Is the source of raw materials for silicon wafer manufacturers reliable?

The raw material sources of silicon wafer manufacturers are usually quite reliable, but they are also affected by some factors, as follows:

Main raw materials and supply situation

Polycrystalline silicon: It is the main raw material for silicon wafer production, and the global supply of polycrystalline silicon is relatively concentrated. Some large-scale polysilicon producers, such as Tongwei Co., Ltd. and GCL Group, have stable production capacity and a relatively high market share, and can provide continuous raw material supplies for silicon wafer manufacturers. These large suppliers usually sign long-term supply contracts with silicon wafer manufacturers to ensure a stable supply of raw materials.

Quartz crucible: In the process of silicon wafer production, the quartz crucible is a key component used to hold polycrystalline silicon raw materials and melt them. The main raw material of quartz crucibles is quartz sand, and high-quality quartz sand mainly comes from countries such as the United States and Norway. Some domestic enterprises, such as Dongxu Optoelectronics, have certain technical strength and market share in the production of quartz crucibles and can provide reliable quality quartz crucibles for silicon wafer manufacturers.

Factors affecting the reliability of raw material sources

Market supply and demand relationship: When the demand for polysilicon is strong, there may be a situation of tight supply, which makes it difficult for silicon wafer manufacturers to purchase raw materials. For instance, during the period of rapid development of the photovoltaic industry, the price of polysilicon rose and there was a shortage of supply. Some small silicon wafer manufacturers might face the problem of insufficient raw material supply.

Supplier production status: Factors such as equipment malfunctions, process issues, and natural disasters of suppliers may all affect the supply of raw materials. For instance, in 2021, a certain polysilicon supplier experienced a decline in production due to a malfunction in its production facilities, which affected its supply to silicon wafer manufacturers.

International trade policies: Policy changes such as international trade frictions and tariff adjustments may affect the import and supply of raw materials. For instance, during the Sino-US trade friction, the quartz sand imported by some silicon wafer manufacturers from the United States was affected by tariffs, increasing procurement costs and supply uncertainties.

Countermeasures of silicon wafer manufacturers

Establishing long-term cooperative relationships with suppliers: Silicon wafer manufacturers usually sign long-term cooperation agreements with high-quality raw material suppliers, clearly defining the rights and obligations of both parties to ensure a stable supply of raw materials. For instance, Longi Green Energy has signed long-term purchase contracts with multiple polysilicon suppliers, ensuring a stable source of raw materials.

Diversified procurement channels: To reduce reliance on a single supplier, silicon wafer manufacturers will actively expand their procurement channels and purchase raw materials from multiple suppliers. Meanwhile, some silicon wafer manufacturers will also search for suitable raw material suppliers worldwide to enhance the reliability of supply.

Establishing raw material inventory: Silicon wafer manufacturers will establish a certain scale of raw material inventory based on their own production needs and market conditions to deal with possible supply shortages. Reasonable inventory management can ensure the normal production of enterprises when the supply of raw materials is tight.