Shortage of Semiconductor Materials
There are growing concerns that semiconductor materials can be in short supply in 2019 as major companies at home and abroad, such as Samsung Electronics Co. and SK Hynix Inc., are expanding their production facilities due to a boom in the semiconductor industry.
According to industry sources on December 27, many express concerns that semiconductor materials can face supply shortages when the expansion of the second floor of the Samsung Pyeongtaek Line 1 and SK Hynix’s plants in Cheongju and Wuxi in China are completed and start operation in earnest in 2018 and 2019.
An anonymous official from the semiconductor industry said, “Isopropyl alcohol (IPA), which is widely used to clean parts in a semiconductor manufacturing operation, is also in short supply now because of the expansion of factories and the increase in usage. The expansion of Samsung Electronics’ Pyeongtaek plant and SK Hynix’s Cheongju plant will lead to severe material supply shortages next year.”
In this regard, Samsung Electronics and SK Hynix say that there will be no problem as they have already secured the supply of semiconductor materials with diversification of suppliers and application of predictions. However, some still say that some materials will have an imbalance between supply and demand in 2019 when the two companies start operation of additional facilities in earnest.
When Samsung Electronics starts mass producing DRAM chips in some lines in the Hwaseong plant and the second floor of the Pyeongtaek plant, the output is expected to increase from the current 370,000 to 600,000 wafers per month in 2019.
This is not the only material that is forecast to face supply shortages. An official from a mid-size semiconductor foundry said, “The supply and demand of helium, tungsten slurry, ceria slurry and tungsten hexafluoride (WF6) gas can be unstable.”
As seven Arab countries, including Saudi Arabia, broke off their diplomatic relations with Qatar, which accounts for 30 percent of the global helium productions, in July, helium gas is likely to see an imbalance between supply and demand.
Such a situation is also shown through the move of semiconductor material manufacturers for expansion. Foosung Co., which produces WF6, announced in November that it would expand its semiconductor special gas production facilities worth 55.4 billion won (US$51.49 million). SK Materials Co. is also making an investment to expand its nitron fluorine three (NF3) production facilities with an annual capacity of 2,500 tons by the end of November next year. The industry believes that other materials will be in a similar situation as there are about 1,000 kinds of semiconductor materials.
There are rumors about possible supply shortages of semiconductor materials because the semiconductor material market is recently growing at a rapid pace, driven by a dramatic demand increase in the upstream industry.
According to the Semiconductor Equipment and Materials International (SEMI), the global semiconductor fab process market is expected to grow 11.3 percent from US$24.7 billion (26.58 trillion won) last year to US$27.5 billion (29.6 trillion won) this year. The figure is US$2.2 billion (2.37 trillion won) higher than this year’s estimates which was predicted last year. The global semiconductor market will be worth US$408.6 billion (443 trillion won) this year, up 20.6 percent from last year, according to the data from the World Semiconductor Trade Statistics.
Some also say that the supply shortage of semiconductor materials can be worse since Chinese semiconductor manufacturers, such as Tsinghua Unigroup, Fujian Jinhua Integrated Circuit Co. and Yangtze Memory Technologies Co. (YMTC), are planning to start mass production of memory chips in earnest from next year.
However, accurate information on the current supply and demand of semiconductor materials and the localization ratio of materials cannot be found at the moment. The Ministry of Trade, Industry and Energy said that the localization ratio of semiconductor materials came to 48.5 percent as of the end of 2012, citing the data of market research firm IHS Markit in 2013, but it has failed to compile statistics since then.
An official from the Korea Semiconductor Industry Association said, “There is no possibility of Samsung Electronics and SK Hynix having semiconductor production delays caused by material shortages unless unexpected incidents, like the 2011 Great Eastern Japan Earthquake, occur. Since Samsung Electronics and SK Hynix have refused to disclose information on materials from 2013 owing to a possible leakage of company confidential information, including semiconductor productions, it is hard to grasp the current supply and demand situation.”