Wafer Area Shipments Flat, But What Does That Really Mean?

The total area of shipped silicon wafers dropped 2% in Q3 compared with Q2, but that same 2% reduction has shown up in the same time frame over the past several years. There appears to be no significant impact on the silicon wafer area, which is flat at about 2.3 billion square inches.

Figure 1: The change in silicon wafer shipping area. Source: SEMI

Despite a rapid recovery after the Lehman Shock (2008 downturn), silicon semiconductor material shipments have not shown any strong improvement. In fact, the trend line shows that overall shipments have been relatively flat. So how should we interpret this? There is no solar panel in the shipping area of silicon wafer developed by SEMI. And yes, the wafers are being developed for semiconductors.

Are the limitations and weakness of the semiconductor market the main causes for the flat market reports for silicon wafers? Or does the shipping price of the semiconductor based on WSTS provide another explanation? WSTS publishes the monthly shipping price of semiconductor products. Figure 2 shows a graph plotted based on the numerical figure published by WSTS, summarized on a quarterly basis. The red curve of the graph represents the sales of semiconductor products.

Figure 2: The relationship between silicon area and semiconductor sales.
Left y-axis shows silicon area in 1 million square inches.
Right y-axis shows semiconductor sales 1 million dollar unit.
Source: Summarized by author based on the data by WSTS and SEMI

By plotting the silicon area and the sales of semiconductor products on the same graph, the ups and downs of the silicon area show a close correlation to semiconductor sales. But look closer and you can see the silicon wafer area trend does show a slight decline throughout the years while the semiconductor sales curve shows a slight improvement. In fact, the area of silicon wafer for Q3 of 2013 shrunk 2% compared with the previous quarter period and the same quarter period of the previous years. In contrast, the semiconductor sales were up during the same quarter, exceeding the maximum sales of the past years at more than $80 billion.

The increase of the percentage of software in semiconductor products helps explain the divergence between the silicon area trend and the semiconductor sales curve. New product development and the improvement of sales can be easily achieved by simply changing only the software parts of the products without increasing the number of hardware parts. This indicates a big change in the semiconductor business and points toward systems that include basic ASIC hardware plus a major processor integrated embedded system.

In the nutshell, while increases in silicon area are not expected in the near future, the semiconductor business definitely appears poised for growth. Moreover, it appears that decreases in silicon area have ended, as silicon area settles to its optimum value. In the meantime, there are active discussions going on now regarding how to design a system that can be utilized globally and how to embed the semiconductor business into the system.