Industry-wide solar crisis coming next year –- Thank you China!

NEW TRIPOLI, USA: The solar industry is at a critical stage and 50 percent of the existing solar manufacturers may not survive 2010 according to the report: Opportunities in The Solar Market For Crystalline and Thin Film Solar Cells, published by The Information Network.

“I wrote only a month ago that massive inventory buildup and huge overcapacity were having a serious impact on the solar panel industry and its manufacturers,” noted Dr. Robert Castellano, president of The Information Network. “To reiterate, inventory is averaging 122 days in 2009 versus 71 days in 2008. Capacity utilization (amount of production capacity actually produced) dropped to 27.9 percent in 2009 from 48 percent in 2008.”

For 2010, I “cautiously” anticipated that no new additional capacity will be brought on board, maintaining 2009 levels of 17,551 MW. This would bring capacity utilization to 35.4 percent and reduce inventory to 96 days on average for all of 2010. That ideal scenario is represented in the table below.Source: The Information Network

If solar manufactures went ahead and installed all the capacity planned for 2010, it would even worsen the outcome of the solar industry –- the utilization would decrease further to 26.8 percent and days of inventory would increase to 127 days, as shown in the table.

Now, I am hearing that small solar panel manufacturers in China are planning to bring an additional 1 GW of panels to the market by the end of 2009, which we have learned based on manufacturing equipment purchases. While it represents an increase of less than 5 percent of the planned capacity, there are several implications.

1. China’s solar panel manufacturers, exasperating the situation by adding more capacity, are already dropping prices to $1.80 per watt for polysilicon-based products, which is lower than the $1.85 level we projected back in March for the end of 2009. By way of comparison, the average selling price in Q3 2008 was $4.05 per watt.

2. Because of economies of scale, whereby the more solar panels manufactured, the lower the cost to make them, other manufacturers will increase capacity to their planned 2010 levels in order to compete against the Chinese. We will now reach the last column in the table –- 25.7 percent capacity utilization and 133 days inventory.

3. Average selling prices could drop below $1 per watt in 2010 and $0.50 in 2011.

4. As many as 50 percent of the more than 200 solar manufacturers, mired in red ink with current selling prices above $2.00 per watt, may not survive.

Q-Cells sales fall in H1 by 36.8 percent, announces comprehensive set of measures

BITTERFELD-WOLFEN, GERMANY: The photovoltaics company Q-Cells SE presented its half-year report up to 30 June 2009. Following the considerable decline in business performance for Q-Cells SE in the first six months of the current year, the Board of Management is introducing a comprehensive set of measures to fundamentally improve the company’s performance.

As already stated, sales in the first half of the year fell from 579.5 million Euro in the previous year period to 366.2 million Euro. A profit in business operations (EBIT) of 119.1 million Euro in the first six months of last year is countered by an operating loss of -47.6 million Euro over the same period in 2009.

Influenced by a further write-down in connection with the sale of its share in Renewable Energy Corporation ASA (REC) in May, the period loss incurred for the first half of 2009 was 696.9 million Euro.

The production volume has remained almost constant at 272.2 MWp in comparison with the first half of 2008. Q-Cells’ business was harmed by negative pricing trends in the industry and reduced customer volumes. Q-Cells International, a fully consolidated subsidiary of Q-Cells SE, performed generally better and continued to grow rapidly building solar parks.

The company achieved an EBIT of 8.0 million Euro during the half-year on sales of 128.0 million Euro and, amongst other projects, is currently erecting Germany’s biggest ever solar park in Strasskirchen in Bavaria with a capacity of around 54 MWp.

“The business performance shows how quickly and dramatically the markets have changed for us. In order to take rapid and comprehensive countermeasures, we have developed Q-Cells Reloaded, a three-tier set of measures with which we will adapt Q-Cells to market conditions which have structurally changed. The aim is to grow profitably at a sustainable rate again in the medium term,” says Anton Milner, CEO of Q-Cells SE.

Milner further says: “Of course we feel the pressure on prices that comes from overcapacities and the financing of major projects, which remains sluggish because of the financial crisis. We will tackle these and other issues most resolutely in the context of Q-Cells Reloaded.”

In addition, operating profit has been affected by long-term contracts with wafer suppliers which have been working to the company’s disadvantage, by manufacturing partly at too high costs by international comparison and also by comparatively high overheads.

“Q-Cells Reloaded” set of measures

The set of measures comprises the following:

1. Adjust capacity and lower costs
As a result of the oversupply of silicon wafers, the market price for this preliminary product in the short-term has, since the beginning of the year, been below the price level that Q-Cells agreed with its suppliers in its contracts for 2009.

In the first half year alone this resulted in a competitive disadvantage of around 50 million Euro. In 2010 the contracts will be brought into line with the market price so that this disadvantage will largely be eliminated.

