Shortage Now Also Pushes Wafer Prices Upwards

by Hilbert Hagedoorn on: 03/14/2018 08:39 AM | source: | 30 comment(s)

Yet another shortage is driving up prices. Silicon wafers will continue to experience tight supply in 2018, driven by robust demand from IC foundries. Taiwan-based GlobalWafers and Formosa Sumco Technology (FST) are both among the beneficiaries including Shin Etsu, Sumco, Siltronic and SK Siltron.

China-based foundry startups' aggressive expansions, as well as the arrival of new production capacities at Intel, TSMC and other major foundries, led to the tight supply of silicon wafers mainly 12- and 8-inch ones, the sources indicated, reports DigiTimes:

Silicon wafer quotes already rose 15-20% in 2017 as a result of tight supply, said the sources, adding that prices are likely to increase further by at least 20% in 2018 to reflect the ongoing tight supply. The price rally will continue to boost silicon wafer providers' revenues and profitability.

In addition, chipmakers are willing to accept high prices in order to secure enough supplies from their upstream wafer providers, the sources noted. Many of them have struck long-term deals with their wafer suppliers.

GlobalWafers, which acquired SunEdison Semiconductor in late 2016 and has become the world's third-largest silicon wafer company, saw its 2017 revenues climb to a record high of NT$46.21 billion (US$1.58 billion). The Taiwan-based company generated net profits of NT$3.29 billion in the first three quarters of 2017, up 196% from a year earlier, with EPS reaching NT$8.06.

GlobalWafers will report EPS of over NT$12 for 2017, according to market watchers. As the supply of silicon wafers is expected to stay tight through 2021, GlobalWafers, which supplies about 18% of the overall silicon wafers produced worldwide, will enjoy impressive revenue and profit growth over the next three years, the watchers indicated.

GlobalWafers is capable of producing 750,000 12-inch silicon wafers and 1.05 million 8-inch wafers a month. The Taiwan-based company holds an around 14% share of the 12-inch silicon wafer market and a more than 20% share of the 8-inch wafer segment, the watchers said.

FST's EPS is expected to reach between NT$2.80 and NT$3 in 2017, and EPS for 2018 is set to surge significantly, the watchers indicated. The company has reported EPS for the first three quarters of 2017 arrived at NT$1.97.

GlobalWafers's revenues totaled NT$9.03 billion for the first two months of 2018, up 38.9% from a year earlier, while revenues at FST climbed 27.4% on year to NT$2.52 billion.

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cryohellinc
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#5528023 Posted on: 03/14/2018 08:56 AM

This all starts to sound like some form of Industry-Wide cartel agreement.

XP-200
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#5528027 Posted on: 03/14/2018 09:02 AM

I don't undertand, in my local BM there have plenty of wafers, yes they are pink, but still they have plenty.:p

Spider4423
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#5528046 Posted on: 03/14/2018 09:58 AM

This all starts to sound like some form of Industry-Wide cartel agreement.

First HDD then RAM...

fantaskarsef
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#5528047 Posted on: 03/14/2018 10:00 AM

First HDD then RAM...

HDD was because they had too much water (flooding), now it's because of too little... the sad part is, the money this costs more will not be invested to prevent such conditions in the future, because then they can charge more again.

fOrTy_7
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#5528075 Posted on: 03/14/2018 11:45 AM

First HDD then RAM...

I wonder when cryptocurrency gold rush will start to affect coal prices

But seriously those cryptocurrencies should be regulated by governments.
Right know it is a great opportunity for criminals to laundry money and avoid paying taxes.

cryohellinc
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#5528085 Posted on: 03/14/2018 12:40 PM

I wonder when cryptocurrency gold rush will start to affect coal prices

But seriously those cryptocurrencies should be regulated by governments.
Right know it is a great opportunity for criminals to laundry money and avoid paying taxes.
This^

Texter
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#5528089 Posted on: 03/14/2018 12:58 PM

After a ~20% wafer price increase, the fabs can charge customers e.g. $5k PLUS ONE DOLLAR per etched wafer...all the real price hikes won't come from the 'raw' supply side of things...wafers cost next to nothing, especially once you order them by the tens of thousands a week.

NaturalViolence
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#5528104 Posted on: 03/14/2018 01:48 PM

I don't get this kneejerk reaction this community has to any news like this being part of some global conspiracy against consumers. How exactly do you guys think capitalism works? Are they supposed to NOT raise prices when the product demand goes up so that the shortages get even worse while they lose money? Should they just stop building fabs so that their competitors pass them and they go out of business that way you can temporarily see $2 lower prices on your cpus? Seriously, why does any news about prices going up on anything immediately create this type of reaction anywhere online.

fantaskarsef
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#5528110 Posted on: 03/14/2018 01:54 PM

Easily explained: people don't want to pay more. I'm surprised you need one to point that out since the rest of your post is actually quite reasonable.

anxious_f0x
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#5528119 Posted on: 03/14/2018 02:18 PM

As someone who works in the industry of semiconductor Crystal growth, I can tell you that the whole process of growing crystals with enough in spec material really isn’t easy, it’s a dark art growing these things and then there’s the process of cutting and polishing the wafers that can lead to further loss of good wafers.

On the plus side a couple of good runs can put you right back on track.

sammarbella
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#5528147 Posted on: 03/14/2018 03:23 PM

There is certainly no excuses shortage for another price increase.

LOL

Silva
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#5528166 Posted on: 03/14/2018 04:44 PM

Supply and Demand works well to set prices. I have no problem with prices rising from high demand.
The REAL problem is that they make profit from said rising prices, and don't extend the production lines.
By keeping the money on their pockets, they choke the market, evolution and the less fortunate that can't afford the rising prices.
If they invested on more fabs, they could make more money (on the long term), cement their market position as bigger companies and help poor people afford the products by keeping the price low.

It's just pure greed. HDD's I understand, it was a natural disaster. The price has come down a little since.
DDR4 I half understand, putting 512Gb on phones is fucking stupid for a girl to take pics on her new iphone but whatever. Why not use the extra profit to build new or re-qualify old fabs?

Embra
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#5528169 Posted on: 03/14/2018 04:54 PM

The demand is only going to become higher., much higher. All the mobile devices, cars are going to be totally computerized, ......etc.

Prince Valiant
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#5528170 Posted on: 03/14/2018 04:56 PM

Why do you think that capitalism is about screwing the customer and sucking up as much money as possible? There are laws that try to prevent that for a reason.

sammarbella
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#5528173 Posted on: 03/14/2018 05:06 PM

Why do you think that capitalism is about screwing the customer and sucking up as much money as possible? There are laws that try to limit (to some extent) that for a reason.

I fixed it for you...

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