Another price hike for chip materials — is this time different from before?
The latest round of semiconductor material market trends can hardly be summed up by a single "price increase cycle". Silicon wafer suppliers have revealed that the capacity utilization rate of existing 12-inch production lines is rising, photonics device manufacturers take the optical interconnection demand from AI data centers as the basis for capacity expansion, and high-end IC packaging substrate manufacturers have observed a continuous increase in customer inquiries for large-size, multi-layer products. These changes do not occur under the same material, region or contract terms, but point to a common trend: the constraints of the semiconductor industry are shifting from the total supply and demand balance to the effective delivery capacity of high-specification materials.
The key to this change is not a simple increase in material demand, but the fact that the demand structure has altered the way materials are consumed. WSTS forecasts that global semiconductor sales will reach 1.51 trillion US dollars in 2026, a year-on-year increase of about 90%; among which the memory market is expected to grow by about 250%, and logic chips by about 37%. The growth of high-bandwidth memory, advanced logic, optical interconnection and advanced packaging means that each unit of computing power requires higher-specification silicon wafers, more deposition layers, more complex substrates, and stricter material consistency. As a result, the material market has moved from the stage of "more wafer input" to the stage of "more complex consumption per wafer and per system".
Silicon Wafers Send the First Signal
Silicon wafers are the starting point for observing the material cycle. SEMI data shows that the global silicon wafer shipment area in the second quarter of 2026 reached 3.573 billion square inches, a year-on-year increase of 7.4% and a quarter-on-quarter increase of 9.1%. The recovery of shipments indicates that wafer manufacturing activities are improving, but its internal structure is different from the last boom cycle. AI-related demand is spilling over from advanced logic and memory to applications such as power and photonics, while traditional end products such as PCs and smartphones are still constrained by the recovery pace of memory prices and demand.
This differentiation is directly reflected in the capacity utilization rate and pricing strategies of suppliers. GlobalWafers' revenue in the second quarter was 15.2 billion New Taiwan dollars, up 8.8% quarter-on-quarter and down 5% year-on-year; the company stated that after excluding newly expanded production lines, the existing 12-inch production lines have been fully utilized, the utilization rate of 8-inch production lines remains at a high level, and the recovery of 6-inch products is relatively gradual. The same company also clearly distinguished the price handling methods for non-long-term agreement products and existing long-term agreements in its earnings conference. The change in the silicon wafer market is first reflected in the improved bargaining power for specific specifications, specific customers and non-long-term agreement orders, rather than a unified increase in quoted prices.
For downstream wafer fabs, this difference is more important than the average selling price. The supply of general polished wafers is relatively easy to adjust through inventory and production capacity, while the value of heavily doped, epitaxial, SOI, silicon photonics and other products comes more from process adaptation and customer verification. Therefore, the scarcity of materials depends not only on the nominal production capacity, but also on the ability to stably deliver products within the customer's process window. The signal from silicon wafers thus foreshadows the basic feature of this round of material market trends: the supply-demand relationship of high-specification products will change before the total market.
Tungsten Hexafluoride and Indium Phosphide
The constraint of tungsten hexafluoride comes from the superposition of "resources and purification". As an important electronic specialty gas for advanced deposition processes, its cost is highly sensitive to high-purity tungsten powder. Industry data shows that high-purity tungsten powder accounts for about 60%-70% of the production cost of tungsten hexafluoride; previously, the reference quotation of high-purity WF₆ in China once reached 1670-1810 yuan/kg, and the average export price in China in April was 149.79 US dollars/kg. The basis for the price increase is not complicated: the upstream tungsten resources, raw material trade flows and high purification capacity are tightening at the same time, and the demand side is superimposed with the increase in the number of 3D NAND layers and the evolution of advanced logic processes.
The recent state of the tungsten market shows that material prices will not rise along a single slope. Market information released by the China Tungsten Association shows that the price of black tungsten concentrate is about 415,000 yuan per standard ton, and APT is about 610,000 yuan per ton. The supply and demand are still in a stalemate, and the procurement side remains cautious. For WF₆ suppliers, what really determines the price elasticity is not the raw material itself, but whether raw material guarantee, purity control, filling capacity and customer certification can be achieved at the same time. For memory and logic fabs, the focus of procurement is not only to reduce the unit price, but to maintain the continuity of the deposition process through multi-source certification and raw material traceability.
The logic of indium phosphide is different. Its core constraints come from optical interconnection demand, concentrated supply and long certification cycles. According to statistics, AXT and Sumitomo Electric together account for nearly 80% of the global indium phosphide substrate manufacturing market; after the export license constraints, the average price of 6-inch indium phosphide wafers has risen to about 5000 US dollars, an increase of about 250% compared with before. This change has turned the material problem of high-speed optical chips from a simple cost issue to a supply chain security issue.
Changes on the demand side are reinforcing this tension. Coherent's revenue in the fourth quarter of its latest fiscal year reached 2.05 billion US dollars, a year-on-year increase of 34%; the company listed the migration of AI data centers from copper interconnection to optical interconnection as an important reason for expanding manufacturing capacity. The customer prepayment and long-term supply arrangement disclosed by AXT also reflect that the downstream has begun to advance procurement to the stage of capacity planning. At the same time, JX Nippon Mining & Metals plans to invest up to 120 billion yen in the next 4 years to increase the production capacity of indium phosphide substrates to 7-10 times the current level. The scale of the capacity expansion plan is very large, but crystal growth, defect control, epitaxial matching and customer verification jointly determine the speed at which new capacity forms effective supply.