In addition, the cost structure of the older generation production lines at the Thalheim location lies around 30 percent above the usually accepted level in international competition. This is mainly the result of substantial scale effects which could be achieved with larger production lines and the technical condition of the old equipment. For this reason the Board of Management has decided to shut down these production lines.

Together with the necessary reduction in overheads in all areas, around 500 jobs will be cut permanently. Short-time work will continue to be in operation at the Thalheim plant depending on the market development. Altogether a reduction of production cost of 25 percent will be achieved with these measures.

2. Strengthening of technology position
Q-Cells is focusing its research in the solar cell sector on projects that are marketable and where success can be expected in the short to medium term.

Most recently, an efficiency of 18.3 percent was achieved for monocrystalline cells. “On this basis, we will achieve a 20 percent efficiency in our R&D lines by the end of 2011”, explains Gerhard Rauter, Member of the Executive Board and responsible for production.

Within its technology portfolio Q-Cells will in the future concentrate on the thin-film companies Solibro (CIGS) and Calyxo (CdTe), where it controls these companies. The Executive Board of Q-Cells has requested that Calyxo proves its technological potential in mass production by the end of 2009. The efficiency of Solibro’s best thin layer modules has most recently been 11.7 percent.

Solibro started mass production in 2008 and has since then produced about 9 MWp of thin-film modules. For its other investments, Q-Cells will continue working with partners to further expand these companies.

3. Securing medium-term liquidity reserves
In order to create sufficient room to manoeuvre for the transitory phase until the beginning of 2011, Q-Cells’ in-house financing is to be reinforced. All investment projects, especially those for 2010, will be reviewed again and the capital commitment in projects and stocks reduced. In contrast to the original plan, Q-Cells expects a reduced outlay of up to 300 million Euro.

“We are able to reduce the cash requirement by around 200 million Euro through tight working capital management in production and in the project business. We can avoid a further cash outflow of up to 100 million Euro through a reduction in our investment programme,” says Dr. Nedim Cen, CFO of Q-Cells SE.

“After the great successes in the start-up period, for which we also have to thank a unique team, we now face some big challenges. To steer Q-Cells safely through the crisis and give the company a long-term perspective at the Thalheim location, these measures, including a cut in personnel, are unavoidable.

“We appreciate that this is a very painful step to take. At the same time we are even managing to create new positions in the Research & Development, Sales & Marketing and thin-film companies so that in future we will be able to differentiate ourselves from our competitors even more strongly by having a technological edge”, Milner concludes.

With the change in the photovoltaic markets, new sectors and regions will also open up. In addition to its core business Q-Cells will in future engage more in systems integration by building on the project business of Q-Cells International which is already a well-known player in the market. Milner said: “We will be offering our own system know-how to selected markets.”

LDK Solar's revenue drops in Q2

XINYU CITY, CHINA & SUNNYVALE, USA: LDK Solar Co. Ltd, a leading manufacturer of multicrystalline solar wafers, reported its unaudited financial results for the second quarter ended June 30, 2009.

All financial results are reported in US dollars on a US GAAP basis.

Recent highlights:
-- Second quarter 2009 revenue was $228.3 million;
-- Shipped 231.7 MW of wafers, up 20.9 percent year-over-year;
-- Secured an RMB500 million (equivalent to approximately $73 million) short-term loan from The Export-Import Bank of China, and anRMB 500 million three-year loan from Huarong International Trust Co. Ltd;
-- Reached mechanical completion of the first 5,000 metric ton (MT) train in its 15,000 MT annualized capacity polysilicon plant in Xinyu, China.

Net sales for the second quarter of fiscal 2009 were $228.3 million, compared to $283.3 million for the first quarter of fiscal 2009, and $441.7 million for the second quarter of fiscal 2008.

For the second quarter of fiscal 2009, gross profit was negative $205.5 million, compared to $4.9 million in the first quarter of fiscal 2009, and $112.3 million for the second quarter of fiscal 2008.

During the preparation of its second quarter 2009 financial results, LDK Solar's management determined that an inventory write-down and loss on firm purchase commitments of polysilicon materials of approximately $175.8 million and $16.7 million, respectively, was required as a result of the continued rapid market price decline for solar wafers.

As a result, gross margin and results from operations were negatively impacted in the second quarter of fiscal 2009.

Gross margin for the second quarter of fiscal 2009 was negative 90 percent, compared to 1.7 percent in the first quarter of fiscal 2009 and 25.4 percent in the second quarter of fiscal 2008.

Loss from operations for the second quarter of fiscal 2009 was $235 million, compared to a loss of $16.1 million for the first quarter of 2009, and compared to income from operations of $100.3 million for the second quarter of fiscal 2008.

Operating margin for the second quarter of fiscal 2009 was negative 102.9 percent compared to negative 5.7 percent in the first quarter of fiscal 2009 and 22.7 percent in the second quarter of fiscal 2008.

