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Silicon wafer prices head north

Posted: 07 May 2010     Print Version  Bookmark and Share

Keywords:silicon wafer  price hike  tight wafer supply 

The shortage of silicon wafers in the industry is driving silicon wafers prices to head north with some suppliers opting for "low single digit" increase.

MEMC Electronic Materials Inc. said that it raised its silicon wafer prices by the "low single digits" in Q1. Silicon wafer capacity is also "tight" for both 200- and 300mm products, MEMC said.

The U.S.-based company will also raise its prices for silicon wafers in both the second and third quarters by the "low to mid-single digits." SEH, Sumco, Wacker and others are also believed to be raising their silicon wafer prices.

There has been a strain on the supply chain following the horrific downturn in 2009. "Because of the market plunge in Q4 08 and Q1 09, most semiconductor wafer companies scaled back drastically in order to survive a long recession," said Richard Winegarner, an analyst at Sage Concepts, a research firm.

"Fortunately for them, the remainder of 2009 the market was not as bad as they originally expected. However the decisions to layoff people, close plants, and to move production of sub-300mm diameter wafers to more cost effective production locations had already been placed in motion," he said.

"That said it is a standard industry practice to cry tight supply in order to increase prices. I am pretty sure if you are willing to take wafers from MEMC, LG Siltron, and Covalent Materials, they would be glad to take your order," he said. "However if you want wafers from SEH, Sumco or Wacker, you will be asked to pay higher prices. After all prices fell very significantly in 2009 and they would like to get some of that price decrease back."

MEMC recently reported financial results for the quarter ended March 31. Net sales for Q1 10 were Rs.2,021.17 crore ($437.7 million), representing an increase of 23 per cent from Q4 09 net sales of Rs.1,647.13 crore ($356.7 million), and an increase of 105 per cent from Q1 09 net sales of Rs.988.19 crore ($214.0 million).

The company reported an operating loss of Rs.70.65 crore ($15.3 million) for the quarter, compared to an operating loss of Rs.50.79 crore ($11.0 million) in the 2009 fourth quarter and an operating loss of Rs.121.91 crore ($26.4 million) in Q1 09.

MEMC's net loss for Q1 10 was Rs.44.33 crore ($9.6 million), or minus Rs.1.85 ($0.04) per share, compared to a net loss of Rs.32.79 crore ($7.1 million), or minus Rs.1.39 ($0.03) per share in Q4 09 and net income of Rs.9.24 crore ($2 million), or 0.46 paise ($0.01) per share, in Q1 09. Results in Q1 10 include a non-cash Rs.24.47 crore ($5.3 million) loss, or 0.92 paise ($0.02) per share, associated with the valuation adjustment of the Suntech warrants.

Semiconductor materials sales for Q1 10 were Rs.1,012.66 crore ($219.3 million), an increase of 5.6 per cent from Q4 09 net sales of Rs.959.10 crore ($207.7 million), and an increase of 273.6 per cent from Q1 09 net sales of Rs.271.06 crore ($58.7 million).

"The sequential increase in sales was the result of higher wafer volumes and modestly higher wafer prices. The year-over-year increase is attributable to significantly higher wafer volume partially offset by lower prices," according to MEMC.

Segment operating loss narrowed to Rs.36.48 crore ($7.9 million) in Q1 10 first quarter from Rs.44.33 crore ($9.6 million) in Q4 09 and from Rs.338.94 crore ($73.4 million) in Q1 09.

Solar materials sales for Q1 10 were Rs.728.21 crore ($157.7 million), an increase of 8.6 per cent from Q4 09 net sales of Rs.670.49 crore ($145.2 million), and an increase of 1.5 per cent from Q1 09 net sales of Rs.717.13 crore ($155.3 million).

Segment operating profit decreased to Rs.56.34 crore ($12.2 million) in Q1 10 from Rs.149.61 crore ($32.4 million) in Q4 09 and from Rs.313.08 crore ($67.8 million) in Q1 09.

Germany's Wacker Chemie AG recently posted a strong rise in silicon wafer demand during Q1 10. The division generated total sales of Rs.1,299.88 crore ($281.5 million), up 74 per cent against the prior-year period. Compared with Q4 09, Siltronic's sales grew 19 per cent.

Wafer sales by surface area sold tripled year over year. Plant-capacity utilisation was correspondingly high, averaging 80 per cent. For some product types, plants reached full capacity.

Having posted a negative EBITDA of minus Rs.356.02 crore ($77.1 million) in Q1 09, Siltronic generated EBITDA of Rs.6.93 crore ($1.5 million) in Q1 10.

Amid a loss for the year, Japan's Sumco Corp. is reducing its 200mm capacity by 20 to 30 per cent. The company sales fell 44.3 per cent for its fiscal year. At the same time, it is looking to raise prices.

- Mark LaPedus
EE Times

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