Despite a highly oligopolistic character of the global silicon market, the silicon industry, including its mining, smelting, refining and manufacturing operations, consists of a wide range of multiple-scale entities with a very broad line of products, reaching out to various adjacent marketing systems and related industries.
However, global leaders on the silicon market have been always looking to increase their capacity for vertical integration to secure long-term supplies of the materials they need, improve profit margins, increase flexibility of product ranges and better cater to their clients’ needs. Companies that did not regard their silicon business as a strategic priority were often selling their silicon business to more silicon market-oriented entities.
This is especially true for the polysilicon market, and the examples are plentiful. In September 2019, DuPont sold its compound semiconductor solutions business to South Korean silicon wafer supplier SK Siltron for USD 450 mln. Likewise, 13 years earlier, Shell Solar sold its solar-grade polycrystalline silicon (polysilicon) operations to SolarWorld. Its parental company, SolarWorld AG, declared insolvency later, and its main division, SolarWorld Americas, was fully purchased by American company SunPower in 2018. This is a typical story for the silicon industry, where entities are often unable to combine the required market orientation with a sufficient level of vertical integration. These entities have to operate in a very high-tech, volatile and policy-dominant environment. As for the latter, it is sufficient to mention the so-called 531 New Deal policy, declared by China a few years and now rejected. This New Deal policy involved the curtailment of multiple subsidies into the vast majority of silicon-based projects, which led to overcapacity and falling polysilicon prices in 2018 (the fall was experienced by all regional markets, and not only China). In such unstable environment, it is paramount to enhance vertical integration and originate what Wacker Group defines as an integrated silicon-based production system.
Such vertical integration and systematization are demonstrated by actual market leaders like Wacker Group, which is a major technology driver and supplier of high-purity (hyperpure) polysilicon for photovoltaics and semiconductor electronics. Wacker’s silicon-related business is a typical example of such approach. Wacker owns the total polysilicon capacity of around 80k mty, which is almost entirely based in the established Siemens technology. It includes a 40k mty facility in Burghausen (Germany), a 20k mty facility in Nünchritz (Germany) and a 20k mty facility in Charleston (Tennessee, USA). Wacker’s silicon business is integrated into other company’s operations, especially related to silicones division. For example, in October 2019, Wacker launched a 13k mty plant for manufacturing pyrogenic silica (highly pure amorphous silicon dioxide) at its US site in Charleston, Tennessee. It is the same facility where the company manufactures polysilicon. The hyperpure polysilicon production involves the transformation of raw silicon into tetrachlorosilane, large amounts of which are released as a by-product by reaction with hydrogen chloride gas. Tetrachlorosilane can be either fed back into the production loop or converted into pyrogenic silica. With such a level of integration of various feedstocks and commodity products, the operation of the company gains significant flexibility and creates additional value.
Find a detailed analysis of the global silicon market in the in-demand research report “Silicon: 2019 World Market Review and Forecast to 2028”.