Osaka Titanium exits polysilicon business for semiconductors

Worker with polysilicon rods at polysilicon plant of Osaka Titanium Technologies in Japan
The polysilicon production facilities of Osaka Titanium Technologies were too small and old to remain competitive – Image: OTC

The shakeout in the polysilicon industry has now arrived at its prime segment: Osaka Titanium Technologies Co., Ltd. (OTC), a Japanese manufacturer of titanium materials and electronic-grade polysilicon, has announced that it will abandon polysilicon production at the end of December 2018.

Hence, the company has cancelled a long-term supply contract with its main polysilicon customer Sumco, the world’s second-largest manufacturer of semiconductor wafers, and expects to terminate polysilicon shipments by the end of March 2019.

OTC has a polysilicon production capacity of 3,250 metric tons, which has been underutilized in recent years. Consequently, one reason the company cites for the plant closure is that “the global supply-demand gap of semiconductor polysilicon is not solved,” despite steadily growing demand for semiconductors.

In the fiscal year ended in March 2018, the polysilicon business contributed 24.5% to OTC’s revenues, but only 2.5% to its operating income. Increasing quality requirements for electronic-grade polysilicon would have demanded new investments in the company’s facilities. Therefore, OTC has decided to focus on its thriving titanium business instead.

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