Silicon Wafer Shortage 2018

The semiconductor industry is inching towards a supply crisis that could cripple several markets. Silicon wafer supply began to fall below booming demand early in 2017, and there’s still no path out of the shortage. Rivals have already begun to compete on the basis of dwindling supply, with Toshiba lagging behind other competitors in securing silicon wafer contracts. The decade-long boom, caused largely by IoT surges and increasing data storage needs, is unlikely to overcome the imbalance in 2018.

Raw Wafer Prices Surge

SEMI believes it will be producing over five million wafers a month by 2020. The law of supply and demand is already being felt in raw wafer prices. Manufacturers have returned to 200 mm production points to escape the crisis, but even these are in short supply. In response, investors are pulling back on capital spending on semiconductor production.

Fab operators have placed price pressure on wafer manufacturers for years, and recent economic crashes didn’t help matters. Prices are expected to rise by up to 20% as a way to stamp out some of the demand.

Consumers will feel those increases most. PC DRAM Four gigabyte module prices have already been bumped up, and smartphone prices will follow.

Opinions of the shortage are by no means unanimous. Gartner has changed its forecast for semiconductor growth from 15% to 7.2%. Gartner VP Ganesh Ramamoorthy believes the crisis is largely over already, and many journalists agree. Profit-driven brand titans don’t accept revenue loss easily, and those in the chip industry are finding new ways to improve the situation. Neon gas, which is needed for manufacture, will need to be conserved, and new gas recycling technology will be implemented. Whether you call the wafer shortage a challenge or a crisis, solutions are underway.

Read more: Silicon Wafer Shortage Starts in 2018