Silicon Wafer Makers Seek Steep 2027 Price Hikes as China Adds Supply

Suppliers are asking chipmakers for steep increases on 300mm wafers. Shin-Etsu says every maker is running flat out, and SUMCO says 10% won't cover costs. China's new capacity is the buyers' main leverage.

The opening asks for 2027 silicon-wafer contracts are the steepest in years. Channel checks published this week put proposed increases on new long-term agreements at 15% to 25% for 300mm epitaxial wafers and more than 40% for polished wafers, with some second-tier buyers facing more than 50%. These are opening positions in private talks, not signed prices. The more useful question is how much volume they can actually reach in 2027.

Less than the headline suggests. Much of the market's 300mm volume ships under long-term agreements, and Shin-Etsu says its most recent ones were all signed in 2020 and 2021, during the pandemic boom. GlobalWafers says LTA prices are honored unless a contract carries special terms. Shin-Etsu told analysts on July 24 that its agreements expire unevenly: some by the end of 2027, others three to four years later. The 40% asks therefore bite first on wafers sold outside contracts and on agreements that roll off, while contracted volume stays at old prices well into 2027.

The largest supplier is on the same side

Shin-Etsu, which held about 42% of the global wafer market in 2024, has not published a price target, and it is sometimes cast as the supplier most able to trade price for market share. Its July 24 call summary says the opposite. Management said all wafer makers appear to be running 300mm lines at full capacity, that supply is "increasingly constrained," and that June shipments set a monthly record. Some devices that cannot get 300mm wafers are being made on 200mm instead. Dummy and monitor wafers, used to set up and check new production lines, are short.

On investment, Shin-Etsu said a new plant would now cost more than twice its previous investment and that it has "no intention of heedlessly rushing" to build. It wants pricing "that will make those investments viable." That puts the largest, best-capitalized supplier alongside SUMCO and Siltronic, not against them.

What the suppliers' accounts show

SUMCO, the second-largest supplier, made the cost case most bluntly. First-half revenue rose 4.7% to ¥215 billion on record 300mm shipments, yet it swung to a ¥6.3 billion operating loss from a ¥7.4 billion profit, mainly because depreciation rose ¥11.6 billion. Depreciation of about ¥100 billion this year is expected to climb to ¥120 billion to ¥130 billion in 2027. Third-quarter guidance calls for roughly breakeven on ¥118 billion of revenue. The company's president said on its August 7 call that increases of 5% or 10% "won't come close" to covering costs. SUMCO has put LTA renewal talks on hold and will not restart its postponed Yoshinogari plant.

That freeze reads two ways. It can signal confidence that prices will rise, since a supplier that expects higher prices does not lock in volume early. It can equally signal distrust of demand outside AI. Shin-Etsu said the makers became "quite cautious" after the pandemic boom peaked in 2022 and demand stayed weak for years. Both readings point to the same near-term result: less new capacity from the incumbents.

Siltronic shows the cost in euros. First-half gross profit was negative €40.5 million, a gross margin of minus 6.4% against 17% a year earlier, as depreciation rose to €238.8 million from €126.1 million with the new Singapore fab. Second-quarter gross margin improved to minus 4.5% as utilization rose, and EBITDA margin was 21.4%. Even so, Siltronic expects 2026 sales slightly below last year's level. Full 300mm lines are not yet producing higher revenue.

Taiwan moved first

GlobalWafers said on its August 4 call that its lines were "almost fully loaded" and that prices outside long-term agreements would rise through the second half "and even Q1 next year." On August 24, GlobalWafers, Formosa Sumco Technology and Wafer Works raised prices by at least 10% across every wafer size. It was the first synchronized rise since before the pandemic downcycle. Formosa Sumco locked limit-up and GlobalWafers touched its limit intraday. GlobalWafers can push because it is still profitable: first-half gross margin was 20.7%, down 5.5 points.

It also absorbed a supply shock. On July 20, a fire damaged part of the back-end area of the 8-inch line at GlobalWafers' plant in Novara, Italy. The company says its 300mm lines were unaffected and that some production would resume from mid-August, with output shifted to sister plants in the meantime. The fire tightens 200mm supply just as Shin-Etsu reports chipmakers pushing work from 300mm onto 200mm.

Buyers have already shown what access is worth. In July, Micron agreed to provide $500 million of financing for GlobalWafers' 300mm plant in Sherman, Texas, alongside a 10-year supply agreement. Polished wafers, the substrate SK Siltron describes as the core input for DRAM and NAND, carry the steepest asks, aimed at the memory makers adding HBM capacity fastest.

China is large enough to matter

The case against lasting pricing power is Chinese capacity, and at global scale it is not marginal. Xi'an Eswin says monthly 300mm production and sales have passed one million wafers, with a 1.8 million target. NSIG is nearing 1.2 million a month after 300mm shipments rose more than 90% in the first half. TCL Zhonghuan plans a 700,000-wafer-a-month plant, and TrendForce counts about RMB 39 billion of new 300mm projects.

SEMI projected in 2023 that global 300mm fab capacity would reach about 9.6 million wafers a month in 2026, with China at about 2.4 million. On those figures, Eswin and NSIG alone equal more than a fifth of global fab capacity, and almost all of China's own. That makes qualification a weaker shield than incumbents suggest. Chinese fabs can absorb nearly all domestic wafer output, freeing their existing Japanese, German and Taiwanese volume for customers elsewhere. NSIG's first-half revenue rose 36.5% while its net loss widened, the profile of a supplier buying share rather than setting prices. The more incumbents raise prices, the stronger the case for Chinese fabs to qualify local wafers faster.

CTOL view: We think the price rises will reach profits more slowly than the asks imply, because contracts lock much of 2027's volume and depreciation keeps rising. Our call: SUMCO's operating margin for January to March 2027, reported in its first-quarter results in May 2027, will be between 0% and 10%. That means back in profit, but thinly. We are wrong if SUMCO reports an operating loss for that quarter, or an operating margin above 10%.

The market on the day

Wafer stocks traded on their own news on September 23. Tokyo was closed for the autumn holiday, so SUMCO and Shin-Etsu did not trade. GlobalWafers fell 2.2% to NT$950. Siltronic fell 7.0% to €76.95 after Wacker Chemie sold 2.2 million shares, about 6.7% of the company, at €77.25, a 6.6% discount to Tuesday's close, cutting its stake from about 21.7% to 15%. The fall reflected new shares for sale, not wafer demand. Siltronic had risen about 22% between September 15 and 22, helped by a higher UBS price target, and its former parent chose that rally to sell.

Silicon Wafer Makers Seek Steep 2027 Price Hikes as China Adds Supply

The largest supplier is on the same side

What the suppliers' accounts show

Taiwan moved first

China is large enough to matter

The market on the day

Sources

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