Will the solar bubble really burst in 2009?

Will this actually happen? Will the solar bubble burst in 2009 as supply exceeds demand? I don't know, but I came across this news and am pleased to share with you.

According to Lux Research, the overall solar industry revenues will grow to $70.9 billion in 2012, but oversupply and new technologies will squeeze today’s leaders! This has been reported in its new report titled "Solar State of the Market Q1 2008: The End of the Beginning."

As per Lux Research's study, the solar industry has been having a remarkable run, attracting the attention of all stakeholders. However, all of this activity has also led to the growth of a bubble, which will most likely burst some time soon.

Lux Research says that while growth will continue to be robust -- solar industry revenues will grow at a brisk 27 percent annual rate to reach $70.9 billion in 2012, up from $21.2 billion in 2007 -- the solar industry will look very different just two years from now!

"Government subsidies in countries like Japan, Germany, and Spain have helped make large-scale solar a reality, with annual installations reaching 3.43GW in 2007," said Lux Research Senior Analyst Ted Sullivan, the report’s lead author. "During this period, solar demand has consistently outpaced supply. But the market is now approaching a tipping point. We project that the supply of solar modules will exceed demand in 2009, leading to falling prices and a shake-out among companies that aren’t prepared to thrive in this new environment -– particularly crystalline silicon players that haven’t invested in new thin-film technologies."

Interesting comments! At the recently concluded ISA's Vision Summit, it was disclosed by Jairam Ramesh, union minister of state for Commerce, that the Indian government had received seven confirmed investments in the Hyderabad Fab city, with a total value of $7 billion for 10 years.

Five firms have been given principle approval with $1 billion investment. Proposals of three other firms -- Videocon, Moser Baer, and Hindustan Semicon Manufacturing Corporation (HSMC), have yet to be considered.

Reliance is said to have put forward a proposal for solar/PV manufacturing facility with an investment of $5 billion in Jamnanagar. This proposal is under consideration. The majority of firms proposed to set up in Fab city are mainly focused on solar/PV.

As I said in that blog, the last bit is the interesting part. If everyone focuses on solar/PV, who will focus on the other ancillaries required to complete the semicon ecosystem? What about the LCD, OLED plants, etc., that were mentioned in the semiconductor policy? Now, with the Lux Research report predicting a squeeze next year, these Indian companies investing in solar/PV fabs need to be careful about how they go about setting up their businesses.

The solar business will surely be a space worth watching over the coming years!

India's semicon policy takes off

Close on the heels of the historic Indian semicon policy announced earlier this year comes the news that Hindustan Semiconductor Manufacturing Corporation (HSMC) would be setting up a semicon foundry in India partnering with Infineon Technologies for CMOS licences. It's no surprise to see Infineon among the early movers as Infineon has been present in India for quite a while now.

This is excellent news as far as the Indian semiconductor industry is concerned. I remember the day the India Semiconductor Association (ISA) was formed in Bangalore in early November 2004. The ISA is a very young industry body and all kudos to it for having taken forward the Indian industry so very well.

Congratulations are also due to Honourable minister, Dayanidhi Maran for having the foresight and for believing in the semiconductor industry.

Not only would the semicon industry boost India's GDP in the coming years, the policy should also see India emerging as a destination of choice for manufacturing of high-tech products in the future.

This January, while attending the VLSI conference in Bangalore, I had the pleasure of learning about the various incentives some of the state governments, such as those of Karnataka, Kerala, Tamil Nadu and West Bengal have to offer to investors.

Other state governments should come forward as well and make India's dream of becoming a semicon giant a success and help the semicon policy really take off.

Following HSMC's announcement, we have now come to expect more such announcements in the near future. All of this really augurs well for India. It will also change the global perception that India is the destination for software and outsourcing.

We can do it. Time to show the world. Well done ISA. Well done Minister. And well done HSMC and Infineon