Chip profit declines, Samsung and SK Hynix plan to purchase fewer silicon wafers

IT House news on January 11, according to TheElec, South Korean chipmakers Samsung and SK Hynix are planning to purchase silicon wafers for chip production, but the quantity is less than originally planned.

The chipmakers discussed the issue with their respective wafer suppliers sometime in the fourth quarter, the sources said.

Silicon wafers are cut from crystalline silicon. Chips used in electronics are cut from these wafers.

There are five major suppliers of these wafers, including Japan’s Shin-Etsu and Sumco, Taiwan’s GlobalWafers, Germany’s Siltronic and South Korea’s SK Siltron.

During the worst two years of the pandemic, these wafers were in tight supply and chipmakers were in short supply.

This continues in 2022 when the global recession begins. This is because silicon wafers are a back-end industry, and the influence of the consumer market comes later than that of the front-end industry. The front-end industry sells products directly to customers and is more directly affected.

IT Home learned that in the third quarter of last year, when chipmakers reported a decline in profits for the first time, the profits of wafer companies increased.

Chipmakers are looking to reduce the number of wafers they purchase even more than usual. Wafer supply deals are typically long-term, which typically limits chipmakers’ adjustments to purchases, but Samsung and SK Hynix have asked for further cuts, the sources said.