Where Will the Semiconductor Material Industry Go in 2019 Due to Trade War Between Japan and South Korea？

Global trade disputes and industrial tensions have barely stabilized after the leaders of China and the United States met at the G20 Summit in Osaka. Japan's ministry of economy and industry immediately announced that it would strengthen the export control of hydrogen fluoride, fluorinated polyimide and photoresist to South Korea. This movement of Japanese government immediately led South Korea, which relies heavily on display panels and memory for export trade, to file a lawsuit against the WTO (world trade organization). The conflict highlights the difficulties semiconductor materials industry face in 2019.

Japanese and Korean semiconductor companies are mutually dependent
According to the latest data of semiconductor materials market released by the international semiconductor industry association, the total revenue of 2018 reached us $51.9 billion, with Taiwan and South Korea ranking first and second with 22% and 17% respectively.
Japan has transformed from the chip power to a more upstream material country in the global semiconductor ecosystem after the territory of semiconductor manufacturing relocated. Shin-etsu, SUMCO, Sumitomo, Hitachi Chemical, KYOCERA and other Japanese manufacturers control more than half the global market for semiconductor materials. While Taiwan and South Korea have become important export areas of Japan's semiconductor industry, with global wafer/test packaging OEM and memory power respectively. It can be seen that Korean and Japanese semiconductor manufacturers are highly interdependent.

2019 semiconductor material market demand weakness is more obvious
In fact, electronics industry downturn signs of the electronics industry can be traced back to the 2017-2018 decline in shipments of smartphone and auto apps before the whole industry have not underwent the conflict among the United States and other countries as well as the conflict between Japan and South Korea.

The semiconductor industry start has the obvious signs of demand recession and inventory level rising at the end of 2018, semiconductor materials market as upstream of all kinds of electronic products naturally can't escape from this wave of boom cycle.

 
source：SEMI, GWJ, 2019/07

Take silicon wafers for example, which account for the largest proportion of production in the semiconductor material industry. With the booming market demand for memory and various chips in 2016-2017, the price of silicon wafers was increased from $0.67 per square inch in 2016 to $0.9 per square inch in 2018.

However, as the orders of fabs successively declined in the fourth quarter of 2018, silicon wafer manufacturers also began to face the pressure of bargaining with customers again.GWJ ranking third and WAFER WORKS ranking sixth in the market share of global silicon wafer confirm the market conditions at the meeting in 2019 June. Considering comprehensively industrial boom and international political instability and other factors, the semiconductor materials industry will be inevitably affected by the economic downturn and international political instability in 2019.

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