As shipments of computer chips, smartphones and DRAM modules return to pre-COVID-19 normal volumes, the high-tech industry is suffering from an increasing number of negative business results. Silicon wafer makers are also suffering from new market conditions, although it's not just bad news for manufacturing as a whole.

According to SEMI Silicon Manufacturers Group (SMG), an industry association that provides information and statistics on the silicon industry and semiconductor market, global silicon wafer shipments fell to 3.265 billion square inches (-9.0% sequentially) in the first quarter of 2023 compared to the fourth quarter of 2022. On a year-over-year basis, the silicon wafer market declined 11.3% from 3.679 billion square inches in the first quarter of 2022.

Anna-Riikka Vuorikari-Antikainen, President of SEMI SMG, said the decline in silicon wafer shipments reflects the weakness in semiconductor demand since the beginning of the year. Vuorikari-Antikainen said that demand for memory chips and consumer electronics devices declined the most, while automotive and industrial applications remained relatively stable.

SEMI SMG emphasized that silicon wafers are the basic building blocks of semiconductors, which in turn are "the core building blocks of virtually all electronic goods, including computers, telecommunications equipment and other consumer electronics." These highly engineered "thin" discs range in diameter from 1 inch to 12 inches and are the base material for most semiconductor devices or chip manufacturing.

The market data provided by SEMI SMG includes both polished wafers, such as original test and epitaxial wafers, and non-polished wafers shipped to end users, namely CPU, chip and DIMM manufacturers. SEMI SMG is committed to "facilitating collective efforts" to address issues related to the silicon industry, including the development of market information and statistics on ongoing market trends.

The trade association did not provide any projections on future (expected) quarterly performance, and third-party analysts are already watching for signs of a potential market rebound. According to Gartner, chip revenue should return to growth in 2024.

Looking back at 2022, with the high price of silicon, the price of silicon chips has been soaring. Until the end of the year, the price of silicon wafers plunged again in a "stage", falling by more than 20%. In addition to the ups and downs of silicon wafer prices, the expansion of silicon wafer production capacity and silicon wafer overcapacity have also become a major industry hotspot.

It is reported that in 2022, China plans or is under construction of up to 32 silicon wafer projects, with a total scale of 543GW, involving an investment amount of 419.786 billion yuan. And unlike the long expansion cycle of the silicon material field, the expansion cycle of the silicon chip link is relatively short. Taking Gaojing Solar as an example, its 50GW monocrystalline silicon rod and 30GW monocrystalline silicon wafer project in Yibin, Sichuan Province, the first phase of the construction of 25GW monocrystalline silicon rod and 25GW monocrystalline silicon wafer production line and supporting facilities, the project officially started in September 2022, and officially put into operation in December that year. It took just 85 days from construction to production. Because of this, the capacity of many new silicon players will expand rapidly in 2022, almost on par with the industry's leading companies.

Under the tide of expansion, the competition in the industry is bound to intensify, including the competition in price. However, Longji and Central still dominate the price of silicon wafers very strongly in 2022, which well transmits the pressure of rising silicon materials. In 2022, Longi shares, the silicon leader, adjusted the price of silicon chips 14 times. Taking 182 silicon wafers as an example, at the beginning of 2022, the price of 165μm thickness is 5.85 yuan/piece, since then the thickness of silicon wafers not only dropped to 150 microns, the price is also rising all the way, to July 26, the price reached the peak of the year, 182 silicon wafers the highest annual increase of 28.89%. The highest increase of 166 silicon wafer was 25.84%, and the highest increase of 158.75 was 26.92%. On November 24, Longi silicon began to cut prices, and on December 23, it was significantly reduced to 5.4 yuan/piece. Compared with the price at the beginning of the year, Longi 182 silicon chips decreased by 7.69% and 166 silicon chips decreased by 9.74%.

Another silicon chip giant, Central shares, adjusted their prices 10 times in 2022, with the highest price appearing on September 8, 2022. The highest annual increase of 218.2mm silicon wafer was 33.91%, the highest increase of 210 was 34.13%, and the highest increase of 182 silicon wafer was 36.56%. From October 31, Zhonghuan began to reduce the price of silicon wafers. The same as Longji shares, Central shares also significantly adjusted their prices on December 23, with 210 silicon chips falling to 7.1 yuan/piece and 182 falling to 5.4 yuan/piece.

At the same time, the price of the entire silicon wafer market is basically the same as the price trend of silicon wafers in Longji and Central. According to the data released by the Silicon Industry Branch, from the beginning of November 2022, silicon chip prices showed a slight decline, and then all the way down.

So far, the status quo of silicon wafer oversupply has not changed, the upstream raw material prices are falling, so it is expected that silicon wafer prices will continue to maintain a downward trend in the short term, but in general, the inventory of various enterprises has not increased significantly, so the price will not fall sharply in the short term.