ST. PETERS, Mo. -- Worldwide demand for semiconductor production wafers is growing and average selling prices are rising, but suppliers of silicon substrates are still not out of the woods in terms of ending several years of losses.
MEMC Electronics Materials Inc. here this week said its net losses in the first quarter of 2000 narrowed to $27.3 million vs. a net loss of $50.3 million in the period last year. Germany's Wacker Siltronic AG this week also indicated that it was still losing money but expects to "edge up into the black this year" after posting a loss of DM 10.4 million (about $5 million) on sales of DM 1.5 billion ($750 million) in 1999. Wacker Siltronic's 1999 sales grew 4.2% over 1998 revenues.
In response to the poor market conditions for blank production wafers, Wacker Siltronic said it has cut capital expenditures in 2000 by 35% to DM 318 million ($151 million) compared to about DM 485 million last year. However, the wafer supplier said it was pressing ahead with strategically projects, such as the completion of its first 200-mm wafer production facility in Asia--located in Singapore--and expansion of its 300-mm wafer line in Burghausen, Germany.
Wacker Siltronic also said it has implemented modest price increases for blank production wafers because of the prospects for silicon shortages in the future.
Analysts tracking chip-making materials have warned of potential wafer shortages following several years of huge losses by silicon merchants (see Jan. 12 story). The lack of investments and the current turnaround in semiconductor markets have begun to drive up average selling prices on blank substrates used in wafer fabs. The large Japanese silicon suppliers began negotiating higher prices last year when higher demand began reducing the world's glut of substrates.
"As anticipated, our average selling prices increased this quarter Q1 2000," said Klaus von Hörde, MEMC's Chief Executive Officer in St. Peters. "We expect that our average selling prices will continue to show a modest improvement in the next quarter through product mix improvements and selective pure price increases as market demand continues to increase towards wafer industry capacity levels.
"We also expect our product volumes to increase moderately in the next quarter as a result of the continued growth in the semiconductor industry," von Hörde added.
In the first quarter, MEMC's net sales grew 21% to $193.1 million, compared to $159.8 million in the period last year. Net sales increased sequentially by 6% from the previous quarter, ended Dec. 31.
"Our better operating results have enabled us to significantly decrease our rate of borrowing this quarter," von Hörde said. "Looking forward, we expect to see continued improvement in our cash flow situation as the silicon wafer industry continues to strengthen."
Wacker Siltronic officials said industry forecasts show demand for silicon wafers increasing by 15% in 2000 over 1999. The increase could be as much as 25% in 200-mm (8-inch) wafer substrates this year. Currently, Wacker Siltronic's four wafer production facilities (outside of Singapore) are operating at about 95% capacity.