Shin-Etsu Chemical (4063-¥4,450-SB) Differences within the Industry Are Set to Widen Toshihiko Ginbayashi
Shipment volume of silicon wafers began to adjust in Nov owing to semi production adjustments. The decline in demand has been particularly great for wafers with diameters of 150mm or less.
There is a high probability that C1Q01 world shipment volume of silicon wafers will decline about 10% Q/Q, but the drop at Shin-Etsu Handotai is forecast to be less, mainly because of contributions from 300mm wafers, a leading-edge product, and because wafers with diameters of 150mm or less account for a small percentage of company sales. Overseas price negotiations, held at the beginning of the year, resulted in flat prices. The company believes the outcome will be similar for the domestic price negotiations, held in the spring.
With the expansion in demand for 300mm wafers, new facilities are likely to be operating at full capacity. Shin-Etsu Handotai completed the world's first commercial production facilities for 300mm wafers at the end of C2000; Manufacturing is slated to reach 40,000 units in Apr and 50,000 units in the summer. Inquiries from users are strong, and the company will be unable to meet all of the demand until production at a second facility starts up.
We maintain our Strong Buy rating. Prices are stable at a high level, and we estimate that sales of 300mm wafers in F2001 will amount to ¥40B with an operating margin of 30%. The company will benefit from being the forerunner in 300mm wafers, and differences among companies in the industry are likely to widen significantly. |
