Another 20% increase! Why does the price of silicon wafers continue to skyrocket?

With the continuous increase in global semiconductor industry shipments, the contract price of silicon wafers in the second quarter has continued its previous upward trend, rising nearly 20% on top of the 10% increase in the first quarter.

Silicon wafer, in simple terms, refers to the silicon wafer required for manufacturing semiconductor integrated circuits. Due to its circular shape, it is called a wafer. Wafers are the basic materials for manufacturing semiconductor chips, while silicon wafers are the foundation of the semiconductor industry. The price of semiconductor grade silicon wafers reached its lowest point in nearly 11 years last year, and then slowly stabilized and rebounded. In 2017, major suppliers of silicon wafers around the world began to enter a state of shortage, including companies such as SMIC and Samsung that have started to compete for supply, and small and medium-sized enterprises are even willing to increase prices to purchase.

The prices of silicon wafers have continued to rise in recent months, mainly due to the following factors:

1. The silicon wafer industry has gone through years of low tide, with excess production capacity cleared. Currently, the production capacity of major global silicon wafer manufacturers is already full and unable to meet order demand, and production capacity continues to be tight;

2. China's efforts to support the development of the semiconductor industry have been unprecedented, and the process of chip localization has accelerated. Under the guidance of policies, investment in 12 inch wafer factories has surged. Currently, the monthly production capacity is about 460000 pieces, and the ongoing production capacity is about 630000 pieces. In the future, the monthly production capacity of 12 inch factories in China will reach 1.09 million pieces, exacerbating the rush for silicon wafers;

3. The downstream semiconductor industry of silicon wafers has further rebounded, and the shipment volume of electronic consumer goods such as smartphones has increased.

From the contract orders of major manufacturers in the second quarter, it can be seen that (China Semiconductor Forum WeChat: CSF211ic) this year's silicon wafer supply will become very tight, and the supply and demand gap will be difficult to alleviate in the short term. The market supply gap is expected to be 3-5% in 2017 and expand to 7-8% in 2018.

At present, the global silicon wafer suppliers are mainly enterprises from Taiwan, China, Japan and South Korea. Shin Yue Semiconductor, Suntech, Global Wafer, Silitronic and LG have monopolized about 93% of the global silicon wafer market. Although there are currently no listed companies mainly engaged in the production of silicon wafers in the domestic market, as a leading indicator of the semiconductor industry, the continuous recovery of production and sales data will drive the further recovery of the semiconductor industry, and core suppliers of equipment, materials, and other related equipment in the industry chain are expected to benefit.