As steep decline in chip demand continues
South Korean chipmakers Samsung and SK Hynix are planning to procure fewer silicon wafers used in chip production than they initially planned going forward, TheElec has learned.
The chipmakers discussed the issue with their respective wafer suppliers sometime during the fourth quarter, sources said.
Silicon wafers are cut out from crystallized silicon. The chips used in electronics are cut out from these wafers.
There are five major suppliers of these wafers; Japan’s Shin-Etsu and Sumco, Taiwan’s GlobalWafers, Germany’s Siltronic and South Korea’s SK Siltron.
During the two years of the pandemic at its height, the supply of these wafers was tight and in short supply for chipmakers.
This continued in 2022 when the global economic downturn started. This is because the silicon wafer is a back-end industry and the effects of the consumer market come later to them than front-end industries that sell products directly to customers.
Last year during the third quarter, when chipmakers reported their first profit declines, those of wafer companies grew.
Chipmakers are seeking to lower the number of wafers they procure more than usual. Wafer supply deals are usually long-term, which usually limits chipmakers’ adjustment of the number they buy but Samsung and SK Hynix have asked for more reduction, sources said.