I pointed out in a recent article on Seeking Alpha that the semiconductor industry will not get out of the red for all of 2012. As we go down the supply chain, both semiconductor equipment and materials will feel the impact of lower semiconductor sales, which are primarily driven by dour macroeconomics.
According to the report recently published by The Information Network, "The Global Market for Equipment and Materials for IC Manufacturing," the chemicals and materials market could drop in the double digits between 2011 and 2012, weighed down by the silicon wafer sector. In 2011, the silicon wafer sector also kept the overall market from registering a gain.
As shown in the table below, the revenues for the five major sectors of semiconductor fab materials will drop 9.5% in 2012 to $15.3 billion from $16.9 billion in 2011. Already for the first six months of 2012, the market has dropped 8.2% and will continue dropping for the next six months.
2011 Revenues ($M)
2011 Market Leader
6 Mos 2012 Change
2012 Revenues ($M)
2012 Growth Forecast
Silicon wafers on an area basis only decreased 4.3% in the first half of 2012, from 4,680 million square inches (MSI) in 2011 to 4,480 MSI in 2011. Revenues decreased 14.7% in the same period, indicating a price decrease of 10.4% for the period. Prices decreased across all wafer sizes. The 2011 market leader was SUMCO (OTCPK:SUMCF) followed by Shin-Etsu (OTCPK:SHECF) and MEMC (WFR).
A key factor is that semiconductor manufacturers are demanding price drops. The precipitous drop in photovoltaic polysilicon prices in the past few years and a further projected drop of 48% price in 2012 are a catalyst for buyers of wafers at these semi firms to demand lower prices from semiconductor wafer manufacturers because of reduced raw material costs.
In the gases market, revenues will increase 1.2% in 2012 because of the requirement of higher purity product as line widths decrease. Air Products (APD) was the market leader in 2011 followed by Air Liquide (OTC:AIQUF).
The resist market is moving toward the more expensive deep UV technology, and so revenues will increase 2.3% in 2012. JSR (OTC:JSCPF) was the market leader in 2011 followed closely by Dow Chemical (DOW).
The CMP slurry is expected to grow 4.3% in 2012 as extremely low defect levels at insanely small sizes drive the need for high-cost, high-performance slurries for sub 32nm design rules. Cabot Microelectronics (CCMP) led the overall slurry market in 2011. In the CMP slurry market, we will see a snap back from the rapid growth of copper slurries that moved into the memory market in the past two years. With the slowdown of the memory device sector, there will be a concomitant drop in high-priced copper slurry consumption.