TOKYO A polysilicon shortage could cause semiconductor market growth to fall short of 2006 industry estimates and possibly stagnate in 2007, according to an analyst with market researcher J-Star Global Inc.
Yoshihisa Toyosaki, J-Star's president, CEO and former head of iSuppli Japan, said material supply chain conditions were as important as demand in predicting semiconductor market growth. Though the industry has been growing on the assumption that silicon is inexhaustible, it now needs to focus on how to secure polysilicon, Toyosaki said.
"There are forecasts of about 10 percent growth for semiconductor market this year and next year, based mainly on the analysis of demand from electronics devices that employ semiconductors. But if semiconductors and solar cells both continue growing, there will be a gap between polysilicon supply and demand from them. Polysilicon shortages will be a new impact on the silicon cycle," warned Toyosaki.
J-Star estimated total polysilicon production was 30,000 tons last year, about two-thirds of which was allocated to semiconductor production. The remaining third was used for solar cell production, which has grown 45 percent annually since 2001. J-Star estimated that polysilicon production will reach 40,000 tons in 2007 thanks to suppliers bolstering capacity. However, polysilicon demand by the solar-cell industry is slated to double to nearly 20,000 tons over the same period.
One polysilicon supplier is responding by expanding production. Wacker Chemie AG (Munich, Germany) said this week it would expand its polysilicon production capacity by an additional 4,500 metric tons to a total of 14,500 metric tons by the end of 2009.
Should the allocation ratio of polysilicon to IC and solar industries remain the same, J-Star predicted chip market growth of 6.3 percent this year and 8.7 percent next yearlower than the World Semiconductor Trade Statistics group's 10.1 percent forecast for 2006 and 11 percent in 2007.
If the solar industry absorbs more polysilicon, the percentage of polysilicon it consumes will increase to 35 percent this year and 40 percent next.
Consequently, semiconductor market growth will slow to 3.6 percent this year and 0.3 percent in 2007, said Toyosaki.
"I don't foresee the allocation balance changing, and expect 8.7 percent growth for the semiconductor market next year. But there is a risk that change in polysilicon allocation brings a worse-case scenario for the semiconductor industry," he warned.
He called on chip makers and OEMs to make strategic procurement plans that take polysilicon shortages into account.
For some time, polysilicon has been a hot topic in recent times. Prices for polycrystalline materials have soared amid ongoing and severe shortages in the marketplace.
Leading polycrystalline or polysilicon vendors Hemlock, MEMC, Mitsubishi Materials, REC and Wacker cannot keep up with huge OEM demand and are reportedly sold out of these materials for the next two to three years, according to industry sources
An investment banking firm recently increased its forecast for solar-cell production in 2006 and 2007, but noted that polysilicon material shortages will continue to plague the industry.