Silicon wafer shipments are expected to stay in low gear in the fourth quarter of 2019 as clients have decelerated their shipment pull-in to facilitate year-end financial settlements, according to industry sources.

Affected by the US-China trade war, many clients have failed to honor procurement contracts inked with silicon wafer suppliers since the second quarter of 2019. Shipments of 12-inch wafers picked up slightly in the third quarter thanks to strong demand from TSMC to support its 7nm and 5nm production, the sources said.

The sources said while 12-inch silicon wafers are mostly for handset and memory chips, 8-inch ones see much wider applications including automotive electronics, consumer electronic devices and power supply. Accordingly, demand for 8-inch wafers can best gauge the overall economic outlook.

Most suppliers are still plagued by high inventory of 8-inch wafers amid the sluggish shipment pull-in at clients, and it will take two quarters for them to digest inventories in hand after the global economy starts to turn around.

Many 8-inch silicon wafer plants in China are set to kick off volume production in 2020, which, however, is expected to pose only limited impact on major suppliers worldwide given that even existing Chinese 8-inch wafer suppliers still have room for improving their yield rates, the sources said.

The sources said demand rebound for 12-inch wafers may come earlier than that for 8-inch ones, which in turn may see quicker upturn than 6-inch wafers.

GlobalWafers seems less affected than smaller peers by lackluster shipment performance as it has maintained major clients including TSMC and IDMs such as Infineon and TI, which have chosen to honor procurement contracts with the wafer vendor and reduce spot-market purchases, said the sources.

By: DocMemory
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