Silicon Wafer Pricing Falling for the First Time in Three Years

Semiconductors are largely made using silicon, even though there are other types of substrates that can be used as well, such as gallium nitride or silicon carbide. However, most semiconductors today are made using silicon wafers, which in turn means that silicon wafers are a key material in the semiconductor industry. Over the past three years, the cost of silicon wafers have increased in pricing, due to higher demand, as there has been a higher demand for semiconductors. However, as there are a limited number of suppliers of silicon wafers, especially at the larger 12-inch size, the increased cost in materials has had an impact on the cost of the final semiconductors.

Reports out of Taiwan are suggesting that the price of 12-, 8- and 6-inch wafers are all starting to see a decline in price. We’re talking single digit percentages here and it should be noted that these are spot prices, not contract prices, which are negotiated between the parties a long time before delivery. That said, the fact that the spot prices are point downwards also means that companies with not so great contract pricing are starting to want to renegotiate their contract pricing, as even a small saving here can lead to a bigger saving further down the line. Many IC manufacturers have also asked to pause their contract orders, as the utilisation rate of many foundry nodes are going down, which means the foundries aren’t in need of as many wafers as they have ordered. Hopefully this will all lead to lower prices across the board when it comes to semiconductors this year, but it’s too early to draw any real conclusions. It’s also possible that the end customers won’t see any direct benefits from lower costs to the manufacturers.