Competition Expected to Intensify
Competition in the global semiconductor wafer market is expected to intensify as it is experiencing an excess supply and a weaker demand at the same time. Wafer supply is expected to increase in the long term as a result of manufacturers’ continued expansion of production facilities. Yet the recent downturn of the upstream industry will lead to a decrease in demand in the short term.
Industry watchers say that the semiconductor market has been slowing but the supply of wafers is forecast to gradually expand as Chinese companies are expanding their production capacity.
Global research firm IC Insights says nine new 300-mm wafer fabs will go into operation this year. Six more 300-mm wafer manufacturing plants are expected to start operation next year as well. The number of 300-mm wafer production plants is forecast to increase to 130 in 2021 and 138 in 2023 from 112 last year.
The global semiconductor industry focused on 150-mm and 200-mm wafers in the past. However, 300-mm wafers have taken up most of the market as an increasing number of companies built 300-mm wafer production facilities. The expansion of 300-mm wafer manufacturing plants means an increase in wafer supply.
SK Siltron Co., a South Korean wafer manufacturer, is aggressively investing to expand supply and strengthen competitiveness. The company has been expanding its production capabilities after it was acquired by SK Group in 2017. It is also planning to invest 900 billion won (US$757.26 million) over the next two years.
SK Siltron plans to execute a total of 595 billion won (US$500.63 million) of investments this year. It will invest 440 billion won (US$370.21 million) to expand its wafer production capabilities at the Gumi plant in North Gyeongsang Province and reinforce R&D. It is also investing 155 billion won (US$130.42 million) to strengthen its manufacturing prowess. The company is investing aggressively to chase Japan’s Shin-Etsu and Sumco, which are the industry leaders.
Industry watchers say that production expansion can be a burden on the market as a whole. “Semiconductor manufacturers decreased the volume of orders. Demand has slowed compared to a year earlier but there has not been much change in supply,” an analyst said.
As the volume of orders from semiconductor producers declined, the global wafer shipments slightly dropped in the first quarter. The global wafer shipments recorded at 3.05 billion square inches in the first quarter of this year, down 5.6 percent from 3.23 billion square inches in the fourth quarter of last year, according to a recent report released by Semiconductor Equipment and Materials International (SEMI).
Wafer manufacturers are expected to face intensifying competition as orders from semiconductor producers are falling. Recently, M&As are taking place in the wafer industry due to keen competition. ON Semiconductor signed an agreement last month to buy GlobalFoundries' 300-mm fab located in New York.
The prevailing forecast is that wafer production will continue to grow as the semiconductor industry’s growth will continue in the medium and long term.