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Global Commodity Intelligence
Q2 2025 | APRIL - JUNE
Global Commodity Intelligence
Q2 2025 | APRIL - JUNE
Point of View: Undersupply of Silicon Wafers will Continue into 2023
April 29, 2022
2021 was a year of robust growth for the semiconductor industry, not only in terms of device revenue, but fundamental material on which most semiconductor devices are fabricated: silicon wafers.
According to a SEMI (Semiconductor Equipment and Materials International) report published in February, silicon wafer shipments totaled 14.1 billion square inches and marked a 14% increase year-over-year in area shipments. Silicon wafer revenue hit a record of $12.6 billion in 2021.
Figure 1: Annual Silicon* Shipments and Revenue
Source: SEMI (www.semi.org), February 2022
*Shipments are for semiconductor applications only and do not include solar applications
The strong demand for silicon wafers boosted the revenue of suppliers who produce materials critical for wafer manufacturing. DISCO Corporation, who supplies precision cutting, grinding and polishing machines to semiconductor IDMs, OSATs, and wafer manufacturers posted a 268% revenue increase year-over-year at the end of the first half of 2021 for wafer manufacturing machines segment.
Fujimi Incorporated, a supplier who has a dominant share of greater than 80% in abrasives used for wafer lapping machines and wafer polishing machines, reported a nearly 30% revenue growth year-over-year for the silicon wafer segment.
Where Does the Raw Wafer Come From?
Silicon wafers are composed of a material called monocrystalline silicon ingots. It takes one month to grow a single ingot. The ingot then goes through a wafer forming process of slicing, lapping, etching, and polishing.
For most semiconductor device makers, raw wafer supply comes from the top five manufacturers: Shin-Etsu Chemical (Japan), SUMCO (Japan), GlobalWafers (Taiwan), Siltronic (Germany) and SK Siltron (South Korea).
Figure 2: Market Share of Key* Wafer Manufacturers
Source: Statista 2022
*5 Key Players’ share on 100% scale. Estimated share of other manufacturers is less than 10% of total.
Capacity Expansion by Key Players
In the wake of many semiconductor IDMs and foundries rolling out the investment plan, silicon wafer manufacturers have also released their capacity expansion plan in total value expected to be surpassing $10 billion from 2022 to 2024.
Top share Shin-Etsu Chemical made comments on the capacity expansion plan in answer to the question at the shareholders’ meeting held on January 27, 2022, although dollar values were not disclosed.
Shin-Etsu’s capacity expansion will be carried out progressively based on the Long-Term Agreement (LTA) signed off with each customer. Although Shin-Etsu forecasts limited contribution from the brownfield investment in 2023, they expect the greenfield project to be online in late 2023 to 2024.
Second place SUMCO unveiled $3 billion (JPY330 billion) of 300mm wafer expansion in two stages. In a September 2021 press release, $2 billion (JPY228.7 billion) of capacity investment for domestic plants in Saga and Nagasaki was announced, followed by a media report in March 2022 for another $1 billion (JPY115 billion) investment for building 300mm wafer factory under their subsidiary in Taiwan, Formosa Sumco Technology Corporation (FST).
SUMCO expects logic and memory device demand will drive the strong demand for 300mm wafers, claiming their domestic capacity including new investment is 100% booked until 2026. As for FST, LTAs cover 50% of their capacity until 2026 including new investments.
On February 6, 2022, GlobalWafers announced $3.6 billion (NTD100 billion) for both brownfield and greenfield across Asia, Europe, and the U.S. Their investment is spanning both 300mm and 200mm wafers, including emerging materials for semiconductor devices such as Silicon Carbide (SiC) and Gallium Nitride (GaN). The new production lines are expected to ramp up in the second half of 2023 and to be expanded on a quarterly basis.
On October 26, 2021, Siltronic broke ground for its new facility in Singapore, capital expenditure of $2.2 billion (EUR2 billion) for 300mm wafers. Under the joint venture with Samsung, the new 300mm fab is the largest investment in the history of Siltronic which is funded largely by LTAs with prepayments and is expected to be online by the end of 2024.
It is reported in March 2022 that at SK Siltron, part of the conglomerate SK Group has SK Hynix as one of its subsidiaries, the board of directors approved $1.2 billion (KRW1.495 trillion) investment plan for the next three years for 300mm wafers in Gumi, South Korea. Production at the new fab is expected to start in the first half of 2024.
Key Takeaways
- Global silicon wafer shipments marked a new record in 2021 in history for both area shipments and revenue.
- Major wafer manufacturers have released their investment plans exceeding $10 billion that are taking place from 2022 to 2024.
- Contribution to wafer capacity from the greenfield investment is expected only in late 2023 to 2024.
If you have any questions or need additional information, please do not hesitate to contact us directly (rudi_palmans@jabil.com), (mitsuko_yamamoto@jabil.com).
Rudi Palmans, Director, Supplier Relationship Management
Mitsuko Yamamoto, Global Commodity Management
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