November 14, 2006 – Wafer shipments surged in 3Q06 to surpass 2000 million sq. inches (MSI), a 5.5% sequential increase and more than 18% ahead of the same period in 2005, according to new data from SEMI’s Silicon Manufacturers Group (SMG). Total silicon wafer area shipments were 2074 MSI, vs. 1996 MSI in 2Q06, and 1748 MSI in 3Q05, and have risen sequentially since 1Q05.
Last month, SEMI projected strong 18% growth for 2006 for wafer output, followed by single-digit growth in 2007 and double-digit growth in 2008. But based on the industry’s wafer output increase in 3Q06, that projection may already be too conservative. Silicon suppliers would have to cut shipments by 9% in 4Q06 to meet that mark — just as they did two years ago, in 4Q04, when similarly faced with rising chip stockpiles. If silicon supplies even stay flat in the fourth quarter, that would bump overall 2006 wafer shipments to >20% vs. 2005.
“I think that [20%] is a real possibility,” Dan Tracy, SEMI’s director of industry research and statistics, told WaferNEWS, adding that he has been “surprised by the strength in silicon shipments this year.” He cautioned that it’s still too early to project wafer shipment trends into 4Q, but pointed to recent reports from packaging houses proclaiming softness in business, suggesting that 4Q will indeed be slower than 3Q.
Tracy also noted that while 2006 is proving to be a strong year in terms of silicon demand, other factors such as lower average selling prices are moderating growth for semiconductors. “Even if silicon shipments are up 18%-20%, the chip revenue growth forecast will be much lower than that” — projected to be 8%-10% by recent WSTS projections, he said.
Quarterly silicon area shipment trends
Silicon shipments in millions of square inches (MSI)
Quarter…….Polished…….Epitaxial…….Nonpolished…….TOTAL
1Q05………..1107………..307……………51………….1465
2Q05………..1207………..345……………54………….1606
3Q05………..1304………..385……………59………….1748
4Q05………..1358………..407……………61………….1826
TOTAL……..4976……….1444…………..225………..6645
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1Q06………..1390………..431……………63………….1884
2Q06………..1452………..452……………62………….1966
3Q06………..1541………..471……………63………….2074
Source: SEMI
Possible scenarios for total 4Q06 and 2006 silicon shipments
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4Q06……………….1887 (-9% q-q)
2006 TOTAL…….7811 (18%)
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4Q06……………….2074 (flat)
2006 TOTAL…….7998 (20.4%)
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4Q06……………….2136 (3% q-q)
2006 TOTAL…….8060 (21.3%)