Excluding the inventory write-down and loss on firm purchase commitments of polysilicon materials, gross profit was negative $13.0 million, or a gross margin of negative 5.7 percent for the second quarter of 2009 and loss from operation was $42.5 million, or an operating margin of negative 18.6 percent for the second quarter of 2009.

Income tax benefit for the second quarter of fiscal 2009 was $29.5 million, compared to income tax benefit of $1.6 million in the first quarter of fiscal 2009.

Net loss for the second quarter of fiscal 2009 was $216.9 million, or $2.03 per diluted ADS, compared to a net loss of $22.5 million, or $0.21 per diluted ADS for the first quarter of fiscal 2009.

LDK Solar ended the second quarter of 2009 with $265.7 million in cash and cash equivalents and $123 million in short-term pledged bank deposits.

"Our results for the second quarter of 2009 reflect the prevailing operational challenges for the solar industry. The continued decline in prices for solar wafers impacted our top and bottom lines and required an additional inventory write-down for the company, which significantly impacted our margins in the second quarter," stated Xiaofeng Peng, Chairman and CEO of LDK Solar.

"As part of our ongoing efforts to realign our near-term strategy and operations with current industry dynamics, we remained focused on improving our cost structure, increasing wafer sales and ramping up polysilicon production.

"During the second quarter, we took a measured approach to capital spending and proceeded with implementing our curtailed manufacturing expansion plans. We believe this approach allows us to improve our strategic positioning while continuing to best serve our customers.

"We continued to ramp our polysilicon production and also achieved mechanical completion for the first 5,000 MT train of our 15,000 MT plant. Construction is proceeding as planned and we look forward to the cost savings benefits that we will realize once larger scale in-house polysilicon production commences," continued Peng.

"We are encouraged by a number of recent developments in the solar industry. Demand for solar wafers is beginning to turn more positive. The current momentum surrounding China's Golden Sun solar subsidy program reflects the long-term confidence in the local solar industry.

"We believe that we are well positioned during this critical early stage of development of the PV industry in China, and we are pleased to be negotiating contracts for a number of local projects. During the quarter, we also made significant strides in further diversifying our business by collaborating on a number of PV development projects, particularly in the fast growing European markets.

"As we continue to evolve as a leader in the solar industry, we look forward to expanding our growth opportunities once we overcome the near-term industry challenges," concluded Peng.

Business outlook
The following statements are based upon management's current expectations. These statements are forward-looking in nature, and the actual results may differ materially. You should read the "Safe Harbor Statement" below with respect to the risks and uncertainties relating to these forward-looking statements.

For the third quarter of fiscal 2009, LDK Solar estimates its revenue to be in the range of $240 million to $270 million with wafer shipments between 260 MW to 300 MW and module shipments between 10 MW to 20 MW.

AU Optronics strengthens presence in clean energy sector

HSINCHU, TAIWAN: AU Optronics Corp. announced its decision, as resolved by its Board of Directors on June 19, to subscribe new shares to be issued by M.Setek, which is a major polysilicon and monocrystal silicon wafers manufacturer in Japan.

Such investment is for AUO to secure key materials in the solar industry and strengthen its strategic position in energy business. AUO’s preliminary plan is to invest US$125 million taking majority shareholding of M.Setek gradually, with investment amount to be finalized depending on future development of the investee.

Being a major supplier to renowned solar cell companies around the world, M.Setek is a company with leading technology that realizes high conversion rate of monocrystal silicon wafers for solar cells. Its capabilities and high-efficient products have always been highly recognized in the Industry. “This will mark a major step forward for AUO’s endeavor in energy business,” said K.Y. Lee, Chairman of AUO. “We are very much looking forward to collaborating with M.Setek, jointly bringing greater inputs to solar energy sources and providing better renewable energy solutions.”

Dr. L.J. Chen, President and CEO of AUO, also expressed that after extensive and careful planning, as well as the establishment of a dedicated R&D team, AUO’s energy business, guided by the strategy of total solution, has been proactively making sound presences throughout the value chain of energy business, aiming to offer the finest integrated technology and services to the world. This includes the collaborations with system house for photovoltaics (PV) in a bit to swiftly accumulate capabilities in system integration and design at the end market.

Furthermore, the company has established a 100 percent-owned energy company called AUO Energy Taiwan Corp. (AET) presided by Max Cheng as the Chairman in May 2009, which dedicates to provide integrated technical supports in energy system.

AET will provide more extensive value-added services in the future, including installation of energy system fueled by solar or other renewable energies for power plants, industrial facilities, commercial buildings and households. Currently, the AET together with system providers is actively participating in relevant solar energy projects in Taiwan and around the world.

