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Chip shortages are pulling demands for upstream silicon wafer suppliers. Semiconductor silicon manufacturers stated that the production capacity is lagging behind high demands, and are looking into expanding plants for extra production capacity.

Industry watchers predict a bright outlook for silicon wafer manufacturers’ sales growth, including GlobalWafers Co., Formosa Sumco Technology Corp., and Wafer Works Corp.

Japanese silicon wafer supplier conducts a price hike

The Japanese industry leader, Shin-Etsu Chemical Co., which takes up 29.4% of the market share, has rung the bell in announcing a price hike on all silicon wafer products to rise 10%-20% from April onwards on their website.

Simultaneously, the third largest wafer supplier, the Japanese Sumco which takes up 21.9% of the market share has stated that orders have overwhelmed the current production capacity and have run out of stock. 

Sumco is considering to set up a new plant

Sumco is considering building a new manufacturing plant which will span across a year and a half before shipments could go into volume, leaving the tight capacity to continue for a period of time.

Since 2008, Sumco has only made investments on existing plants at a ‘Brown Field Investment’ scale to boost capacity and has not established a new plant. 

According to Nikkei Asia, Sumco Chairman Hashimoto Mayuki said it’s time to evaluate a Green Field Investment and set up a new plant in face of the demands of 5G and data centers. 

Sumco Chairman Hashimoto Mayuki said “this is the first instance for chip shortage to last for such a long period since entering the industry for 20 years. Demands for 8-inch wafer products have poured in and overwhelmed the supplier’s production capacity.” He further states that the tightest demands come from the automotive industry needing 8-inch products.

Steady sales growth and fully loaded capacity

GlobalWafer Co., the second largest silicon wafer supplier that takes up 26.70% of global market share had reached a new peak of revenue for a single month in March reaching NT$ 5.7 billion, subsequently raising the revenue for the first quarter to NT$14.8 billion with a quarterly increase of 4.72% and a yearly increase of 9.55%. 

The company has seen steady growth for five consecutive quarters.

Currently, all their silicon wafer production lines are fully loaded, coupled with the price hike, revenue in March reached a 12.99% yearly increase.

Credit Suisse has pointed out that price hikes following the tight capacity of foundries are already reflected in the first quarter, and will further expand to RAM, IDM firms in a ripple effect due to the high demands.

Credit Suisse forecasts the loaded capacity of the 12-inch wafer to grow from 80%-85% from 2019 to 2021 to reach 92% this year and 97% in 2022, while the 8-inch wafer will increase to 95%, almost fully loaded.

Taiwanese firms all seeing growth 

Targeted on the Asia foundries market for 8- and 12-inch wafers, Formosa Sumco Technology has seen operational growth.

Wafer Works focuses on the 8-inch heavy-doped silicon wafer. Half of the production targets the automotive market, leading the shipment to surge to a historical peak.

As silicon prices continue to rise, the silicon wafer industry leader in Taiwan, GlobalWafer Co., has also subsequently raised prices for the 12-inch silicon wafer end of last year and implied further price hikes will gradually be introduced to other wafer scales.

 

Sources: Commercial Times