Increased risk of tight supply of semiconductor materials

Source: Tiantian IC

    According to the latest data from electronic material consulting firm TECHCET, the semiconductor material market is expected to experience a 3.3% decline in 2023 due to a slowdown in overall growth in the semiconductor industry and a decline in wafer fab capacity utilization. However, the overall semiconductor material market will rebound in 2024, growing by nearly 7% to reach $74 billion.

    The institution predicts that the entire semiconductor materials market is expected to grow at a compound annual growth rate of over 5% from 2023 to 2027. By 2027, it is expected that the market size will reach over $87 billion, and the expansion of new global wafer fabs will contribute to a potentially larger market size.

    Although the global economic slowdown in 2023 has eased the tension in the semiconductor supply chain, TECHCET believes that with the increase of new global wafer fabs, the supply of 12 inch wafers, epitaxial wafers, some specialty gases, and copper alloy targets is expected to tighten again in 2024, and the degree of supply tension will depend on the delayed expansion of material suppliers. If the material/chemical production capacity cannot keep up with the expansion of wafer factories, strong demand growth may put pressure on the supply chain.

    In addition to the expansion of global wafer fabs, new device technologies will also drive the growth of the materials market, as the number of layers increases, requiring new materials and additional process steps for all gate field-effect transistors (GAA-FET), 3D DRAM, and 3D NAND to increase several times. These materials include special gases for EPI silicon/silicon germanium, EUV photoresists and developers, CVD and ALD precursors, CMP consumables, and cleaning chemicals (including highly selective nitride etching).

    In addition, as wafer fabs expand their production capacity, other lingering supply chain constraints and potential bottlenecks may also lead to problems. For example, geopolitical issues between China and the United States are beginning to put pressure on the supply chains of germanium and gallium, and the risk of rare earth supply is increasing due to China‘s important position in these materials.

    Another concern in the United States is regulatory issues that may limit the expansion of material supply. Bypassing regulatory permits may increase the time and cost of expansion projects. In addition, the US government‘s regulations regarding EHS hazards may prohibit the existence of PFAS materials, forcing material suppliers to develop alternatives, which will require time for development and certification.