Lee also emphasized that AUO has already possessed sound energy- efficient technologies in TFT-LCD Industry and by acquiring integrated capacities in both solar upstream and downstream industry, it is hoped that AUO will swiftly establish its leading presence in energy Industry. “More importantly, by injecting more resources and efforts, we hope to see the realization of renewable energy products with higher efficiency in a bit to solve human beings’ energy needs in the long run, as well as to protect the Earth.” he added.

Will grid parity change everything for solar industry?

EL SEGUNDO, USA: Many in the solar power industry and the investment community believe the arrival of grid parity—the point when cost of electricity generated by a rooftop photovoltaic (PV) cell system is equivalent to that purchased from an electrical utility—will mark a major inflection point for the market that will deliver a huge increase in growth.

However, even when true grid parity arrives, it’s unlikely to generate an abrupt rise in solar system installations due to the high upfront costs and the long-term return of investing in a rooftop photovoltaic system, according to iSuppli Corp. In fact, growth is set to moderate during the years when grid parity arrives for various regions of the world as the industry enters a more mature phase.

Following a dip in growth in 2009, photovoltaic installations measured in terms of megawatts are expected to rise at a Compound Annual Growth Rate (CAGR) of 72.4 percent from 2010 to 2013. During the period from 2010 to 2020, when grid parity is expected to arrive in many nations that are leading in solar-energy installations, the CAGR will slow to 20 percent.

Parity apparent
While there are many definitions of grid parity, iSuppli characterizes it as the point when an investment in a rooftop solar system delivers a 100 percent return on investment in five years. Furthermore, debts incurred, i.e. negative cash balance in the investment in the system—must never exceed 25 percent of the total cost of the installation.

“iSuppli doesn’t expect the arrival of grid parity to result in an abrupt increase in user demand for photovoltaic systems,” said Dr. Henning Wicht, senior director and principal analyst for iSuppli.

“The market is likely to make a smooth transition, with demand progressing through the arrival of grid parity in an evolutionary way. This is because users must still make an investment in advance and the wait for the return over a long period of time. A lot of this has to do with psychology. It takes a high level of commitment to invest in a solar system that is expected to operate during a period of 30 years.”

Because of this, global PV installations are expected to rise in smooth fashion, even when grid parity arrives in certain nations of the world. The major factor determining the growth of PV installations will be the supply/demand balance, which will dictate pricing.

Solar market to recover from Spanish flu
Global PV installations are expected to decline by 32.3 percent in 2009 to reach 3,546 megawatts, down from 5,235 in 2008. However, the 2009 decline is due to a single event: a sharp decline in expected PV installations in Spain.

Spain accounted for 50 percent of worldwide PV installations in 2008. An artificial demand surge had been created in Spain as the time approached when the country’s feed-in-tariff rate was set to drop and a new cap of 500 Megawatts loomed for projects qualifying for the above-market tariff. This set a well-defined deadline for growth in the Spanish market in 2009.

However, megawatt installations will rebound in 2010 with growth of 42.5 percent, followed by a 73.6 percent rise in 2012 and a 68.6 percent increase in 2013.

The figure presents iSuppli’s forecast of worldwide photovoltaic system installations in terms of megawatts.Source: iSuppli, June 2009

Waiting for parity
Different countries are expected to attain grid parity at different times, due to varying factors including sun exposure and the cost of utility-provided electricity.

“The country that is probably closest to reaching this standard is Italy,” Wicht said. “Italy has high electricity rates, and low system prices. It also has a high exposure to solar radiation.

However, even in this nation, the elapsed time to the cash break-even point is now about 14 years. Furthermore, debt for a system installed now will reach 35 percent of the net system price.”

iSuppli doesn’t expect the nation’s solar industry to achieve grid parity until 2012.

The next closest nation to reaching grid parity is Germany due to the high cost of electricity and the availability of low-cost solar systems in the nation. However, Germany is not set to achieve grid parity until 2018, according to iSuppli’s definition.

California may already have achieved grid parity if consumers are paying the premium of 35 cents per kilowatt hour. However, this kind of grid parity addresses only a small fraction of the state’s consumers. Grid parity addressing the majority of private household and reaching electricity prices of 22 cents per kilowatt hour are likely to be achieved in four to five years.

However, these events are not likely to spur a major rise in solar installations.

“The definition of Grid parity is imprecise, making it easy to call it the holy grail for solar,” Wicht added. “As solar system prices will continue drop and public incentives will allow to obtain Return on investment of 5 to 10 percent over 20 years, Solar Penetration will rise like any other market, with early adopters and late adopters. The market is at an early stage in terms of penetration. Penetration of solar systems will progress like any other market.”

Bright prospects for solar industry at Intersolar 2009

MUNICH, GERMANY: The world’s largest trade show for solar technology, Intersolar, has been an enormous success. The organizers were able to achieve their objectives, with approximately 60,000 visitors from over 150 nations visiting the show. In addition, over 2,000 participants attended the 22 conference events in Munich.

