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You can't measure a non-linear phenomenon like compression (P1dB) using a purely linear set of data, which is what S-parameters are. If you look at the SnP file, you will see S11, S21, S12, and S22. These are the voltage input-to-output ratios for the ports. The simulator simply takes the input voltage and scales it up according the value in the SnP file for a particular frequency. The higher you ramp the input signal, then higher your output signal goes, without end. When you boil it down, it's just a simple multiplication. Vout = Vin*X (where X is defined inside the SnP file).
You need a non-linear model for the device you want to test. Finding something like a SPICE model should do the trick. See if that is available for the device you are trying to model. You can import SPICE models into ADS and run them in your sims.
Additionally, you can use the generic amplifier components in the ADS Toolboxes, and enter the parameters you know about your device, such as Gain, P1dB, Psat, IIP3/OIP3, etc. ADS will then try to approximate the device's response, based on the performance values you specify. It works decent for initial hardware line-up simulations, rather than hunting for models for every device you might use.
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