Taiwan Ratings Corp. today affirmed its ‘twAA-‘ long-term and ‘twA-1+’ short-term issuer credit ratings on GlobalWafers Co., Ltd. The outlook on the long-term rating is stable. The ratings reflect our view that GlobalWafers could maintain its third ranking market position supported by high industry concentration and significant entry barriers in the wafer industry, as well as the company’s better flexibility and capability in serving clients with more diversified production sites than most of its peers. The ratings also reflect our view that GlobalWafers could maintain strong operating cash flow generation and keep its ratio of debt to EBITDA comfortably below 1x in 2023-2024, despite aggressive capital expenditure. Several factors temper these strengths. These include GlobalWafers’ somewhat inferior technology positioning in advanced wafers relative to the industry leader, and high product concentration which makes it significantly susceptible to semiconductor cyclicality and technology obsolesce risk.
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