China Seeks Acquisition of Siltronic to Speed up Silicon Wafer Market Consolidation

16 Dec

China’s National Silicon Industry Group, a government-backed semiconductor investment fund, was among those from China that were seeking the acquisition of German firm Siltronic to expand the market.

The news of the potential acquisition came as a shock to the global semiconductor industry, after Taiwan’s GlobalWafers acquired U.S. firm SunEdison in August 2016 for NT$21.43 billion to become the world’s third largest silicon wafer supplier.

If the acquisition goes through, China can greatly reduce its reliance on global wafer fabs. In addition, Siltronic’s clients include most of the industry’s leaders, such as TSMC, UMC, Vanguard International Semiconductor, Intel, Samsung Electronics, Toshiba, GlobalFoundries, SK Hynix, Powerchip, Texas Instruments, NXP Semiconductors, Micron, and STMicroelectronics. Taking over Siltronic would help China expand its semiconductor market.

As the silicon wafers in short supply, 12-inch fabs around the world scramble to increase the capacity. Chinese media reported that Japanese firms Shin-Etsu Chemical Co and Sumco account for almost half of the global market share for silicon wafers. With their long-term research and investment in 12-inch wafers, the two Japanese companies also supply most of the world’s high quality and advanced silicon wafers.

However, the Chinese government is injecting large sums of funds to help the Chinese industry reduce its reliance internationally. China’s national semiconductor fund currently focuses on chipset design, wafer production, IC testing and packaging, equipment and materials, as well as silicon wafers.

In addition to Shin-Etsu and Sumco, Siltronic, SunEdison, and LG Siltron came in third to fifth, respectively, before No. 6 GlobalWafers acquired SunEdison to make it to the top three. If China’s National Silicon Industry Group successfully purchases Siltronic, the leader group in the silicon wafer industry may reshuffle again.

In response to the reports, market analysts pointed out that as the U.S. and European countries keep a closer eye on China’s activity on their hi-tech companies, the U.S. and German governments may not approve such a sale. Siltronic may also be seeking better deals elsewhere.

Shipment of 12-inch wafers continues to rise in terms of its proportion to all other wafers, and it is expected to account for 75 percent of all wafers by 2020.

Although the 8-inch wafers are currently a hot item on the market due to the higher demand for fingerprint recognition in smartphones and its IoT applications, all eyes are on the future prospects of the 12-inch wafers. Wafer fabs will gradually introduce advanced process note for 12-inch wafers, and the technology transition in 3D NAND memory also make 12-inch wafer a hot topic. China is also building new 12-inch fabs. Industry consolidation is an inevitable trend as major suppliers seek to reinforce their capacity and supply.

Image: Shutterstock

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