By Lita Shon-Roy, TECHCET
TECHCET CA LLC’s prediction of a wet chemical supply fallout is materializing. The reduction of petrochemical refinery output that the Company has been tracking throughout 2020 combined with severe winter storms in Texas has been more than the supply-chain could support without interruptions. As TECHCET pointed out to its CMC (Critical Materials Council) members in the fall of 2020, the US wet chemical supply capacity and demand volumes are running so closely that any plant shut-down or appreciative increase in demand can cause a shortage.
Several semiconductor process materials in the petroleum supply-chain are running short because of lower overall oil refinery further impacted by the Texas snowstorm. Materials including acetone, PGMEA, NMP, and IPA, a few of several solvents, rely on the petrochemical refinery supply-chain. Specialty polymers used to make photoresist, and CMP pads are also part of this chain, although used in lower volumes than solvents. And last but not least, plastics production, required by high purity chemical providers for packaging and wet processing equipment, is experiencing raw material price increases due to availability issues.
In 2020, US petroleum refinery runs fell 2.3 million barrels/day (Each barrel represents 42 gallons of crude.) at par with the demand drop. US throughputs increased in December and early January but are likely to stagnate until a stronger demand recovery takes hold, which is expected toward the end of 2021.
At present, nearly 10% of US refining capacity is offline due to low demand, plant repurposing, or extended turnarounds. Many US refiners feel that the current demand is still not enough to support refining margins.
As the US and other parts of the world are coming out of the pandemic, demand is rising sharply relative to production, causing price escalation for feedstock chemicals, including polypropylene, acetone, and other solvents. Ethylene, a vital material for wet chemical containers and lines, is running at such low levels that both spot and contract prices have increased to a 6-year high, escalating 17% over the past two months. As explained by Bruce Lipisko, TECHCET’s Director of Business Development, “The price hike was sparked by the winter storm that hit southern Texas. However, in any normal year, this would not have been an issue. Inventory levels have been running so low, due to the pandemic, that when the storm hit, the supply-chain could not handle the demand and multiple producers declared force majeure. And now, this demand is increasing.” As refineries in Texas come back online, supply is expected to remain tight.
The problems for the US chemicals supply-chains will not rest for long. The US fab expansions expected over the next few years (which now include Intel, Samsung, and TSMC) will require a massive increase in chemicals. Current high purity chemical capacity is already tight with no new plants to support ultra-high purity chemicals; some chip fabricators must import ultra-high purity IPA from Asia.
The US issue is just one example of a semiconductor material supply-chain skating on thin ice. With inventories held low and few/no plans for future investment/expansion in wet chemical production, the semiconductor materials supply-chain is well-positioned for a major disruption.
TECHCET continues to track and assess material supply-chains worldwide. They will be releasing an in-depth report on the “Impact on Chip Expansion on US Wet Chemical Supply-Chain” by May 2021. For more information please contact [email protected] or call +1-480-382-8336, x103.
The 2021 Critical Materials Council (CMC) Conference, happening April 14-15 in virtual space, will also include coverage on this topic. Register here: https://cmcfabs.org/registration-2021/
ABOUT TECHCET: TECHCET CA LLC is an advisory services firm focused on process materials supply-chains, electronic materials business, and materials market analysis for the semiconductor, display, solar/PV, and LED industries. Since 2000, the company has been responsible for producing the Critical Material Reports™, covering silicon wafers, semiconductor gases, wet chemicals, CMP consumables, Photoresists, and ALD/CVD Precursors. The Critical Materials Council (CMC) of semiconductor fabricators is a business service offered by TECHCET, and includes materials supplier Associate Members. For additional information about reports, market briefings, CMC membership, or custom consulting please contact [email protected], +1-480-332-8336, or go to www.techcet.com or www.cmcfabs.org.