More Semiconductor Material Price Hikes from Japan
Against rising raw material prices and a weak yen, Japanese semiconductor material companies have already been raising prices this year, but it looks as if that trend will continue as Showa Denko (4004.JP) has indicated that it will have to raise prices for a number of materials used in the semiconductor process (etchants) as the company, along with others, struggles to find a way to convince customers to carry more of the burden of higher raw material and transportation costs. While convincing customers such as Taiwan Semiconductor (TSM) that it will benefit them in the long run to pay the higher prices is a difficult task, the inability to pass through those increases will cause Showa and others to abandon a number of less profitable materials and cancel contracts with smaller customers, further extending the inflationary spiral the CE space finds itself in currently.
Wafer supplier Sumco (3436.JP) will raise prices on long-term contracts while it increases capacity over the next two years, and Sumitomo Bakelite (4203.JP), a major producer of packaging encapsulants and Shin-Etsu Polymer (7970.JP), a producer of wafer transport containers have also raised prices, and we have noted that the war in Ukraine has limited the supply of neon gas a necessary component of photolithography tools and caused significant price increases. At this point, it seems that semiconductor foundries are still willing to accept higher prices in order to ensure they have the necessary materials, but we expect as global electronics demand slows there will be a point where there will be some resistance to continued price hikes. With weak demand continuing through the 2nd half, we expect Japanese material suppliers to institute those price hikes in the near-term or miss their opportunity if foundry demand slows in 2H as we expect it will be increasingly difficult to convince semiconductor manufacturers that such price hikes are appropriate and will benefit customer over the long term, as Showa employees have been instructed to do.
Wafer supplier Sumco (3436.JP) will raise prices on long-term contracts while it increases capacity over the next two years, and Sumitomo Bakelite (4203.JP), a major producer of packaging encapsulants and Shin-Etsu Polymer (7970.JP), a producer of wafer transport containers have also raised prices, and we have noted that the war in Ukraine has limited the supply of neon gas a necessary component of photolithography tools and caused significant price increases. At this point, it seems that semiconductor foundries are still willing to accept higher prices in order to ensure they have the necessary materials, but we expect as global electronics demand slows there will be a point where there will be some resistance to continued price hikes. With weak demand continuing through the 2nd half, we expect Japanese material suppliers to institute those price hikes in the near-term or miss their opportunity if foundry demand slows in 2H as we expect it will be increasingly difficult to convince semiconductor manufacturers that such price hikes are appropriate and will benefit customer over the long term, as Showa employees have been instructed to do.
RSS Feed