Value Chain Activity: Manufacturing Wafers
Context
The process of melting polysilicon into ingots and subsequently cutting them into wafers is wedged between polysilicon production and cell manufacturing. It is a distinct process that does not require physical proximity to upstream or downstream processing. Consequently, some companies specialise in just doing that. |
Industry Dynamics
Low barriers to entry
Standard production facilities can be bought off the shelf. Although a significant capital outlay is required, companies that are on either side of the value chain are well positioned to move into this segment.
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Upstream: Big polysilicon producers may want to forward-integrate
As the process and output of ingot growing and wafer cutting are fairly standardised, it is realtively easy for polysilicon producers to forward-integrate into wafer cutting, thus becoming direct competitors to established wafer cutters.
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Conclusion
following the crash in polysilicon prices on one side and decrease in demand for wafers on the other, this segment is under threat of being taken over by its suppliers and customers in search for capturing more stable value |
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Competition based on price
Competitors
The wafer industry is dominated by 5 companies sharing over 90% of the market with Shin-Etsu and Sumco alone having a third each. There are however, many more smaller companies fighting for share.
Product Differentiation
Wafer quality is a distinguishing feature, as it determines the efficiency of the module..
Cost Structure and Margins
Average non-silicon related costs are low, hence this is much less of a fixed cost business than the polysilicon production.
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No threat of substitution
There is virtually no threat of substitution for this process, as long as silicon wafers are needed for both chip makers and solar cell manufacturers. |
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Downstream: Low threat of backwards integration
Most wafer manufacturers are pure-play companies. There does not seem to be a need for module manufacturers to backward integrate into wafer. |
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Market Share
This is a market with few participants. The Top-5 cover 90% of the market. Most of the companies are pure-play wafer manufacturers. Unlike in other segments of the solar value chain, there have been very few newcomers.
This market has witnessed consolidation by mergers and acquisitions, the latest being the acquistion of Siltronic by GlobalWafers. |
Company Details
Name |
Country |
Comments |
Shin-Etsu Chemical Co Ltd |
Japan |
World's leading silicon wafer manufacturer. Also produces compounds such as GaAs |
Sumco |
Japan |
This is a joint venture between Sumitomo and Mitsubishi Materials focusing on silicon wafers. |
Siltronic |
Germany |
Originally, a joint venture with Samsung, Siltronic specializes in manufacturing diameters up to 300mm with manufacturing locations in Europe, Asia and United States. Siltronic is merging with Global Wafers in 2021. |
GlobalWafers |
Taiwan |
GlobalWafers acquired MEMC and Sun Edison Semiconductor and by 2021 also Siltronic. After merger with Siltronic, its market share increases to over 25%. MEMC- branded wafers "Perfect Silicon", are based on a proprietary ingot growing process, resulting in some of the world's highest quality wafers. |
SK Siltron |
South Korea |
Dedicated wafer company |
Okmetric |
Finnland |
Seventh largest wafer manufacturer. |
LDK Solar |
China |
LDK Solar is one of the few fully integrated companies, as they are also manufacturing cells and modules. |
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