Wafer Demand: Under Pressure But Still Growing

Wafer demand grew 10.7% in 2017 while total semiconductor units grew 13.4%. Due to the tight supply of silicon wafers and increased prices, most manufactures placed an even higher priority on improving yields. The industry’s focus on yield improvements is relentless but especially important when the cost of key input materials is on the rise.

In 2017 the semiconductor products that consumed the most silicon included analog, NAND, communication MOS logic, microcontrollers, and other MOS logic (automotive, consumer, multipurpose, etc.). It is interesting to note two major shifts in terms of the largest users of silicon.

2017 Wafer Demand By Product

Source: Semico Wafer Demand Database, Feb. 2018

In 2017, analog products surpassed NAND in terms of the amount of silicon required to produce all the analog units. This has not happened since 2010. Analog units increased 16.5% in 2017 while NAND units only increased 1.5%. It is interesting to note that the Analog products experiencing higher growth rates were products with lower ASP’s. This atypical type of high growth is usually characteristic of periods of inventory build for low ASP products. In 2018, analog units are expected to grow 5.3% while wafer demand will increase only 4.3%. In addition to a limited amount of 200mm capacity, silicon wafer supply continues to be tight and prices of wafers have increased. This will continue to put pressure on Analog manufacturers to improve productivity.

In 2017, NAND continued its transition to 256Gb and larger densities while at the same time more production shifted to 3D NAND and multi-bits per cell, helping to moderate silicon consumption. In 2018, NAND units are expected to decline as the move to higher densities continues. Production on 3D NAND processes continues to improve which will help reduce wafer demand by 1.6%.

The other significant shift in the top consumers of silicon was the growth in MCU and Other MOS logic which pushed silicon usage for DRAM out of the top five. MCU units grew 21.8% in 2017 while wafer demand grew 18.9%. Smart cards, IoT, and automotive all helped to increase demand for MCU products. At the same time, DRAM units declined 3.2% and wafer demand declined by 3.6%. DRAM was pushed out of the top five silicon consumers and is expected to remain there for the next two years.

In total, wafer demand is expected to grow 5.6% in 2018 as unit growth tapers off to a 5.6% increase. In 2018, MCU and Communication MOS Logic will experience double-digit wafer demand growth along with Sensors. Other Non-volatile will experience declining units and the largest decline in silicon demand.