"Never before has Intersolar had more exhibitors, more visitors, more media representatives and more different nations represented. Given the difficult economic situation, we are especially pleased that Intersolar 2009 has turned out so successful. At the last provisional count here in Munich, we registered visitors from over 150 nations. The response has been truly overwhelming," says Markus Elsässer, Managing Director of Solar Promotion GmbH, one of the two organizers of Intersolar.

Klaus W. Seilnacht, CEO of Freiburg Wirtschaft Touristik und Messe GmbH & Co. KG, and co-organizer of Intersolar, is also more than satisfied with the show: "Following on from the extremely successful opening in Munich in 2008, we are pleased to see such a significant year-on-year increase in levels of interest among exhibitors and visitors. This growth in international attendance, size, number of exhibitors and visitors gives us plenty of cause for optimism."

Exhibitors and visitors highly satisfied
In view of the approximately 60,000 visitors, the large number of innovations exhibited at the show and the 37 percent increase in exhibition space, visitors and exhibitors alike were more than satisfied with Intersolar 2009.

"We have exhibited at Intersolar right from the very beginning. We have followed the show from Pforzheim to Freiburg and now to Munich. The exhibition halls are fantastic, and the show is extremely well organized. We are very pleased with the large numbers of high-caliber visitors the show is able to attract, including a great many foreign visitors, who are very important to us," says Rudolf Pfeil, CEO of RESOL – Elektronische Regelungen GmbH.

"I find Intersolar a very fascinating solar show. It is the biggest solar show in the world and you can just feel the energy here," says Connie J. Duncan, Senior Manager of Applied Materials Inc.

"We are very pleased with the way the show has gone and the fact that visitors showed a great deal of interest in our booth, and especially our new exhibits. Intersolar is without doubt the world's leading trade show and, as such, is a must for anybody who wants to launch a new product on the market," says Christoph Panhuber, Head of the Solar Electronics Division of Fronius International GmbH.

The partners of the trade show are satisfied with the event as well. Heinz Kundert, President of the SEMI Europe PV Group, has appreciated the upbeat atmosphere at the show over the last few days: "You can feel that the interest in PV is extremely high and exhibitors are pleased."

The next Intersolar will take place in Munich from June 9 to 11, 2010.

SunPower announces solar industry's most powerful rooftop system

SAN JOSE, USA: SunPower Corp., a manufacturer of high-efficiency solar cells, solar panels and solar systems, today announced its new SunPower T5 Solar Roof Tile (T5 Roof Tile), the solar industry's most powerful roof overlay system.

The T5 Roof Tile system approximately doubles the energy generated per square meter compared to systems that are mounted onto flat commercial rooftops. Combined with SunPower's high-performance, 96-cell solar panels, the T5 Roof Tile produces the industry's maximum solar energy per roof and greatest energy savings.

Tilted at a five-degree angle, the T5 Roof Tile is the industry's first all-in-one, non-penetrating photovoltaic rooftop product that combines solar panel, frame and mounting system into a single pre-engineered unit. The T5 Roof Tile solar tiles interlock for wind resistance and secure installation. The patented design is adaptable to virtually any flat or low-slope rooftop.

"It was SunPower technology that established the commercial rooftop solar market more than a decade ago and today we continue to build on more than ten years of experience delivering reliable, affordable solar power systems," said SunPower's CEO, Tom Werner.

"The introduction of the T5 Roof Tile will enable us to extend our leadership in system innovation and offer the benefits of solar to an even wider array of customer building types. We design our solar system technology for lower cost, faster delivery of local, secure clean energy that will accelerate solar green job opportunities."

"The development of the T5 Roof Tile is a direct result of the investment by the US Department of Energy (D.O.E.) through its Solar America Initiative program," said Bill Mulligan, SunPower's vice president of technology and development. "The T5 Roof Tile was developed and delivered to customers less than two years after SunPower began receiving D.O.E. research and development funding."

The T5 Roof Tile all-in-one mounting system and frame is made from an engineered glass-filled polymer that is non-reactive, eliminating the need for electrical grounding of the array. This makes the T5 Roof Tile easier and faster to install than other rooftop systems.

Its aerodynamic design is resistant to high winds, and the strong, smooth-edged, lightweight polymer material protects the roof for long-term durability. Since the T5 Roof Tile is stacked for shipping, more kilowatts per pound can be transported using less packaging, resulting in lower distribution costs.

The T5 Roof Tile system integrates a frame and mounting system with SunPower's high-performance, 96-cell solar panels, including the recently announced SunPower 315 Solar Panel. This combination empowers commercial customers to generate the greatest return by maximizing solar gain from each roof.

The T5 Roof Tile is available in the US immediately and can be ordered in Europe during the third quarter of 2009.

