Two South Korean storage giants plan to reduce the purchase of silicon wafers

Due to the continuous decline in chip demand, Samsung and SK Hynix, two major Korean memory chip manufacturers, are planning to purchase silicon wafers for chip production, but the quantity is less than the original plan.

The two enterprises discussed this matter with their silicon wafer material suppliers in Q4, 2022. The main reason for the reduction of the purchase volume is that the market situation has changed. Taiwan media also mentioned that under the premise of maintaining the long-term contract, many silicon wafer manufacturers have received requests from customers to delay the delivery of some products.

Semiconductor silicon wafer is an indispensable material for manufacturing chips. It is mainly composed of five types of products: polished wafer, annealed wafer, epitaxial wafer, segmented spacer and silicon wafer on insulator. Among them, polished wafer is the most widely used product. Other silicon wafer products are also produced by secondary processing on the basis of polished wafer. The five major suppliers of silicon wafers in the world include Shin-Etsu and Sumco, GlobalWafers, Siltronic and SK Siltron.

As of September 2020, Xinyue Chemical's market share in the global silicon wafer product market reached 29.4%, ranking first in the world. SUMCO ranks second with a market share of 21.9%. Global Wafers ranked third with a market share of 15.2%. Siltronic AG ranks fourth with 11.5% market share. SK Siltron ranks fifth with 11.4% market share.

In February 2022, Sunrise said that the silicon wafer capacity had been sold out in the next five years. This situation continued to exist when the global economy began to decline in 2022. Wafer is a back-end industry, and the impact of the consumer market is later than the front-end industry that directly sells products to customers. In Q3 of 2022, when chip manufacturers first reported a decline in profits, the profits of wafer companies increased.

Generally, the impact period of the downstream semiconductor market on the upstream manufacturers is 6-9 months. Considering that the sales volume of the major semiconductor manufacturers in Q3 in 2022 will decline significantly, it can be seen that the market reaction of the upstream manufacturers is faster than expected.

Now, chip manufacturers are seeking to reduce the number of wafers purchased more than usual, and it is expected that silicon wafers will not be able to avoid "survival".