Silicon Wafers Finally Fall In Price But Does It Mean Cheaper CPUs And GPUs?

by Mark Tyson — Thursday, February 09, 2023, 10:50 AM EDT

The spot price of 6-, 8-, and 12-inch silicon wafers has fallen for the first time in three years. Taiwanese business journal UDN notes that this is the first dip in wafer pricing since the start of the epidemic. These prepared silicon wafer blanks from businesses such as Global Wafers, Wafer Works and others are now facing an oversupply situation, precipitated by a deadly mix of ramping production and sliding demand. It is possible that this ‘raw material’ price cut to the foundries (TSMC, Intel, Samsung, etc.) might lead to price cuts at the consumer end but, as is typically the case, price drops will take time to filter through.

One of the major barriers to price cuts coming through to consumers is that the wafer producers have long-term contracts with their customers, which aren’t affected by fluctuations in the spot pricing until contracts get renegotiated. For some, that time may be several months away. Nevertheless, we may be seeing a trend established by the spot price declines, which will frame upcoming contract negotiations.

So, what of the scale of the spot price dips? Firstly, we must highlight that this is the first time in three years that this kind of price action has been observed. Secondly, the declines we are seeing in wafer prices now aren’t very sharp, but it might be a significant event to someone who pores over charts looking for trends. According to the source report, the smaller wafers have seen the strongest price declines; 6-inch (150mm) wafers are down in price by a single digit percentage in the latest quarter, 8-inch (200mm) wafer pricing have dropped slightly, but 12-inch (300mm) wafer pricing remains relatively stable.

Intel 12 inch wafer — *Intel has processed this 12-inch wafer to create Xeon CPU dies*

PC enthusiasts should pay most attention to the 12-inch wafer pricing, as the leading edge production of today’s most attractive computer processors will use 12-inch wafers. In other words, the current news we have on wafer price declines isn’t great for the holy trinity of AMD, Intel and NVIDIA—and so it isn’t likely to make much difference to us, as things stand. However, we can remain optimistic that wafer prices have passed a pinnacle and are now trending down, which is a wave we can patiently ride if waiting for component upgrades at the best possible prices.