Wafer Market Projected to Grow at a 2021~2025F CAGR of 10.2%
The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com. -- Ed.
According to Sumco, silicon wafers are likely to be scarce through 2026, with the silicon wafer market projected to grow at a 2021~2025F CAGR of 10.2%. Wafer demand is to be impacted by rising processor die sizes and payloads.
Silicon wafer shortage to sustain into 2026
According to the CEO of wafer maker Sumco, the silicon wafer supply shortage will continue beyond 2023. Sumco’s main 300mm wafer capacity contract is a long-term deal that lasts through 2026. Wafer prices climbed by 10% in 2021, and 10% pa price growth is expected to continue for at least three more years.
Meanwhile, GlobalWafers, another wafer maker, has said that the US$3.59bn it had set aside for the acquisition of Siltronic will be used to expand its own capacity, following the failure of the planned takeover due to opposition from the German government. Of the total, US$2bn will be pointed towards green-field investment and US$1.6bn towards expanding existing fab capacity. In 2022, the company could see beyond double-digit sales growth backed by strong wafer demand.
Increasing processor die size and per-device processor payload impacting wafer demand
Over the next three years, Korean wafer producer SK Siltron plans to invest W1.5tn (W232.5bn in 2020). Despite an expected jump in supply, the ongoing wafer supply shortage is forecast to continue due to the gradually expanding die size of high-performance processors, new chiplet designs, stacked packages, transistor migration limitations, and greater demand for machine learning.
An increase in processor load per device, including in automobiles and IoT devices, is also driving the rise in wafer demand. Sumco predicts that the wafer market will grow at a 2021~2025F CAGR of 10.2%. We expect current trends to favorably impact wafer manufacturers such as Sumco, Shinetsu, and SK.