Japanese silicon wafer manufacturer Sumco has announced plans to cease silicon wafer production at its Miyazaki plant in Japan by the end of 2026, as part of its strategy to improve profitability by optimizing its product mix.
The company will transfer wafer production from the Miyazaki plant of its subsidiary Sumco Techxiv to other manufacturing facilities, as it restructures the production for silicon wafers of 200mm and smaller.
According to Sumco, the silicon wafer market continues to face prolonged sluggish demand, attributed to multiple factors including post-COVID decline in demand and structural changes in the semiconductor supply chain amid US-China trade tensions. While inventory correction for 300mm wafers at customers is ongoing due to continued semiconductor production adjustments, the company anticipates a gradual recovery in overall demand, driven by strong momentum from cutting-edge products supporting AI chips and high-performance memory.
Smaller wafers see declining demand
The company reports that demand for small-diameter wafers, primarily used in consumer, industrial, and automotive applications, remains weak. Specifically, demand for wafers of 150mm and smaller is projected to decline, as customers either transition to 200mm wafers or reduce production capacity when manufacturing equipment reaches the end of life.
In response to these market conditions, Sumco will convert the Miyazaki plant into a facility dedicated to monocrystalline ingot production, discontinuing wafer production there by the end of 2026. The company plans to transfer wafer production to other Sumco plants in Japan and Indonesia, while employees affected by the reorganization will be reassigned to 300mm wafer operations after the transition.
Sumco chairman Mayuki Hashimoto noted that 200mm silicon wafers face intense price competition from Chinese suppliers across most application segments. Additionally, with electric vehicle (EV) demand slowing, 200mm silicon wafer growth has stagnated.
Despite projections of mild demand recovery in the second half of 2025, the market may continue to experience oversupply. However, Hashimoto highlighted that US demand for 200mm silicon wafers has exceeded expectations, suggesting that potential increases in US tariffs on Chinese products could boost demand for locally manufactured products.
For the fiscal year 2024, Sumco reported sales of JPY396.6 billion (US$2.63 billion), representing a 7% decrease year over year. Operating profit declined 49% year over year to JPY36.9 billion, while net profit fell 69% to JPY19.8 billion.
The restructuring has resulted in expenses for business structural reforms being recorded for fiscal 2024 as extraordinary losses totaling JPY5.8 billion, comprising an impairment loss on non-current assets of JPY4.6 billion and an inventory write-down and other costs of JPY1.2 billion. The company emphasized its commitment to ongoing efficiency-raising initiatives, including production facility reorganization.
Looking ahead, Sumco plans to concentrate management resources on modernizing equipment in existing 300mm plants and enhance its capacity for supplying leading-edge products for AI applications, responding to the accelerating pace of semiconductor technology innovation.