Nitrogen trifluoride (NF3), an essential material for domestic semiconductor and display production, is expected to see a significant improvement in profitability in the second half of the year due to a drop in raw material prices and increased demand.

According to SunSirs, a site specializing in Chinese raw material price trend data, the price of hydrofluoric acid, the raw material for NF3, has been continuously falling since the end of April.

The price of anhydrous hydrofluoric acid continued to rise, reaching 16,220 RMB per ton as of April 15, 2021, but continued to decline after peaking on April 24, reaching 11,800 RMB per ton as of May 25.

Major domestic NF3 production companies saw their profitability decrease compared to the past despite increased sales and volume in the first quarter due to increased cost of sales, including raw material prices.

In particular, the domestic factory operating rate in the first quarter is expected to approach 100%. As demand increased, there was some disappointment in terms of improving profitability.

Meanwhile, profitability is expected to improve significantly and product prices are also expected to rise in the second half of the year.

First, the semiconductor industry, which is a major demand source, is expected to see an increase in non-memory shipments starting in the second quarter of 2021 due to a shortage of non-memory supply.

In addition, as the economy recovers from the economic downturn caused by COVID-19, the server market with high B2B demand is expected to lead the semiconductor market. In particular, according to the industry, semiconductor demand is known to be quite high as semiconductor inventories at server companies continue to decrease.

Accordingly, starting from the second quarter of 2021, DRAM shipments are expected to far exceed production, inventory trends are expected to fall below normal inventory levels, and volume adjustments are also expected to increase shipments along with rising memory prices in the second half of the year.

In addition, aggressive expansion by NAND and foundry companies is expected to resume, and additional expansion by domestic OLED and Chinese LCD is also expected.

Accordingly, demand for NF3 is expected to continue to increase.

Meanwhile, NF3 production was quite tight in the first quarter, and it is known that it will be tight enough for each company to adjust volume in the second quarter as well.

In particular, since no expansion of NF3 is planned this year, it is expected that there will be a continued supply shortage this year.

An industry insider said, “It is true that production is currently tight, but it is difficult to comment on the possibility of a shortage or adjustments to the quantity in the second half of the year,” adding, “We need to wait and see what the second-half order situation is from demanders in June.”

Meanwhile, NF₃ is used to clean the inside of a wafer by reacting with impurities such as silicon dioxide (SiO₂) or silicon nitride (SiN₄) remaining after coating a thin film on the wafer in a chemical vapor deposition (CVD) chamber, a major process in semiconductor production, and turning it into silicon tetrafluoride (SiF₄).