Siltronic: Wafer production of “small diameters” to be phased out

March 22, 2024. Siltronic AG plans to gradually discontinue the production of polished and epitaxial wafers with small diameters at the Burghausen site. The implementation, which excludes unpolished wafers, is to be completed in the course of 2025. Siltronic currently produces wafer types with a diameter of 300 mm, 200 mm and smaller wafers (small diameters, SD for short) with a diameter of up to 150 mm.

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Symbolic image of a wafer. Photo: Unsplash

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The technology for SD wafers was mainly developed in the 1990s and earlier. The most significant technological breakthroughs in recent decades have been in larger diameters, which also promise the greatest growth potential. The volume of 300 mm wafers is expected to grow by an average of 6 percent per year.

“SD wafer production at Siltronic originated in Burghausen in 1968 and has contributed to our success over many years thanks to the outstanding work of our employees. However, the wafer industry has changed significantly due to structural changes and leaps in innovation. Demand has increasingly shifted to wafers with larger diameters and improved properties, while SD wafers are approaching the end of their life cycle. This has led to a noticeable decline in volumes, which has recently had a negative impact on earnings. As this is likely to intensify in the coming years, we have decided together with the Supervisory Board to gradually reduce the production of small diameters and to discontinue it in the course of 2025,” comments Dr. Michael Heckmeier, CEO of Siltronic AG.

“Despite this decision, the Burghausen site remains of crucial importance for Siltronic. Our global technology and research and development center, the production of 300 mm wafers and 200 mm hyperpure silicon rods as well as a large part of our administrative functions are located here,” Michael Heckmeier continues.

Only 25 years ago, more than half of the silicon wafer market consisted of wafers with a diameter of up to 150 mm, today this figure is less than five percent, based on the published figures of the industry organization SEMI. This is due to the fact that some customers are reducing or discontinuing their production of small wafers as a result of dynamic technological developments in the semiconductor industry. In addition, competition, particularly from China, is now clearly noticeable for small diameters.

Socially responsible solutions for the core workforce

In the past financial year, the SD wafer type accounted for a single-digit percentage of Group sales. The contribution to earnings has already been clearly negative in recent months. Around 400 people are employed at the small diameters, around half of whom are on fixed-term and temporary contracts. The aim is to reduce the core workforce in a socially responsible manner through demographic change and partial retirement and not to make any redundancies for operational reasons.

“Due to the structural changes in the market, we assume that there will be no recovery at SD-Wafers and that the contribution to earnings will be significantly negative in the coming years. We have therefore decided to take this difficult but necessary step. At the same time, it is an important goal for us to make the staff reduction at Siltronic socially acceptable and not to make any compulsory redundancies. After the end of SD wafer production and any necessary downsizing measures, our EBITDA margin will improve by around one to two percentage points in the medium term,” adds Claudia Schmitt, CFO of Siltronic AG.

About Siltronic AG

As one of the leading wafer manufacturers, Siltronic is globally oriented and has production sites in Asia, Europe and the USA. Silicon wafers are the foundation of the modern semiconductor industry and the basis for chips in all areas of electronic applications – from computers and smartphones to electric cars and wind turbines. International and customer-oriented, the company consistently focuses on quality, precision, innovation and growth. Siltronic AG employs around 4,500 people worldwide and has been listed in the Prime Standard of the German Stock Exchange since 2015. The shares of Siltronic AG are represented in the two stock market indices MDAX and TecDAX.

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Photo: Unsplash

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