Silicon Wafer Pricing Is Finally Firming

MEMC Electronic Materials (WFR) manufactures silicon wafer solutions for the semiconductor and solar industries. During its latest earnings conference call (click here for the entire transcript from Seeking Alpha), WFR indicated that pricing is finally firming for its wafer business. The deflation seen in 2008 and 2009 appears to finally be ending. Here is what company executives said:

Semiconductor Materials:

“Price was up modestly versus last quarter and is still down slightly versus the previous year…The absolute level of profitability is not satisfactory, but the improving trend should continue as restructuring efforts progress, as productivity’s aided by volume and as price continues to recover. We’re comfortable to say that the price increases, first of all in Q1, we had like low single digits. In Q2 and Q3 we’ll have mid to high single-digit increases quarter-on-quarter.”

Solar Materials:

“We could have easily turned around and raised price on our Solar customers. We just didn’t want to do it. While we’d have shown a much better result this quarter, but they would have missed all their plans and we just didn’t feel that that’s the right thing for us to do. So we have given them heads up, and now in Q2 we’re raising price, and the price is increasing as much as it declined from Q4 to Q1, it’s increasing from Q1 to Q2. And we see a firmness as well in Q3, but it’s still early, but so far so good.”

WFR has also experienced cost pressures from its subcontractors, so the company needs these price increases to halt or slow down the current declines in its gross margins. These price increases will very likely continue to push through the semiconductor and solar value chains.