GlobalWafers' Near-Term Margin Shock Has No Effect on Its US 'Monopoly'

GlobalWafers grew to become the third-largest semiconductor silicon wafer producer via more aggressive expansion than peers. It is the only wafer producer to operate factories in Europe, Asia, and the US. Such a diversified footprint is profitable due to a combination of having customers in all three regions and the firm’s record of acquiring distressed competitors during previous industry troughs. We view GlobalWafers’ new plant in Texas as a continuation of its boldness, as it will offer faster and more reliable supply to customers like Samsung and Texas Instruments. We estimate new-built factories near customers will give GlobalWafers a 5% edge in freight costs.