AI Critical Material Shortage Escalates: Prices of 'This Gas' Surge 28% Yet Still Not Enough to Meet Demand

As AI computing power demand continues to rise, memory manufacturers are accelerating production expansion, causing an increasingly tight supply of a semiconductor material rarely noticed by the market.

Prices for electronic-grade dichlorosilane (DCS) have risen significantly this year. In China, quotes for 5N-grade products have reached RMB 1,000–1,100 per kilogram, up approximately 25% from the beginning of the year. Imported 6N-grade products have surged to USD 300–320 per kilogram, representing a 28% increase.

DCS is a core precursor gas for chip thin-film deposition and epitaxial growth. As AI drives demand for advanced processes and memory chips, supply bottlenecks are gradually emerging.

AI Memory Expansion Drives Soaring DCS Demand

DCS is crucial because the more advanced the chip process and the higher the number of 3D NAND layers, the greater its usage. 3D NAND is advancing from 128 layers toward over 300 layers, and each additional layer requires another round of thin-film deposition. Industry estimates suggest that DCS consumption per chip in 300-layer NAND is about 1.5 times higher than in 128-layer NAND.

Moreover, DCS has a lower decomposition temperature and a deposition rate 3 to 5 times faster than traditional silicon-source precursors, making it especially suitable for advanced processes below 3 nanometers.

However, the purification threshold for semiconductor-grade electronic DCS is extremely high. Metal impurities must be controlled at the ppt (parts per trillion) level. From initial production capability to stable mass production and obtaining certification from wafer fabs, every stage presents significant challenges. The customer certification cycle in the semiconductor industry lasts 2 to 3 years. Once integrated into a production line, changing suppliers becomes extremely difficult.

High-End Supply Concentrated; 6N-Grade Heavily Reliant on Imports

Currently, global supply of high-end DCS is highly concentrated. Japanese firms such as Shin-Etsu Chemical, Taiyo Nippon Sanso, and Sumitomo Seika collectively hold about 55% of the high-end market. Shin-Etsu Chemical alone accounts for approximately 22% of the global market, with an annual production capacity of about 6,400 tons. China’s domestic production rate for high-end electronic-grade DCS is only about 15% to 20%, and 6N-grade products are almost entirely dependent on imports.

The top five global DCS manufacturers together hold over 68% of the market share. Chinese manufacturers are currently focused mainly on mass-producing 5N-grade products, while 6N-grade products are still in the verification and breakthrough phase. Moving from 5N to 6N appears to add just one more '9' in purity, but in reality, it means improving impurity control capability from parts per million to parts per billion.

AI Demand Outpaces Supply Expansion

The supply-demand gap is widening amid the AI investment boom. Samsung, SK Hynix, and Micron plan combined capital expenditures exceeding $80 billion in 2026. AI computing demand is pushing memory production capacity expansion, but major DCS suppliers in Japan and South Korea are expanding production cautiously. Production capacity growth at Shin-Etsu Chemical and Taiyo Nippon Sanso lags behind demand growth, further intensifying supply pressure.

The current global electronic-grade DCS market size is approximately $550 million to $600 million, with a compound annual growth rate of about 8% to 10%. With continuous increases in 3D NAND layers, rising demand driven by AI memory expansion, and concentrated supply of high-end products, this once behind-the-scenes critical gas in chip manufacturing is becoming another unavoidable material bottleneck in the AI supply chain.