Osaka Titanium exits polysilicon business for semiconductors

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.