Chipmakers Might Increase Silicon Wafer Orders to Build Safety Stock: SEMI

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Silicon wafer (image credit- Flickr)
  • Global semiconductor market, as per SEMI, could see a V-shaped recovery towards the end of 2020
  • Global semiconductor materials market revenues had edged down 1.1 per cent in 2019

Semiconductor Equipment and Materials Institute (SEMI), noted that the chipmakers in the second quarter of 2020, are expected to increase silicon wafer orders to build up safety stock for future demand. This move, as per SEMI, should soften the impact on sales for the quarter.

“If the pandemic erodes semiconductor demand well into the second half of 2020, silicon wafer shipments growth could continue through the second quarter before dipping in the third quarter. In this downbeat scenario, 300mm silicon wafer shipments in 2020 would be flat or see a slight decline despite the sizable jump in the second quarter, and 200mm and 150mm shipments would drop by 5 percent and 13 percent, respectively,” read SEMI’s official statement.

300mm silicon wafers

In the 300mm silicon wafer space, manufacturers in all but the small-diameter industry are beefing up inventory to mitigate wafer supply chain risks, as Micron reported in its recent earnings call. Other semiconductor manufacturers and some silicon wafer manufacturers have revised down their earnings guidance or even withdrawn previous forecasts.

“The question remains whether the uncertainty sowed by COVID-19 will lead to a plunge in demand in the second half of this year or if the heavy impact will be confined to a few months,” read the report.

V-shaped recovery towards the end of 2020

The bullish view, as laid out by SEMI, is that the global semiconductor market could see a V-shaped recovery toward the end of 2020. This is if incase massive stimulus packages planned by governments around the world soften the economic blow – a scenario the semiconductor supply chain needs to prepare for by building up inventory to meet the potential surge in demand.

“If a robust semiconductor industry recovery begins in the second half of 2020, the second quarter inventory buildup will help drive silicon wafer shipment growth and that uptrend will continue through the rest of 2020 as expectations rise that the chip industry will rebound to meet pent-up demand,” read the report.

Taiwan is the largest consumer of semiconductor materials

For the 10th consecutive year, Taiwan, at $11.3 billion, was the largest consumer of semiconductor materials on the strength of its large foundry and advanced packaging base. Korea remained in the second spot, while, China, the only materials market to register an increase in 2019, was third. All other regions saw flat revenue or low single-digit declines.

It is to be noted here that worldwide total wafer fabrication materials logged a slight decrease of 0.4 per cent, from $33.0 billion to $32.8 billion, wafer fab materials, process chemicals, sputtering targets, and CMP registered declines of more than two per cent year-over-year (YoY). Packaging materials slipped 2.3 per cent, from $19.7 billion to $19.2 billion, in 2019. The only two categories to notch increases last year were substrate and other packaging materials.

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