Global Silicone Market Overview, 2024-29

Market Dynamic

Market Drivers • Automotive Electrification and Semiconductor Demand: The global push towards automotive electrification, driven by the adoption of electric vehicles (EVs) and the development of autonomous driving technologies, significantly contributes to the demand for silicon. Advanced driver assistance systems (ADAS) and in-vehicle electronics rely heavily on silicon-based semiconductors. As the automotive industry transforms, the need for silicon in vehicle components continues to grow. The demand for silicon in the automotive sector is expected to rise sharply as electric vehicles become more main-stream and as semiconductor content per vehicle increases. Silicon's role in enhancing the efficiency and performance of electric drivetrains and supporting various connectivity features positions it as a key driver in the automotive market. • Data Center Expansion and Cloud Computing: The rapid expansion of data centers and the increasing demand for cloud computing services are major drivers for the silicon market. Silicon is integral to the production of high-performance processors and memory chips, which are essential components of data center infrastructure. As the volume of data generated and processed globally continues to surge, the demand for silicon in data centers remains robust. The growth of data centers, driven by trends like digital transformation, big data analytics, and the proliferation of online services, ensures a sustained demand for silicon. Companies investing in cloud infrastructure and data processing capabilities contribute to the expansion of the silicon market. Market Challenges • Regulatory Compliance and Environmental Concerns: Stringent environmental regulations and concerns about the carbon footprint associated with silicon production pose challenges for the industry. The traditional methods of silicon production involve energy-intensive processes, and addressing environmental and regulatory requirements presents a significant challenge for manufacturers. Companies in the silicon market are under pressure to adopt cleaner and more sustainable production methods to comply with regulations and meet environmentally conscious consumer expectations. Investments in eco-friendly technologies and adherence to environmental standards are becoming crucial aspects of the industry's response to these challenges. • Global Economic Uncertainties: Economic uncertainties, including factors such as trade tensions, currency fluctuations, and geopolitical events, can impact the global silicon market. Variability in economic conditions can influence consumer spending, business investments, and overall demand for electronic devices, affecting the silicon supply chain. Fluctuations in economic conditions may lead to changes in market demand, pricing, and investment patterns. Companies in the silicon industry need to be agile and adaptable to navigate the challenges posed by macroeconomic uncertainties. Market Trends • Integration of Artificial Intelligence (AI) and Edge Computing: The integration of AI into various applications, coupled with the rise of edge computing, is driving a trend that demands more powerful and efficient silicon-based processors. Silicon plays a crucial role in supporting the computing requirements of AI algorithms, particularly in edge devices where real-time processing is essential. The demand for silicon with enhanced processing capabilities to support AI workloads is expected to rise. This trend aligns with the broader adoption of AI across industries, from consumer electronics to industrial automation. • Development of Advanced Silicon-Based Materials: Ongoing research and development efforts are focused not only on improving silicon but also on developing advanced materials with unique properties. Silicon carbide (SiC) and gallium nitride (GaN) are examples of materials gaining attention for their potential in high-performance applications, such as power electronics and semiconductor devices. The development of advanced silicon-based materials broadens the scope of applications and enhances the efficiency and performance of electronic components. These materials offer benefits such as higher energy efficiency, faster switching speeds, and improved thermal conductivity, contributing to the overall evolution of the silicon market. Covid-19 Impacts The pandemic disrupted global supply chains, affecting the production and transportation of raw materials and finished goods. Silicon, being a crucial material in various industries, experienced disruptions in its supply chain, impacting the availability and pricing of silicon products. The semiconductor industry faced significant challenges due to disruptions caused by the pandemic. The shortage of semiconductor chips affected industries such as automotive, consumer electronics, and manufacturing, as silicon is a primary material in semiconductor production. The automotive industry, a major consumer of silicon for electronic components, faced production slowdowns and disruptions. Lockdowns, factory closures, and reduced consumer demand affected the production and sales of vehicles, impacting the silicon demand in this sector. Research and development activities in the silicon industry may have been delayed or slowed down due to disruptions in laboratory work, restrictions on physical gatherings, and a shift in priorities towards addressing immediate challenges posed by the pandemic. However, the demand for electronic devices, which heavily rely on silicon components, experienced fluctuations during the pandemic. While there was increased demand for certain electronics due to remote work and digitalization trends, other sectors faced challenges, impacting overall silicon demand. The solar industry, which utilizes silicon in the manufacturing of photovoltaic cells, was affected by disruptions in production and project installations. Supply chain interruptions and lockdown measures in various regions led to delays and uncertainties in the solar energy sector.

Key Development

• In September 2023, Wacker Chemie AG, a silicone manufacturer, announced the expansion of their silicone production capacities in China with an investment of USD 160.34 million (EUR 150 million). The facility will be capable of manufacturing silicone fluids, silicone emulsions, and silicone elastomer gels. • In October 2022, Ferroglobe announced to restart of the 55,000-ton silicon metal facility in Polokwane, South Africa. The decision to renew the Polokwane facility was made as part of Ferroglobe's strategic plan to increase its capacity of silicon metal to address strong market demand. The Polokwane plant will enable the company to add lower cost and strategically located accommodation, optimizing its asset footprint and providing flexibility in managing the volatile energy markets in Europe. • In August 2022, REC Silicon and Mississippi Silicon agreement bolster the United States solar supply chain. This agreement will help Mississippi Silicon to gain a stronghold in silicon metal, especially in the solar industry.