GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that it is considering further capacity expansion as customers are requesting more capacity due to rising end-market demand and persistent supply constraints.
The Hsinchu-based company said that emerging technologies and applications from 5G, artificial intelligence and electric vehicles are driving semiconductor demand.
The semiconductor industry has a positive outlook for this year and beyond, with shipments of all diameters of wafers to increase through 2023, GlobalWafers said.
Photo: Grace Hung, Taipei Times
“We have received requests for expansion from many strategic partners. We are now in discussions with customers,” company chairwoman Doris Hsu (徐秀蘭) told a virtual investors’ conference yesterday.
GlobalWafers would only begin expansion when strategic customers make a long-term commitment and prepay a significant amount, Hsu said.
The company must increase its wafer prices, she added.
GlobalWafers’ recent long-term supply agreements have higher prices than previous contracts, she said.
As the end of the first quarter, the company has booked about NT$16.6 billion (US$593.88 million) in prepayments from exisiting contracts, she said.
The company’s net profit shrank 6.6 percent to NT$2.69 billion last quarter from NT$2.88 billion in the same period last year, as higher shipping costs and raw material prices cut into gross margin. That represented a sequential decline of 21.5 percent from NT$3.43 billion.
Gross margin last quarter fell 35.1 percent last quarter from 36.5 percent a year earlier, as snowstorms in the US and earthquakes in Japan temporarily disrupted production lines.
GlobalWafers would factor the cost increase into price negotiations with customers from this quarter, Hsu said, adding that a tight supply of silicon wafers is the main driver behind higher wafer prices.
To keep up with rising customer demand, GlobalWafers plans further capital spending on expanded capacity this year, Hsu said.
Higher capital spending this year would result in a 10 percent annual increase in depreciation costs, Hsu said, without disclosing spending details.
GlobalWafers expects to complete the planned acquisition of Siltronic AG for 4.2 billion euros (US$5.05 billion) in the second half of this year. The company has received approvals from antitrust bodies in Australia, Germany, South Korea and the US.
The firm’s board of directors yesterday approved the distribution of a cash dividend of NT$18 per share, which represents a payout ratio of 59.78 percent based on last year’s earnings per share of NT$30.11. Previous years have offered payout ratios of about 80 percent.
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