies from Taiwan were pure-play GaAs foundry specialists, while TriQuint designs its own products and also offers its fabs for outsourcing purposes.

In recent times, the GaAs foundry business has consolidated, in which AWSC, TriQuint and Win are the major players today. Hexawave failed to get off the ground, while Suntek has reportedly gone out of business.

Last year, Win (Hsinchu, Taiwan) acquired rival GCT. The merged company maintains two 6-inch GaAs fabs for foundry purposes. The company provides several processes, such as pseudomorphic high electron mobility transistor (pHEMT) and heterojunction bipolar transistor (HBT) technologies.

Taiwan’s AWSC (Tainan) claims to have made more than 17 million cellular power amplifier chips for its main customer and investor, Skyworks Solutions Inc., a spin-off of Conexant Systems Inc. AWSC has a 4-inch fab that is capable of 600 wafer starts per week. The fab supports both HBT and pHEMT processes. .

TriQuint offers several processes within its 4- and 6-inch GaAs fabs: pHEMT, HBT and metal semiconductor field effect transistor (MESFET) technologies. One of its biggest foundry customers is Philips Semiconductors. In fact, some 20 percent of TriQuint’s overall sales are generated via the foundry business.

The GaAs foundry business “helps us in our diversification strategy,” according to TriQuint’s CEO. The company also sells its own GaAs-based RF designs, such as power amps and other products.