RFID system for solar industry

CHELMSFORD, USA: Brooks Automation Inc. has announced a new radio-frequency identification (RFID) reader specifically for the solar cell industry.

This innovative solution provides reliable traceability from the source ingot to the ready-to-use solar cell module. RFID usage increases manufacturing throughput, reduces handling errors and limits non-value handling.

The innovative HF80 Series developed by RFID specialist Brooks Automation offers a variety of functions and is obtainable with an Ethernet and/or serial RS232 interface. The system consists of an RFID reader, antenna and transponder. Working at a frequency of 13.56 MHz, the five antenna terminals minimize the cost per reading point and ensure best-in-class reading ranges and reliability.

The HF80 Series is intended for use in the production process where it is effortlessly integrated into production machines. An application in order picking stations is also conceivable. The HF80 enables solar cell manufacturers access to integrated, transparent production data throughout the manufacturing process.

RFID is the future ID-System for the PV-Industry. The read and write capability of the transponder, the accurate reading rate and the exceptional reliability of the system uniquely qualifies it for the solar production process.

Solar industry strategies rerouted by market conditions

SCOTTSDALE, USA: Thin-film (TF) solar panels, most notably the cadmium telluride panels made by First Solar Inc., have solidly established themselves as offering a lower price-per-installed watt than traditional solar panels made using silicon wafers.

The 876 megawatts of TF modules sold in 2008 is expected to grow to 5.2 gigawatts in 2013, a compound annual growth rate of 43 percent, according to a new 2009 report from IC Insights, Solar Energy: Growth Opportunities for the Semiconductor Industry.

With this growth, the TF share of total solar photovoltaic devices sold will increase from 14 percent in 2008 to a forecast 27 percent in 2013, according to the report (see Fig. 1 below).

While TF is expected to continue gaining share, the Solar Energy report shows the forecast rate of growth is significantly lower than many recent solar industry forecasts. There are a number of factors behind this prediction.

TF panel makers have struggled to push panel efficiencies above about 11 percent, despite research-lab devices with efficiencies ranging from 16-20 percent. These higher efficiencies have been difficult to achieve in volume production, and there is little indication so far of a breakthrough in this regard.

Thus, despite their lower cost per watt, TF panels are predominantly used in large-scale ground based utility installations, where a large amount of space is available. In almost all rooftop applications, panels made with silicon-wafer-based solar cells are more attractive because their higher efficiency, ranging from 14-21 percent, means that more power can be generated for a limited rooftop area.

The political clout of electric utilities will undoubtedly draw government dollars toward large-scale solar installations. However, the Solar Energy report suggests that it is arguably the best use of solar technology to distribute small arrays on rooftops, close to the point of power consumption, where it reduces the costs and power losses associated with transmission and distribution lines. The better government policymakers understand this, the better the incentives should be for solar suppliers with the best rooftop products.

The Solar Energy report goes on to show that after several years of stellar growth—capped by a 99 percent growth year in 2008—the solar industry is being slammed during the current economic downturn.

IC Insights believes that after a 22 percent drop in installed megawatts of solar PV capacity during 2009, strong growth will return in 2010, as new government incentive programs gain traction in the US, Asia, and Europe. But with weakened government support during 2009, seriously lean conditions are driving solar device makers to re-evaluate and re-tune their strategies for increasing the value they can deliver per dollar.

A big factor coming to the aid of wafer-based cell makers is a big increase in available polysilicon supplies in 2008, 2009, and 2010. Freed of the capacity constraints for wafers and with silicon costs dropping, wafer-based solar cell makers will concentrate on improvements in device design and manufacturing techniques that allow them to drive device efficiency up and cost-per-watt down. Several suppliers have said that they will be bringing higher-efficiency cells to market, including a number of new back-contact cell designs.

Other key findings in Solar Energy: Growth Opportunities for the Semiconductor Industry:

* Pricing for solar panels will take a big step down in 2009, and then return to moderate decreases in price per watt over the remainder of the 2009-2013 forecast period.

* Competition is great among solar PV suppliers, with the top supplier in 2008 holding only 9 percent of the market, and 13 other suppliers each with 4 percent or more. IC Insights expects supplier rankings to continue to change.

* Solar-grade polysilicon will remain in oversupply throughout the forecast period. New sources of lower-cost supplies, such as upgraded metallurgical grade (UMG) silicon, will help drive down wafer costs.

* Equipment suppliers to the new solar device industry must re-tune their business as device makers struggle with ballooning inventories and plummeting capacity utilization.

Solar Energy: Growth Opportunities for the Semiconductor Industry was written to help current semiconductor manufacturers and suppliers gain a clearer understanding of solar technology and markets as they consider exploiting existing and upcoming opportunities available in the fast-growing solar PV sector.

