This article describes, for the first time, the development of a two‐dimensional physical model which accurately characterizes the DC, bias dependent small‐signal, and large‐signal power characteristics of GaAs/AlGaAs HBTs. This model is implemented using a commercial physical device simulator. It is shown that the physical model can accurately predict the output power, gain, and efficiency of GaAs HBTs, even well into compression where device nonlinearities are significant. A complete description of the model is provided including a discussion of the relevant physical processes, the simulation device geometry, the appropriate material parameters, and the methods for scaling to multifinger devices. © 1996 John Wiley & Sons, Inc.