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As Semiconductors Surge, Silicon Wafers Follow Suit

Nearly three billion square inches of silicon wafer were grown, sliced, polished, and shipped out in the second quarter this year to semiconductor suppliers, which etch computer processors and other types of circuitry onto the blanks.

In this year’s second quarter, manufacturers shipped around 2,798 million square inches of silicon wafers, irreplaceable in the global electronics supply chain.  That has risen 4.2% from the first quarter this year and 10.1% from the same period last year, according to latest report from SEMI, a global microelectronics industry association.

“For the fifth consecutive quarter, global silicon wafer volume shipments have shipped at record levels,” said Chungwei Lee, vice president of corporate development for GlobalWafers, in the quarterly report. These results “are being driven by both 200mm and 300mm shipments,” he added.

More wafers have been delivered to semiconductor suppliers as the market undergoes a surprising surge. Industry analysts predict that soaring prices for memory chips could drive the global market over $400 billion for the first time this year, up from $339 billion in 2016. That growth has also been spurred by the digitization of cars and factories.

In response, companies are doling out billions of dollars on new manufacturing equipment in factories, particularly for etching chips on 8 inch wafers. That machinery is favored in China, as that country’s companies buy used equipment from bigger corporations that have upgraded to silicon printing presses that spit out 12-inch wafers.

The silicon wafers, shipped to every semiconductor manufacturing plant, start out as tiny silicon crystals. These seeds are placed inside a crucible and cultivated into ingots. Specialized machinery draws out the ingots into rods, which are sliced into wafers that serve as substrate materials on which semiconductors are fabricated.

The average selling price of these glossy silicon plates has fallen over the last few years, which has triggered industry consolidation. Last year, Taiwan’s GlobalWafers closed its $683 million deal for SunEdison Semiconductor, which gave it around 17% market share. Shin–Etsu and Sumco hold two-third of the entire industry’s supply.

But the falling prices could start reversing with growing wafer sales to Chinese factories, experts say. Doris Hsu, GlobalWafers’ chief executive, said in a recent earnings call that the company – one of the five major firms that hold around nine-tenths of the total market – expects prices to rebound after last year hitting record lows.

In a recent report, SEMI said that it was tracking the construction of more than 20 semiconductor fabs in China. In February, GlobalFoundries announced a $10 billion project in the Chinese city of Chengdu as part of a major initiative by the local government to boost the country’s domestic production of chips.

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