With the Iran conflict once again in full swing and demand for AI chips booming, industry sources expect that semiconductor raw material prices will only increase. Earlier this month, China created some turmoil in the semiconductor manufacturing raw materials supply chain when it announced that it would suspend Helium exports due to the supply chain turmoil. While China is not a key Helium exporter in terms of capacity, its role nevertheless could create trouble down the road if there is further disruption.
Semiconductor Manufacturing Raw Materials Providers Raise Prices As Demand, Supply Dynamics Bite
The complexity of semiconductor fabrication, which requires chip manufacturers to print billions of transistors on a tiny piece of silicon in layers requires a host of different chemicals for a variety of purposes. These purposes include depositing the materials onto the wafer, removing the excess materials to etch the design, liquids and gases to cool wafers and chemicals to maintain high levels of purity throughout the process.
Now, a report from Taiwan suggests that key chemicals used in chip fabrication are experiencing a price hike. These include hydrofluoric acid and isopropanol. Hydrofluoric acid is used in etching, surface treatment and cleaning, and isopropanol is used in cleaning the wafer, the machinery and the photomasks that are used to transfer designs to the wafer.
The firms that provide these materials and have raised prices are Formosa Plastics Corp and Sheng Yi Electronics. Among these, Formosa is involved with both hydrofluoric acid and isopropanol, and Sheng Yi is primarily involved with the latter. Formosa has already raised prices, while Sheng Yi has informed customers that, after its initial price hikes, it will continue to monitor the current situation to determine whether further price hikes are necessary.
Additionally, industry sources also believe that Formosa is expected to add more capacity when it. comes to electrochemical production. The additional capacity should come into play in the year's current half, while additional capacity could be added in 2027.
Industry analysts quoted outline that the high demand for chip packaging is also contributing to the pressure on the chemical supply chain.
Formosa Daikin, which is a joint venture between Formosa Plastics and Japan's Daikin Industries, is a key player in the hydrofluoric market, while Formosa Plastics Tokuyama, a venture between Formosa Plastics and Japan's Tokuyama Corporation, is the dominant player in the isopropanol market. Formosa's presence in these key markets is expected to help it grow its business as AI demand and supply tightness benefit the chemical industry.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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