The global shortage of chips has overwhelmed the production capacity of fabs. At the same time, the supply of upstream semiconductor equipment has also been in short supply. The market demand for semiconductor materials has increased, and material shortages have begun to spread in the industry.
The direct or indirect auxiliary raw materials for the production of chips are collectively referred to as semiconductor materials, which are of various types, including silicon wafers, photoresists and supporting reagents, high-purity reagents, electronic gases, polishing materials, targets, masks, etc. Dividing these semiconductor materials according to market size and proportion, the top three are silicon wafers (33%), electronic gases (14%), photoresists and supporting reagents (13%). Shortages of all three categories of materials are receiving more attention globally.
Silicon Wafer
Silicon wafers are very important raw materials for fabs. At present, most chip manufacturers including TSMC, Intel, Samsung, Micron, etc. are launching multinational factory construction plans and expanding production capacity, thereby driving the demand for silicon wafers to increase.
According to statistics, in 2021, 19 high-capacity wafer fabs in the world will enter the construction period, and another 10 wafer fabs will start construction in 2022. The amount of silicon wafers has increased, but the market supply is limited and new production capacity has not been opened in time, which has contributed to a wave of silicon wafer price hikes. This provides excellent business opportunities for the world's major silicon wafer manufacturers, especially the leading ones.
At present, the top four silicon wafer manufacturers in the world are: Shin-Etsu of Japan (Shin-Etsu, with a market share of 33%), SUMCO, Universal Crystal of Taiwan, and Siltronic of Germany.
Facing the current market situation, Mako Hashimoto, president of SUMCO, the world's second largest silicon wafer factory, said that such a long-term shortage of silicon wafers has never been seen before. On February 9, SUMCO said that its long-term contracts for 12-inch silicon wafer production capacity, including the addition of new fabs, have been signed until fiscal year 2026. In addition, demand for 8-inch silicon wafers is expected to continue to strengthen.
SUMCO said that the long-term contract prices remained unchanged in the fourth quarter of 2021, but the spot prices of 12-inch and 8-inch silicon wafers continued to rise.
Since the expansion rate of global silicon wafer manufacturers has not kept pace with the market demand, as long as the funds are in place, the expansion of production capacity has become a top priority.
According to the statistics of SUMCO, in 2020, the total global production capacity of 8-inch silicon wafers will be about 5 million pieces/month, and the production capacity scale will remain basically stable. The total production capacity of 12-inch silicon wafers will be about 6-7 million pieces/month, and the production capacity has increased. After 2020, even with rapid expansion based on existing plants, the global expansion space for 12-inch silicon wafers is relatively limited.
Electronic Gas
The supply and demand of the semiconductor material market is already very tight. To make matters worse, factors outside the market have further exacerbated the shortage of materials. Recently, electronic gases are suffering from this.
Ukraine is a supplier of electronic gas, and recently, the export of related gas materials has been hindered by Russia/Ukraine tensions.
Peter Lee, an American-based foreign analyst, said that if Russia uses force against Ukraine, it will hinder the supply of neon, krypton and xenon, which are key raw materials for chip production. The manufacture of DRAM and NAND Flash requires a neon-based lithography process. Currently, memory chip manufacturers hold 6-8 weeks of key gas inventories, which is higher than the normal value of 4 weeks. However, the supply of these gases is extremely dependent on Ukraine. If the war is interrupted Output, chip production will take a hit.
It is reported that Ukraine accounts for 70% of global neon gas production. Ninety percent of U.S. chip-grade neon comes from Ukraine, and 35% of palladium comes from Russia. By-products, which are then sent to Ukraine for refining. Palladium is used in products such as sensors and memory. An escalation of Russia/Ukraine tensions could disrupt neon exports, push up wafer prices and exacerbate the chip shortage.
Excimer lasers used in ArF-Immersion equipment for semiconductor exposure processes are achieved by mixing specific gases such as neon, fluorine, and argon, with neon making up more than 95% of such mixtures. During the 2015 conflict in Ukraine, excimer laser gas mixtures used in semiconductor manufacturing were traded for as much as $25,000 per 50 liters, a more than 20-fold increase from previous levels.
