Makers of blank silicon wafers are enjoying an uptick in margins as supply is having a hard time to keep up with growing demand. Sales were up 20.8 percent last year and DigiTimes Research predicts they'll rise another 20 percent this year.
The average selling price (ASP) per square inch of a silicon wafer rose to $0.86 in the first quarter of this year, the highest price since 2013. A further increase to $1 is expected towards the end of this year, which will be a level not seen since the 2009-2011 period.
There aren't a lot of players in this market. Shin-Etsu and Sumco control over half of the market, GlobalWafers is the third largest silicon wafer maker, and if you add in Siltronic and SK Siltron you've named the companies that supply 95 percent of the market.
Top silicon wafer company Shin-Etsu saw its operating margin climb to 32.2% in the first quarter of 2018, up from 31.2% in the prior quarter and 24.7% a year earlier, while second-ranked Sumco's operating margin grew 6.4pp sequentially and 11.9pp on year to 25.3%. Shih-Etsu and Sumco collectively hold a more than 50% share of the global silicon wafer market.
Taiwan-based GlobalWafers, the world's third-largest silicon wafer supplier, saw its operating margin swing to 10.1% in the first quarter of 2017 from negative 3.7% in the fourth quarter of 2016. GlobalWafers' operating margin continued its rally reaching 28.2% in the first quarter of 2018.
It's believed that demand of 200mm and 300mm wafers will surpass supply until at least 2020. After that period, it will depend a lot on how much demand grows. Smartphone and cloud storage applications are driving demand for 300mm wafers, while industrial, IoT and automotive applications are boosting demand for 200mm versions.