More Silicon Wafer Consolidation

The silicon wafer business typically flies under the radar, but it’s a fundamental part of the semiconductor business.

Every chipmaker needs to buy silicon wafers in one size or another. In the supply chain, silicon wafer vendors produce and sell bare or raw silicon wafers to chipmakers, who in turn process them into chips.

So it’s important to keep an eye on the market. Today, the silicon wafer business continues to consolidate amid booming demand and shortages in the market.

Over the past two decades, the silicon wafer industry has consolidated from more than 20 suppliers in the 1990s to only a handful of players today. The list is getting shorter. Late last year, Germany’s Wacker announced plans to sell its 30.8% stake in silicon wafer maker Siltronic to Taiwan’s GlobalWafers. In effect, GlobalWafers, a supplier of silicon wafers, will assume control of rival Siltronic. The deal must still be approved by various regulators.

The move propels GlobalWafers in the silicon wafer rankings. At present, Japan’s Shin-Etsu is the world’s largest silicon wafer maker with 29.4% share, followed by Japan’s Sumco (21.9%), GlobalWafers (15.2%), Siltronic (11.5%), Korea’s SK Siltron (11.4%) and France’s Soitec (5.5%), according to GlobalWafers. Several players from China also compete in the silicon wafer business.

With the acquisition of Siltronic, GlobalWafers’ share will jump to 26.7%, making the combined company the world’s second largest supplier of wafers, ahead of Sumco. It also represents GlobalWafers’ second major acquisition. In 2016, the company acquired SunEdison Semiconductor, formerly known as MEMC, which was the last major U.S.-based silicon wafer maker.

With these deals, GlobalWafers has transformed itself from a rather obscure company to a major player in silicon wafers. The deal also expands its customer base and manufacturing footprint.

Siltronic’s top customers include Infineon, Intel, Samsung, SK Hynix and TSMC. The silicon wafer maker has production facilities in Europe, Asia and the U.S. Meanwhile, GlobalWafers also has manufacturing facilities throughout the world. It specializes in 3- to 12-inch silicon wafer manufacturing, possessing a complete production line from ingot growth, slicing, etching, diffusion, polishing and epitaxy.

“The market share of the two Japanese players is more than 60% in total of the 300mm epitaxial wafer market in the second half of 2020. This M&A is significant in that GlobalWafers can eventually become the third position player in the lucrative 300mm epitaxial wafer market. The economies of scale set in so that the possibility of a strategic alliance with predominant foundry customers could be higher,” said Sungho Yoon, senior research manager at SEMI.

The GlobalWafers-Siltronic deal wasn’t a surprise. Siltronic was falling behind the pack and its parent company was unwilling to keep the company afloat. It’s also a tough business that requires a ton of capital and large volumes.

This is especially true heading into 2021. Compared to 2020, the silicon wafer market is expected to increase by 5% in 2021, according to SEMI.

That’s not the whole story. In its recent earnings call, Sumco sees booming demand for 300mm silicon wafers in 2021. In fact, the supply of 300mm logic wafers will struggle to keep up with demand, according to Sumco.

There appears to be a shortage of epitaxial wafers. Epi wafers, which consist of an epi layer grown on the substrate, are used for logic devices. Epi reactors, the key equipment used to make these wafers, are difficult to obtain as lead times have extended here.

The memory market is still in a recovery mode, so wafers aren’t hard to find here. But the 200mm market is another story. 200mm fab capacity is tight amid a boom in the automotive market. Demand for 200mm wafers will outstrip supply until perhaps 2022, according to Sumco.

“Silicon wafer shipments in the fourth quarter of 2020 were better than expected due to the anticipation of COVID-19 vaccines, and the improvements are going on in the first quarter of 2021. The foundry and memory markets are expected to continue to grow in 2021. Accordingly, total silicon wafer area shipments are predicted to show mid-to high single digit growth in 2021,” SEMI’s Yoon said.