Japanese Semiconductor Material Giants Initiate Price Hikes... "Impact on Finished Product Prices Expected"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Major Japanese semiconductor material companies have simultaneously raised their prices. As semiconductor demand surges and capital investment expands, costs have increased, and the Ukraine war has driven up raw material prices, leading to a chain reaction of material price hikes.

According to Japan's Nihon Keizai Shimbun on the 9th, Sumco, which holds the second-largest market share in the silicon wafer market, a raw material for semiconductors, has decided to raise wafer prices by about 30% under a three-year long-term contract from this year through 2024. Sumco supplies wafers to domestic semiconductor companies such as Samsung Electronics. Nihon Keizai explained, "Although spot prices have been rising since the latter half of last year, prices will also be increased in long-term contracts, which account for most transactions." Shin-Etsu Chemical, the number one wafer company, also stated, "Prices will be further increased following the expansion of new production capacity after 2024."

The reason these companies are pushing for price increases is the rise in costs due to expanded capital investment. Sumco plans to invest 350 billion yen (about 3.3 trillion KRW) to build new factories in Japan and Taiwan to expand production capacity. Shin-Etsu Chemical also invested over 100 billion yen in the 2022 fiscal year to expand production capacity.

Cases of passing on global raw material price increases, which began with Russia's airstrikes on Ukraine, to product prices are also increasing. Since Ukraine mainly supplied neon gas, essential for semiconductor manufacturing, the impact is unavoidable. Showa Denko, a Japanese company supplying high-purity gases necessary for semiconductor circuit formation, raised prices by more than 20% for products delivered since January. Sumitomo Chemical, which supplies semiconductor packaging materials, raised prices by 20% starting last year.

Nihon Keizai stated, "If prices are raised in a chain reaction due to cost pressures from supply factors in the semiconductor procurement network, final products equipped with many semiconductors will also face price increase pressures," and forecasted, "In a situation where central banks worldwide continue to raise interest rates to curb soaring inflation, there is a possibility of leading to reduced consumption."

This content was produced with the assistance of AI translation services.