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Tight supply hikes up silicon wafer prices

Posted: 07 May 2010 ?? ?Print Version ?Bookmark and Share

Keywords:silicon wafer? price hike? tight wafer supply?

Silicon wafers prices are increasing amid tight supply in the industry.

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 $437.7 million, representing an increase of 23 percent from Q4 09 net sales of $356.7 million, and an increase of 105 percent from Q1 09 net sales of $214.0 million.

The company reported an operating loss of $15.3 million for the quarter, compared to an operating loss of $11.0 million in the 2009 fourth quarter and an operating loss of $26.4 million in Q1 09.

MEMC's net loss for Q1 10 was $9.6 million, or minus $0.04 per share, compared to a net loss of $7.1 million, or minus $0.03 per share in Q4 09 and net income of $2 million, or $0.01 per share, in Q1 09. Results in Q1 10 include a non-cash $5.3 million loss, or $0.02 per share, associated with the valuation adjustment of the Suntech warrants.


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