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To: All Mtn Ski who wrote (4558)	1/12/2000 10:27:00 AM
From: Proud_Infidel	Read Replies (1) \| Respond to of 4697

Prices rise for advanced silicon substrates as wafer glut eases By J. Robert Lineback Semiconductor Business News (01/12/00, 09:04:23 AM EDT) PEBBLE BEACH, Calif. -- The severe glut of silicon substrates for chip making is easing in some market segments, and prices for high-purity 200-mm wafers are rising after falling 40% in the past three years, said a semiconductor materials specialist during the Industry Strategy Symposium here. The latest round of negotiations between silicon suppliers and chip manufacturers is resulting in a price increases as high as 10-12% for 200-mm substrates that are used to fabricate 0.25- and 0.18-micron ICs, according to veteran analyst Daniel J. Rose of Rose Associates. He told executives attending the annual ISS meeting that growing chip shipments, higher substrate prices and stronger exchange rates for the Japanese yen will translate into an overall 10.1% increase in revenues for blank silicon wafer materials in 2000. Wafer-processing fabs are expected to buy $6.475 billion worth of silicon substrates this year vs. $5.883 billion in 1999. "There has been a decided halt to this tremendous price erosion that has been going on for three years," Rose said after his forecast presentation. He said wafer suppliers--many of them base in Japan--have been able to convince semiconductor manufacturers that extra capacity is needed immediately to meet the growing demand for leading-edge ICs. For 0.18-micron integrated circuits, 200-mm wafer substrates must have surface zones that are virtually free defects and optimized for high-speed devices, noted the Los Altos, Calif.-based analyst. "We are not yet in a position where we will have wafer shortages but I believe the wafer makers will immediately start adding capacity necessary to satisfy the very strong demand at the leading edge," said Rose, who is planning to retire at the end of this year after consulting for 31 years. Rose has presented the semiconductor materials forecast at every ISS meeting in the U.S. during the past 23 years. While wafer merchants are beginning to see light at the end of a long recession, silicon suppliers are not yet financially back on their feet, warned Rose. The wafer glut was so bad last year that the world's producers of blank silicon wafers together lost nearly $1 billion on sales of $5.6 billion, raising questions about their ability to invest in next-generation substrates and production of larger diameter wafers. "It is well known that material suppliers have the ability to reduce their costs through higher production and productivity measures, but you cannot cover the 40% decline in prices," Rose observed, adding that the 10-12% increase in leading-edge substrates will not be enough to cover investments needed to increase capacity. Between 1999 and 2002, revenues for silicon substrates are expected to grow 42% to $8.3 billion in three years, according to Rose's forecast. In 1999, wafer suppliers shipped 4.263 billion square inches of silicon to semiconductor companies worldwide--equal to about a square mile of silicon. The area of silicon used by chip makers will increase about 10% to 4.692 billion square inches in 2000, followed by nearly an 11% increase to 5.204 billion in 2001, Rose predicted. Silicon consumption in 2002 is expected to grow 8.3% to 5.638 billion square inches. Rose suggested that the awaited movement to 300-mm diameter wafers will be pushed back in the current recovery cycle and an upsurge in 200-mm substrate demand will occur in the next several year. Shipments of 200-mm (8-inch) silicon substrates will grow from a total area of 1.441 billion square inches in 1999 to 2.892 billion in 2003, a compound annual growth rate of 21.8%, said Rose. The emerging 300-mm segment will account for just 14 million square inches of silicon used by chip companies in 1999 and will grow 112 million in 2003, he predicted.