Source: This article is translated from [techspot] by Semiconductor Industry Observer (ID: icbank), thank you.
The surge in the price of high-purity silicon has hit chipmakers hard
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Image source: techspot
Importance: Silicon makes up approximately 28% of the Earth's crust by weight, making it the second most abundant substance on Earth. However, China's ongoing energy crisis has had a dramatic impact on the production of high-purity silicon, causing prices to surge in just two months. This has further compounded the negative impact of shortages of other materials and components, which are also expected to lead to price increases for a variety of consumer and industrial products.
Over the past few months, we have seen a rapid deterioration in the tech supply chain, starting with a chip shortage and surging prices for rare earth metals and various passive electronic components. Last month, chipmakers and electronics manufacturers complained that a severe shortage of skilled workers could extend the current situation into 2022, a view shared by almost all industry participants.
If that weren’t enough, chipmakers face a new problem: Silicon, the key to making everything from $1 display driver chips and microcontrollers to wafer-scale engines for machine learning, is now three times more expensive than it was just two months ago.
Image source: techspot
It may seem incredible that the world's second-most abundant element would become scarce, but China recently embarked on an energy crunch to reduce air pollution for the upcoming Winter Olympics and to boost reserves of coal and natural gas, in anticipation of higher energy demand during the winter months.
The production of high-purity silicon has been drastically reduced due to energy restrictions, forcing some companies outside China to suspend production until they can secure a steady supply. Glass, solar panel and automakers are expected to see ripple effects in the coming months, with silicon-based product makers already feeling the hit to their businesses.
To understand the severity of the problem, silicon prices have mostly hovered between 8,000 and 17,000 yuan ($1,200 to $2,600) a tonne over the past 20 years. Silicon suppliers in China’s Yunnan province have cut production by 90% compared with August levels, and prices have soared to 67,300 yuan ($9,880) a tonne.
Industry insiders believe that silicon prices will remain high until at least mid-2022, when production will rise again. In the meantime, some manufacturers will be able to absorb the impact, while many will likely increase prices for end customers. Even Apple, which has been largely able to navigate the current supply chain crisis with relative ease, is expected to feel the pinch in the coming months.
Overall, it looks like prices for all products with chips in them will remain high for some time. Both TSMC and Samsung have increased wafer prices this year to aid their ongoing efforts to expand manufacturing capacity for advanced process nodes, which is likely to push CPU and GPU prices to the highest levels. It also doesn't help that PC gaming has become more popular than ever during the pandemic, which means you're more likely to get a good deal on a gaming monitor than to move on from a gaming PC.
*Disclaimer: This article is originally written by the author. The content of the article is the author's personal opinion. Semiconductor Industry Observer reprints it only to convey a different point of view. It does not mean that Semiconductor Industry Observer agrees or supports this point of view. If you have any objections, please contact Semiconductor Industry Observer.
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