In 2015, when the price of neon gas was soaring, the industry conducted research on ways to reduce its use. By adjusting the software logic and optimizing the purge process of the aeration program, usage can be reduced by 25-50%. Nonetheless, neon and the like still play an important role in semiconductor production.
In early February, the two factories jointly operated by Western Digital and Kioxia in Japan, due to material pollution affecting production, it is estimated that the global supply of NAND Flash will drop by 10% in the first quarter.
Photoresist
Photoresist is an organic compound whose chemical structure changes after exposure to light of a specific wavelength, and its solubility in the developer will change, so it is also called photoresist. The positive film undergoes a photochemical reaction after exposure and can be dissolved by the developer, leaving the same film pattern as the mask, while the negative film becomes insoluble after exposure, and the non-exposed part is dissolved, and the obtained pattern is the same as the mask. version is the opposite.
Photoresist is the core material of the lithography process, mainly composed of resin, sensitizer, solvent, additives, etc., of which resin and sensitizer are the core parts.
In the field of semiconductor photoresist, Japanese companies occupy a leading position. Except for DuPont, the top five are Japanese companies. Among them, the products of JSR and TOK can cover all kinds of semiconductor photoresist and are the absolute leader, especially in the high-end EUV market.
In the current situation of global core shortage, due to high monopoly, the market supply and demand of photoresist is also not optimistic.
Other Materials
In addition, a variety of other materials are also in short supply and fully expanded.
For example, Japan's ADEKA recently announced that it will build a material factory for advanced logic chips in its subsidiary "Taiwan Adiko Precision Chemicals Co., Ltd.", with an investment of 2.5 billion yen. It is expected to start construction in August 2022 and start in 2024. Production started in April.
ADEKA said that the Taiwan factory will become the second overseas semiconductor material production base after South Korea.
It is reported that ADEKA Taiwan's new factory will produce wiring materials for silicon wafers, and it is expected to be used for next-generation process chips with line widths thinner than 5nm. At present, there are only about 5 manufacturers in the world that can support 5nm grade wiring materials.
Since the focus of global chip manufacturing is in Asia, and the focus of Asia is in Taiwan, China, ADEKA is not the only international semiconductor material manufacturer recently announced to expand production in Taiwan.
Sumitomo Bakelite Co., Ltd. announced in November last year that it will invest 3.3 billion yen to build a new plant in the existing plant of Kaohsiung City's Daliao District, Taiwan's subsidiary Sumitomo Peike, mainly for the production of professional packaging and testing outsourcing agents. Work (OSAT) materials. Construction is expected to start in March this year and production will begin in mid-2023.
Merck is building a new production center of more than 15 hectares in Nanke Kaohsiung Park. This will be Merck's world's first large-scale production and application R&D center for semiconductor materials. The new facility will include Merck's full range of semiconductor solution products.
Entegris announced in early December last year that it would expand its investment in the advanced technology factory in Nanke Kaohsiung Park. The investment scale will increase to US$500 million in the next three years, and it will expand the Taiwan Technology Research and Development Center (TTC) in Hsinchu.
Infineon may raise prices due to increased costs
It is said that Infineon recently issued a notice to distributors, saying that the imbalance between supply and demand of semiconductor production capacity will run through 2022. Under the influence of the rising cost structure, the company can no longer absorb the increased costs by itself. Therefore, Infineon must do as much as possible. Allocate the burden on a broad basis.
The global chip supply chain is still in a state of supply shortage and still faces the threat of supply chain disruption. At the same time, Infineon is under higher cost pressure, including raw material, energy and logistics costs.
Increased investment by Infineon's global manufacturing partners to address high utilization rates is leading to additional costs. As a result, suppliers are passing on higher price levels to Infineon.
Although Infineon has not made clear the specific price increase this time, its intention is very obvious.
