2019 Is the Time to Consider Die and Wafer Banking
The silicon wafer market experienced a market boom between 2016 and 2018. In 2018 alone, silicon wafer shipments reached a record high of 12,732 million square inches (MSI), which was up 8 percent from 2018. Despite 3.6 percent market growth through 2019, however, certain areas of the silicon wafer industry have experienced a minor slowdown, particularly in the 300mm wafer market that has hovered at around 95 percent capacity, down from 100 percent capacity in 2018.
As is always the case with market analysis, this news can be positive or negative depending on what side of the market your company is on. For chipmakers and OEMs looking to stockpile bare die and wafer for specialized ASICs, this means that now is an ideal opportunity to operate as a buyer while there is capacity to go around.
Based on current trends, this relatively flat market is not going to last long. “The consumption rates are going to be up,” said Damian Thong, an analyst at Macquarie Securities. “There is new capacity coming in and the shift toward more advanced notes will drive epi wafer demand…It’s fairly clear that we will return to a shortage of wafer within two years.”
Perhaps sensing a looming shortage in the wake of the production slowdown in the Chinese market, even with adequate short-term supply, silicon wafer prices have continued to rise. Also a factor in the price increases is the introduction of new production plants meant to meet the looming wafer demand expected of the IoT and automotive industry. According to Linx Consulting, wafer prices will have to rise as much as 35 percent to fund a new plant in the coming years.
What does this mean for OEMs today? It means that the longer they wait to secure the lifecyles of their products — both in the short and long term — the more difficult and costly their efforts will be. As a buyer, it is critical to take advantage of the market when it is in your favor, before lead times extend to the point where allocation issues become expected.
For OEMs who wish to incorporate IPs through the use of ASICs in their builds, this holds even more true. Not only does such an initiative grant supply chains additional insulation against a growing counterfeit market, but the increased use of ASICs requires OEMs to enter into contracts with wafer manufacturers, which allows them to avoid unexpected market fluctuations and supply chain disruptions such as obsolescence. With the aid of Partstat’s industry-leading die and wafer banking capabilities, even smaller OEMs with limited capital on hand can invest in a long-term storage infrastructure.