Tight Supply in Advanced Packaging
The changes in advanced packaging materials cannot only be judged by the individual quotation of ABF film or electronic glass cloth. High-end IC packaging substrates are system products composed of build-up films, glass fiber cloth, copper foil, resin, circuit processing and yield. Any mismatch in any link will affect the final delivery. IBIDEN recently raised its full-year sales forecast to 550 billion yen and its operating profit forecast to 127 billion yen, pointing out that demand for high-value-added substrates for AI servers and general servers is strong, and related demand still exceeds the industry's supply capacity.
Such signals indicate that price improvement has extended from a single material to packaging links with higher integration. But its transmission is not linear. The rise in the average selling price of substrates may come from the increase in the number of product layers, the improvement of processing difficulty, the increase in yield and the change of customer structure, which does not mean that every upstream material has raised prices by the same margin. The real bottleneck on the material side is the ability to provide a combination of properties that meet the requirements of high speed, high frequency and low thermal expansion.
The supply structure of high-end glass fiber cloth can illustrate this point. TrendForce estimates that Nittobo accounts for about 90% of the T-glass market and 60%-70% of the NER-glass market, and new production capacity is not expected to come online until mid-2027 at the earliest. This makes the risks of advanced packaging and server board-level materials more reflected in specifications, certification and delivery lead times, rather than just raw material costs. For packaging factories and board factories, locking in high-end materials in advance, reserving production lines and improving yield are often more critical than negotiating around a single procurement price.
The Warning from Helium
If silicon wafers, WF₆ and InP correspond to technical and production capacity constraints, helium demonstrates geopolitical and logistics constraints. It is reported that Qatar accounts for nearly 1/3 of the global helium supply, and the disruption of supply in the Middle East has begun to affect the supply chain of technology manufacturing. Helium is used in semiconductor manufacturing for cooling, leak detection and some process links, with limited short-term substitution space, and the impact of unstable supply will quickly amplify into procurement and inventory pressure.
However, the helium market also illustrates the regional nature of material prices. The average import price of helium in China in the first half of the year was roughly in the range of 450-600 yuan/kg, and the long-term agreement supply from Russia buffered the spot fluctuation to a certain extent. The spot, long-term agreement and regional quotations for the same material may show significant differences. For multinational wafer fabs, material management is therefore no longer just price comparison, but a comprehensive arrangement of supply sources, transportation routes, inventory days and alternative gas sources.
Effective Supply Determines Market Impact
One feature of this round of material supply shortage is that the industry is not short of capital expenditure, but short of new supply that can be used immediately by customers. JX Nippon Mining & Metals' indium phosphide capacity expansion target and the new high-end glass fiber plan are all scheduled to be around 2027; and from the completion of plant construction and equipment installation to stable product performance, customer verification and mass introduction, these projects usually go through a longer ramp-up process. For silicon wafers, electronic specialty gases, compound substrates and packaging substrates, nominal capacity, trial production capacity and certified effective capacity are often at completely different levels.
This is exactly why material prices respond faster to supply shortages and slower to capacity expansion announcements. Quotations can be adjusted within one quarter, but customer verification often spans multiple product cycles. Advanced packaging substrates also need to match chip design, packaging form and system reliability at the same time, and supplementing production capacity in a single link cannot automatically eliminate delivery constraints. Therefore, to judge whether the material supply is really improved, we should observe the utilization rate of new production lines, the progress of customer verification and the yield after stable mass production, rather than just looking at the investment amount or planned production capacity.
This lag in effective supply determines the way material price increases are transmitted to the chip market. AI accelerators, high-bandwidth memory and high-speed optical modules have high added value, and the supply chain is more likely to absorb part of the cost through long-term agreements, prepayments and inventory management; for mature process, consumer electronics and highly competitive power devices, the space for cost pass-through is more limited. The difference between the two types of products determines that the same material price increase has completely different impacts on different downstream sectors.
What is more noteworthy is that the unit price of materials is only an explicit cost. For wafer manufacturing, purity fluctuation, batch stability and delivery interruption will also affect equipment utilization and yield; for advanced packaging, the combined performance of substrates, resins and glass fibers must be verified together with chip design. The process fluctuation caused by one material switch is often more difficult to deal with than the procurement price increase itself. Material procurement is shifting from traditional price negotiation to comprehensive management covering supply security, customer certification, regional layout and technical support.
As a result, the profits of material enterprises will further diverge. Suppliers that can master raw material sources, purification capabilities, product platforms, global customer certification and available production capacity are more likely to obtain simultaneous improvements in market share, sales volume and prices; enterprises that are still in the stage of construction, sample delivery or single customer introduction need longer time to convert market popularity into performance. For the local material industry, the most worthy indicator to measure is not the number of projects, but the effective production capacity that can be sustainably delivered after customer verification.
This article is from the WeChat official account "Semiconductor Industry Insight" (ID: ICViews), author: Jun Xi, authorized for release by 36Kr.