Over the past few decades I have watched the semiconductor materials industry move to the Far East, and be consolidated to three to four players.
One little known fact is that 60 percent of the world’s silicon wafers supply comes Japan. While the equipment for making the silicon ingot may originate in the United States, a significant portion of the silicon wafer supply is Japan based. The manufacturers are hardly household names: Shin-Etsu, MEMC, headquartered in St Peters, Missouri, and LG Siltron. Two plants in northern Japan– one owned by Shin-Etsu and the other by MEMC–account for 25 percent of the global wafer supply. It is expected that South Korea based LG Siltron may seize this opportunity to expand their market share.
Over the years, one ingot manufacturer after another has been acquired by Japanese firms. Scale is a crucial factor in being cost competitive, and scale is one of the things that the Japanese do best. It is fascinating that, while the U.S. has such strength in microelectronics and design, the materials have been ‘outsourced’ to another country.
Another industry that could be impacted is the global flat panel display market. The LCD industry was ceded long ago to the Far East.
Most see the impact of the quake as a ‘short term’ issue, though that remains to be seen. And whether this earthquake will spur companies to rethink their global supply strategies.