Shortage of logic chips increasing epitaxial wafer prices

The prices of epitaxial wafers that are used in logic chip production are expected to continue their current increase due to high demand.

There are polished wafers and epitaxial wafers. Polished wafers are made out of polycrystalline silicon and are used mostly in memory chip production.

Epitaxial wafers are polished wafers with single crystalline material deposited atop them.

They are usually used for logic ICs and other chips such as CMOS image sensors.

For instance, gallium nitride (GaN) power management ICs are made out of GaN epitaxial wafer.

More epitaxial wafers are being used for specialty chips for different industries.

Most wafer producers have been operating their factories at 100% capacity for over a year now due to the global chip shortage, a source at a chip company said.

But epitaxial wafers require more sophisticated technology to produce compared to just polished wafers as is being under-supplied, they said.

These companies will need assurances from customers that they will buy the epitaxial wafers if they spend more to increase their production capacity, another source at a separate chip company said.

There are calls for South Korean chip companies such as Samsung Electronics and Sk Hynix to react to the situation.

Japan’s Sumco, which manufactures epitaxial wafers, recently announced that it will spend 2.4 trillion won to expand its production capacity, but this increased supply is expected to head towards TSMC.

South Korea’s SK Siltron said it plans to expand its epitaxial wafer production at its facility in Cheongju but the capacity increase is expected to be minor.

SK Securities analyst Kim Young-woo said the price increase in epitaxial wafers will be higher compared to conventional wafers due to the shortage.