In the main industries for our business, we expect economic trends to present a mixed picture in 2014.

Semiconductor-Wafer Demand Likely to Rise in 2014

According to Gartner’s market research experts, semiconductor-wafer market volume will grow in 2014. They anticipate that worldwide silicon-wafer sales by surface area sold will rise 5 percent year on year to 63.6 billion cm². The 300 mm segment is expected to deliver above-average growth of 7 percent. The segment for wafers with diameters below 300 mm is also projected to grow slightly. The Gartner analysts estimate that semiconductor revenues will rise by 8 percent globally in 2014 to around US$ 8.6 billion. For 2015, Gartner also envisages increases in worldwide volumes and revenues. WACKER should benefit from further market growth for 300 mm wafers. A decisive factor, however, will be the extent to which price pressures in this segment persist.

WACKER’s Key Customer Sectors

Photovoltaic Market Remains Challenging but Will Continue to Grow

The photovoltaic market will remain challenging in 2014. It is still suffering from production overcapacity, low prices, and uncertainty about financial incentives for renewable energy. The market trend could also be impeded by anti-dumping investigations in China against European polysilicon manufacturers.

Photovoltaic-Market Trend in 2014

The substantial fall in prices right along the supply chain has made photovoltaics even more competitive compared with other energy sources. Increased competitiveness is opening up new markets and promoting growth in global solar-application markets. China overtook Germany as the world’s biggest market in 2013. The coming years will see a continuation of this shift toward Asia and other emerging markets outside Europe. According to the EPIA (European Photovoltaic Industry Association), countries with additional growth potential include China, the USA, Japan, India and South Africa.

Based on its own research, WACKER anticipates substantial photovoltaic-market growth in 2014, with newly installed photovoltaic (PV) capacity likely to come in at between 42 and 50 gigawatts (GW).

Chemical Industry Again to See Some Growth in 2014

After a mixed year in 2013, the German Chemical Industry Association (VCI) expects production and sales to edge up in 2014, with prices for chemical products declining slightly. Output should rise 2 percent and sales 1.5 percent. Exports remain the growth driver in Germany’s chemical sector. In 2014, the VCI expects somewhat more momentum from the domestic market. The USA remains by far the biggest trading partner.

WACKER’s chemical divisions primarily see growth opportunities in the BRIC countries, in other emerging economies and in the USA. Amid increasing emerging-economy affluence, we will increase our sales further in such countries as China and India, as well as in Southeast Asia. The WACKER portfolio includes many high-end products that are in demand among new customer groups. WACKER POLYMERS sees good growth prospects for VAE dispersions in the European carpet market, where they are replacing styrene-butadiene. WACKER SILICONES expects higher sales in the electrical and electronics sectors, in cosmetics and personal care, and in medical technology. Moreover, high-end products should continue to increase their share of sales compared with standard products.

Global Construction Industry to Remain on Growth Path

According to Global Insight’s market researchers, the construction industry will continue expanding over the next few years. The market is expected to grow by 4.1 percent on average until 2017. The main drivers of this development will be China, India and Asia as a whole. Global Insight also expects substantial growth for the USA in 2014, above all in the private-housing sector. For Western Europe, Global Insight predicts 2014 will deliver growth for the first time since 2007. Renovation projects and energy efficiency will continue to offer WACKER very good growth prospects for the coming years.

At WACKER POLYMERS, we anticipate that our construction-sector sales will climb in every region during 2014. We see continued growth, for example, with interior paints and dry-mix mortars. At WACKER SILICONES, the percentage of high-end construction products in the portfolio is expected to increase further. There are good growth opportunities not only for hybrid products made from silane-modified organic polymer building blocks and innovative silicone resins for high-end paint and plaster applications, but also for the (all-round) adhesives and (crystal-clear joint) sealants formulated from these resins, and for silicone cartridges sold under our own brand.

Electrical and Electronics Industries with Moderate Growth Expectations for 2014

The electrical and electronics sectors anticipate moderate growth for 2014. According to estimates by the German Electrical and Electronic Manufacturers’ Association (ZVEI), market volumes could rise further in 2014. The ZVEI expects to see production output increase by 2 percent. There will be double-digit expansion in the BRIC countries, which remain the key driving force behind the global electrical and electronics sectors. The German electronics market is projected to achieve sales of around € 170 billion (2013: € 173 billion). In several application sectors, we see good prospects for expanding our electrical and electronics business. One sector is energy, where new power networks, for example, are being planned in Germany. WACKER SILICONES is a leading player in the USA, Europe and India with its high-temperature-curing silicone rubber for long-rod insulators and its liquid silicone rubber for hollow insulators and cable fittings.

We also anticipate good growth prospects in automotive electronics, which remains a dynamic market. Demand for products exhibiting superior temperature and media resistance is rising. This is an area in which WACKER SILICONES supplies UV-initiated silicones and innovative potting compounds for engines. We expect to generate extra growth through products for optical applications (LEDs) and screens (displays), areas in which we have launched various innovation projects.