Over the past decade, semiconductor silicon wafers have been falling in price as supply has exceeded demand. But since the beginning of 2017, the situation has reversed dramatically, with demand outstripping supply pushing up the price of silicon wafers quarterly.
Looking ahead, with the continuous expansion of the production capacity of large semiconductor factories including samsung and related manufacturers in mainland China in the first half of 2019, the supply of silicon wafer is still insufficient, so the quotation will continue to rise.
This not only compressed the profits of the wafer factories, but also made the second-tier wafer factories brew a new wave of price rises.
According to market analysis, there has been a shortage of silicon wafers since the beginning of 2017, resulting in a price increase of about 20% for the entire silicon wafer.
One of the main reasons for the silicon wafer's price rise is the explosion of applications such as the Internet of vehicles, the Internet of things, storage, AI and bitcoin, which has boosted demand for semiconductors. The other is that the world's top five silicon wafer manufacturers have no plans to expand their production capacity, causing the silicon wafer market to continue to be in short supply and driving up prices.
The impact of the quarterly rise in the price of silicon wafers will also affect the gross margins of wafer factories. Among them, TSMC, the leading supplier of wafer manufacturing, has previously pointed out that due to the signing of annual contracts, 2017 will be less affected by the silicon wafer price increase, which will affect the gross profit rate by 0.2 percentage points.
But with the price of silicon wafers rising in 2018, the impact could widen to between 0.5 and 1 percentage point. It is expected that the gross margin reduction will increase after the first-tier factories renegotiate their silicon wafer contracts in 2019.
Compared with the first-tier wafer foundries, the second-tier manufacturers such as GlobalFoundries, advanced worldwide, interconnect, smic international and changjiang storage are expected to be hit more severely.
In fact, in the past wave of price increases, second-tier wafer foundries have benefited more than first-tier wafer foundries such as TSMC. The reason is that on one hand, the demand of wafer OEM is strong, so some orders have to be transferred from the first-line wafer OEM factory to the second-line wafer OEM factory.
On the other hand, the price of wafer fab has risen much more than the cost of materials such as silicon wafers in the previous period, which enables the second-line wafer fab to continue.
However, with prices of silicon wafers continuing to rise, gross margins at second-tier wafers are already under pressure and a new wave of price rises has to be brewing. And after a wave of price rises at the second-tier wafer foundries, downstream chipmakers have had to accept it in silence.
The downstream chipmakers have been forced to swallow the price increases because of past increases in foundry costs that could have been passed on to downstream chipmakers, pushing up prices further in return for higher profits.
In this wave of price rises, however, downstream chipmakers may not be able to absorb or absorb the costs of higher prices from upstream producers. Because chip makers in Taiwan and China are scrambling for market share.
If Taiwanese chipmakers adopt the strategy of increasing prices in line with the trend and pass on the pressure of rising costs to their customers, they are likely to lose most of their Chinese customers. That also puts pressure on chip makers, including mediatek, which wants gross margins to return to more than 40 per cent. As a result, Taiwan's chip makers are likely to adopt a no-price strategy in the face of rising prices for upstream silicon wafers, according to market estimates.
However, the ferment of price rises in the second-tier wafer foundry seems to be no help to the shortage of the wafer in the short term and the high price will be resolved.
Japan's SUMCO, the world's second-largest silicon wafer maker, had previously said it expected prices to rise by about 20 per cent in 2018 on the 12-inch segment, as expected, making the price of silicon wafers in the fourth quarter of 2018 40 per cent higher than in the fourth quarter of 2016. Prices are expected to continue to rise in 2019.
The trend has also prompted customers to be concerned about ensuring they can get the number of silicon wafers they need, and to start negotiating future contracts.
In addition, in the 8-inch wafer segment, due to limited supply growth, there may be a long-term tightening of supply and demand in the future, which makes current customers feel more vulnerable to purchasing 8-inch silicon wafers than 12-inch products. As for the 6-inch wafer, current supply shortages are also emerging. Prices have rallied, but the medium - and long-term picture remains uncertain.
Source: TechNews technology news