Popular Keywords
News
[News] SUMCO: Business with Key Memory Client Hit Hard by China’s Local Silicon Wafer Trend
Often regarded as an industry disruptor in memory and chip making, China is challenging major players in South Korea and Taiwan with the emergence of Semiconductor Manufacturing International Corp. (SMIC) and NAND-focused Yangtze Memory Technologies Corp. (YMTC). However, with the support of government policies, the country is now posing threats to firms in the upstream semiconductor sector as well, according to Japan’s silicon wafer giant SUMCO.
China’s Homegrown Wafers Output Reaches 1 Million
According to the information provided on the company’s website, SUMCO CEO Mayuki Hashimito warned at the recent earnings call that though the majority of wafers produced in China are test wafers, the country’s wafer production output has reached around 1 million (per month).
According to Hashimoto, China’s key memory player is thought to be the bulk purchaser of the country’s local wafer production, as the company is thought to be consuming 400,000 to 500,000 in domestically produced wafers. Notably, he noted that SUMCO’s business with the company, which is likely to be YMTC, has declined substantially.
Hashimoto further explained that this client fabricates stacked memory, which makes its wafer consumption at a relatively high level. Therefore, the overarching policy of homegrown wafers has a significant impact on SUMCO.
Japanese players, led by SUMCO and SEH (Shin-Etsu Handotai), currently hold a 52% share in the global silicon wafer market, according to TrendForce.
However, as geopolitics is having a major impact, China has developed its own capability to fabricate wafers. Though the quality of these wafers are not necessarily good, Chinese chip makers, particularly those with a high degree of state involvement, have little choice but to use made-in-China wafers, Hashimoto noted, warning that the situation may further disrupt the global market.
Imbalance between Supply and Demand for Silicon Wafers to Improve in 2025
According to its press release, SUMCO reported net sales of 296,664 million yen, a decrease of 7.5% year-on-year, while operating profit plummeted by 51.5% to 29,974 million yen.
For the upcoming quarter, SUMCO projects the semiconductor demand for data center use should continue strong driven by AI needs, while demand for automotive, consumer, and industrial uses will be weak, so that an overall gradual recovery is seen.
On the other hand, SUMCO’s Taiwanese partner, Formosa Sumco Technology, agrees with SUMCO’s market outlook. According to a report by TechNews, the company recently stated that the recovery of global semiconductor industry end-market demand remains slow. The mature process sector also faces intense competition from low-cost bids by Chinese manufacturers. Overall, the wafer foundry industry is still undergoing a correction phase.
However, Formosa SUMCO expected that by 2025, driven by the AI market, the imbalance between supply and demand for silicon wafers will improve. The surplus supply is anticipated to shrink to less than 10%, and by 2026, it will further narrow to 6%. By 2027, supply and demand are projected to return to equilibrium.
Additionally, Taiwan’s Topco Scientific, a key member of TSMC’s supply chain, noted that Chinese silicon wafer manufacturers mainly focus on providing mature process wafers and are aggressively pursuing market share with low-price strategies. As China actively promotes localization, aiming to achieve 50% domestic production by 2025, it is expected to secure a significant position in the future market.
Read more
(Photo credit: SUMCO)