It contains five-year forecasts for photovoltaic cells, solar modules, PV pricing trends, semiconductors in solar systems, PV-production capacity, capital expenditures, and polysilicon sales for PV cells. Regional market trends along with profiles and ranking of the industry’s top 15 photovoltaic device suppliers are also covered in the new report.

Single-user copies of the 118-page report sells for $2,975 with each additional copy priced at $495. A multi-user corporate license is available for $5,880.

Source: IC Insights, USA

Strategies for gaining share in solar market

NEW TRIPOLI, USA: Solar cell manufacturers must differentiate themselves during the slowdown in the solar cell market, according to a report Opportunities in The Solar Market For Crystalline and Thin Film Solar Cells, recently published by The Information Network.

The solar cell manufacturing industry has become a “me too” business. Solar companies manufacturing polycrystalline panels buy the same polysilicon and wafers from less than a dozen material suppliers. Companies buying an amorphous silicon thin film process line from Applied Materials or Oerlikon are making the same films as other customers from these equipment vendors.

Certainly there are new avenues of manufacturing, such as CdTe from First Solar, CIGS from half a dozen manufacturers, multi-junction cells from companies such as Uni-Solar, and building integrated photovoltaics (BIPV) from an increasing number of manufacturers. These technologies differentiate these companies’ products, but the proportion of wattage manufactured, while growing, is small compared to the majority of solar panels sold using traditional methods of production, i.e., a thin film on a glass substrate.

How can the majority of solar manufacturers differentiate their products, particularly during the economic slowdown that has dropped capacity utilization to below 50 percent, and most importantly, how can they do it cheaply? Aside from the traditional lingo such as reduce costs or economies of scale, there are better ways -– increase efficiency and improve reliability.

Increase efficiency
Amorphous silicon thin film manufacturers are working on a micromorph structure in which a second layer of silicon is deposited. Applied Materials and Oerlikon are spending vast amounts of R&D to get the solar cells made on their equipment from an efficiency of less than 8 percent to above 10 percent to be competitive with CdTe and CIGS, but they are a few years away. Even so, the added cost of the vacuum equipment to deposit the additional layer can cost upwards of $50 million for a 60MW plant.

“A local company (contact me for details) has developed a coating for amorphous and polycrystalline cells that can improve efficiency between 8 and 12 percent using non-vacuum techniques so that the cost is in the cents per watt range,” noted Dr. Robert N. Castellano, President of The Information Network.

“Tunable refractive indices make these materials excellent candidates for improving both thermal conductivity and absorption bandwidths. When these unique, novel coatings are coupled with nano-enhanced polymeric coatings, significantly improved durability and extended product life can be anticipated. UV resistance, resistance to optical crazing, and the effect of adverse weather and temperature conditions is also predicted. Films can be coated on any surface,” he added.

Research was performed at an acclaimed university in Eastern PA, and the company is now looking for additional funding to optimize deposition parameters and coating properties with the intent of licensing the IP to all solar manufacturers.

Increasing the efficiency by 10 percent will increase a 50MW production line to 60MW. At a selling price of $3 per watt, that comes to added revenues of $30 million at an added cost of $1-2 per panel, that’s per panel of 100-200W, or 50,000-$100,000 per year for the 50MW facility. Imagine the possibility if this coating was put on all 7GW of power we estimate will be installed this year as indicated in a release in late November 2008.

Improve reliability
The high costs of solar panels and their installation keep them out of the “throwaway” mentality. Long life and low cost of ownership are paramount, particularly in space applications. Manufacturing can introduce defects in solar cells that can result in low electron mobility (EM), electron traps and photo-degradation from UV light.

Part 2 of this article will discuss how these issues affect efficiency and lifetime of solar cells and the importance of measuring electron mobility at the wafer and cell stage, and how these results can increase market share for the manufacturer.

First Solar, Juvi secure financing for 53MW PV power plant in Germany

TEMPE, USA: First Solar Inc. and Juwi Holding AG announced that they have secured financing for a 53 megawatt (MW) DC photovoltaic (PV) power plant near the German city of Cottbus.

More than 80 percent of the required project capital is financed through non-recourse debt from a consortium of banks. First Solar and Juwi intend to sell the majority of the project after its completion. Construction of the project began in January 2009, and the first 15MW have been completed. The remaining 38MW are scheduled to be completed by the end of 2009.

The project is being constructed on 162 hectares of land that is part of the Soviet Army's former 26,000 hectare Lieberose training area north of Cottbus in eastern Germany. The project's low cost enables the required return to fund an attractive land lease for the State of Brandenburg. The lease, in turn, finances the environmental cleanup of this former military zone, which is littered with tons of land mines, grenades and other munitions.

Matthias Platzeck, minister president of the German state government of Brandenburg, where Lieberose is located, said the project is a model for the conversion of former military land to productive use. "This kind of project helps us heal the scars of the Cold War and meet our ambitious targets for renewable energy production at the same time," he said.

