Samsung and SK Hynix plan to reduce silicon wafer purchases

South Korean chipmakers Samsung and SK Hynix are planning to procure fewer silicon wafers for chip production than originally planned, TheElec reported.

The chipmakers discussed the issue with their respective wafer suppliers sometime in the fourth quarter, the sources said. There are five major wafer suppliers involved: Japan's Shin-Etsu and Sumco, Taiwan's Universal Crystal, Germany's Siltronic and South Korea's SK Siltron.

During the worst two years of the pandemic, these wafers were in tight supply and chipmakers were in short supply.

This continues in 2022 when the global recession begins. This is because silicon wafers are a back-end industry, and the influence of the consumer market comes later than the front-end industry, which sells products directly to customers.

In the third quarter of last year, when chipmakers reported profit declines for the first time, wafer companies saw profits rise.

Chipmakers are reducing the number of wafers they source more than usual. Wafer supply deals are typically long-term, which typically limits chipmakers' adjustments to purchases, but Samsung and SK Hynix have asked for further reductions, the sources said.