Specialist
Former SVP at Siltronic AG
Agenda
- Supply and demand dynamics across wafer sizes amid semiconductor shortages and spot price hikes
- Capacity plans and potential demand pullbacks from OEMs (original equipment manufacturers)
- Market volatility and scope for longer-term contracts along value chain to counteract this
- Buildout dynamics across epitaxial wafers and polished wafers for NAND and DRAM, plus technology migration impacts on demand
- Is global wafer demand sustainable in the medium-to-long term?
Questions
1.
Are any trends emerging around foundry procurement of wafers besides the price movement? The global semiconductor shortage has been occurring for some time across nodes, sizes and end applications. There has also been a wafer spot price hike across sizes and nearly full capacity utilisation across suppliers. Are foundries procuring in bigger quantities or more frequently in response to this?
2.
Have the sizeable customers done what’s typical in the long-term contracts, even under the chip shortage?
3.
Where are we in the wafer cycle? As you said, it’s a very cyclical commodity market, so what would you say are the key inflection points of this cycle? How do you assess the duration of any upwards or downwards trends? Has this cycle been largely in line with previous examples?
4.
Could end demand pull back faster than the wafer suppliers build out capacity? In applications such as mobile phones, some China-based OEMs [original equipment manufacturers] are already pulling on their demand forecasts for 2022. Does this concern you, or does the lack of brownfield opportunities and the demand from other end devices mean you don’t expect utilisation to drop significantly after capacity is built?
5.
Would you say finding signals of a downcycle now is different to previous times, given the wider range of end applications and increased silicon content of each application?
6.
Could you elaborate on the market remaining volatile? Suppliers and customers along the value chain are coming out with very long-term contracts – the foundries are signing 6-year long-term contracts with wafer loading guarantees. Could the increased prevalence of these new contract structures fail to make the market safer or less volatile?
7.
Do you expect further capacity expansions from wafer suppliers before 2023 to react to the chip shortage? I understand that Sumco and FST are both getting close to the EUR 2bn total CAPEX previously announced by Siltronic, and it seems that everyone has new capacity that should finish construction towards the end of 2024. Are any further urgent or short-term capacity additions unlikely to be lined up for 2024?
8.
Is it more difficult to increase capacity for epiwafer vs other types? Does it take more time because polished wafer is needed as a starting point?
9.
Why has Sumco chosen to expand capacity for epiwafer only? Is this a typical silo of capacity expansion for the company?
10.
Spot prices for blended wafer types have trended USD 74 to USD 76 to USD 81 per wafer QoQ, which is getting close to the recent peak of USD 83 per wafer in 2018. Could spot prices exceed USD 83 given the capacity expansion plans we discussed won’t materialise until at least 2023? Is there any other movement we should highlight?
11.
Is there a difference between polished wafers for DRAM and NAND?
12.
Would Samsung make a combined order for DRAM and NAND wafers or would the supplier know which they are procuring specifically?
13.
Would NAND-DRAM conversions be done by Samsung? Is the wafer supplier uninvolved in the process?
14.
How does technology migration in DRAM impact wafer demand? Would the DRAM makers be able to get 20% more dies per wafer if we moved to 10nm from 20nm? How would this impact wafer demand?
15.
Do you have any concluding remarks on the global wafer industry? As you said, it’s difficult to tell whether one source of demand pulling back means we’re entering a downcycle given the increased number of devices and silicon content per device. What signal could we potentially use as a proxy?
