Tuesday, June 11, 2019
The ongoing US-China trade war may force some silicon wafer suppliers to suspend capacity expansion plans or allow proper buffer space for clients to honor their purchase pacts as the gaps between spot and contract prices are widening further due to declines in demand, according to industry sources.
The sources said that driven by rapid development of 5G, IoT, and IoV (Internet of Vehicles) applications and Chinese semiconductor firms rushing to stockpile inventories, silicon wafer supply shortages had lasted through 2017 and 2018, prompting the major vendors including Shin-Etsu Handotai, Sumco, GlobalWafers, Silitronic and SK to expand capacities starting from 2018.
The supply shortages were widely expected to last into 2020 at least, sending many downstream clients keenly signing purchase deals in 2018 to secure priority supply of silicon wafer. Leading suppliers were also eager to expand production capacity expansions, with others in China building new plants.
But 2019 has turned out to be a critical year for the development of the silicon wafer industry, the sources indicated, citing the growing divergences between the spot and contract prices for silicon wafers, driven by growing impacts of the worsening US-China trade rows on the global semiconductor industry.
Whether vendors can allow buyers to flexibly honor their purchase agreements will affect the development of the silicon wafer industry. If capacity expansions by existing leading vendors and the establishment of new plants by Chinese suppliers can be put on hold, it will be a healthy development for the global silicon wafer industry in the long term, the sources commented.
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