Wednesday, October 04, 2006

Silicon wafer oligopoly tightens The very specialized business of manufacturing silicon wafers, the "raw material" for making semiconductors, keeps getting more concentrated. This is one of those low-visibility manufacturing jobs that, in spite of its lack of glamour, gets ever more important in a semiconductor-run society, with increasing use of solar panels, and silicon powering cell phones, autos, and an increasing number of items beyond the traditional PC segment.. The demand for its product is growing at over 8% a year and looks likely to continue to do so. In fact, the top four companies are predicted to have gone from a 78% share in 2004 to a nearly 90% market share in 2006. Shin-Etsu Chemical of Japan is the #1 company in the market with over 31% market share. But it is expanding is capacity, investing $1 billion in two new factories along with upgrades to the older ones, planning to triple its output. #2 player Japan-based Sumco (Sumitomo Mitsubishi Silicon Corp.) just bought #5 Komatsu Demshu. That will raise its market share from 22% to almost 32%. US-based MEMC (owner by equity company Texas Pacific) has around 15-16% of the market, while #4, Germany-based Wacker Siltronic has around 13%. Smaller players are Japan's Toshiba and South Korea's LG Siltron. For their customers these four companies represent a very tight oligopsony indeed. . 6:03:55 PM

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