"First Solar's mission is to enable a world powered by clean, affordable solar electricity," said Stephan Hansen, managing director, First Solar GmbH. "This project alone is expected to displace approximately 35,000 tons of C02 emissions a year. But we are particularly proud of this project because it adds an additional element to 'clean.' Not only will the project produce clean electricity, but it will also result in the removal of hazardous munitions from this project site."

Upon completion, the PV power plant will consist of approximately 700,000 modules and is projected to be the largest in Germany, producing enough power to provide for the annual electricity needs of more than 14,000 homes, and the second largest worldwide.

"The sheer size of the project helps us achieve economies of scale that are a significant factor in helping PV energy become competitive with fossil fuels and to be able to provide an increasing contribution to national renewable energy targets," said Hansen.

Brandenburg Economics Minister Ulrich Junghanns said the project underlines the state's credentials as an energy producer. "The Lieberose project will shine far and wide and help Brandenburg solidify its top billing as a center of solar power production," he said.

Matthias Willenbacher, Juwi chief executive, said, "Large projects like this one demonstrate that solar power is already capable of making significant contributions to addressing climate change." With this project, Juwi, using First Solar modules, has developed the three largest PV power plants in Germany.

Dramatic price forecast to reshape PV industry: iSuppli

I was very fortunate to attend a webinar on solar PV a couple of days back, thanks to iSuppli, USA. The webinar looked at:

* Polysilicon -- what is going on in the market?
* Cells and modules -- where will the prices go?

Dr. Henning Wicht, senior director and principal analyst, iSuppli, made it clear that the intention was to show what's coming out of primary industry research.

He said: "We believe that solar is a fantastic market. It has been growing over the last four years by revenue. It will continue to grow! There are not many industries with a growth path like that! However, in last the 18 months, the supply has been disconnected from demand."

This is exactly the point iSuppli addressed in its webinar. Dr. Wicht was accompanied by Stefan de Haan, senior analyst, photovoltaics, iSuppli.

iSuppli's recent findings are:
* Severe supply chain imbalances exist at polysilicon/wafer and cell/module levels.
* Short term polysilicon and module prices will decrease significantly.

Polysilicon: What's going on with supply and pricing?
If you looked at the global solar PV industry, many plants are under construction, and there are huge capacity expansion plans. There has been a dramatic decrease in production. In 2008, iSuppli estimated total production of solar PV at 60,000 metric tons. In 2009, about 100,000 metric tons will be produced!

What are the reasons for this supply situation? In 2005-06, the high margins of this industry attracted several newcomers. The cycle time to ramp up a polysilicon plant is 24-36 months, and including another 12 months to get finance, it takes about four years.

He said: "The decisions taken in year 2005-06 are coming to the market now. This is also why we see the big ramp in 2009-10. This is also the reason why the industry will have big difficulties to react on a short term notice. The polysilicon industry is a big super tanker, which has difficulties to maneuver on short term."

Looking at the demand side of things, iSuppli showed a graph where the two curves -- polysilicon supply and polysilicon demand meet, or rather cross, in early 2010. From that point on, the supply line passes the demand line. "That means, from that time onward, we definitely see prices for polysilicon decreasing," he said.

What will happen in 2009?
The key point to note is that the ramping rates of polysilicon and solar cells are completely different! The ramping rate of polysilicon is much steeper, than on the cell side. Polysilicon is more than doubling, while the cell industry is growing at 34 percent.

According to Dr. Wicht, the gap between demand and supply is already shrinking fast in 2009, which will lead to a price decrease in 2009.

Coming to prices, the polysilicon market boasts two kinds of prices -- long term and spot market. According to Dr. Wicht, the long term prices are already decreasing from around $100/kg in 2008, and it is expected to be around $80/kg in 2009.

On the other hand, the spot market price peaked in 2008 at around $400/kg. Now, it has already dropped. It will continue to drop, far beyond today's long term contract price, which will then, from 2010 onward, make up another round of discussion. This is because companies might tend to get out of their long term contracts to secure their silicon on the spot!

Summarizing, he said that polysilicon production will increase heavily. Next, supply will pass demand from 2010 onward, and then the industry will enter the oversupply situation for the next three to four years. The polysilicon industry will also react. In fact, iSuppli anticipates a recent announcement from a solar PV company to expand production capacity would be the last for quite a while!

What about projects on the way? These projects have to come on to the market and many of those will! This is precisely the reason why the industry will see silicon passing solar cells in capacity over the next few years.

Stefan de Haan added that the output of the PV modules industry will grow. The total module prod will likely grow to 11GW this year and to 20GW in 2012. Thin film modules will continuously gain market share and it probably account for 1/3rd of the total market by 2012. Production of crystalline cells will run in parallel. It is likely to reach 9GW for 2009 and 18GW for 2012.

Commenting on the competitive landscape, he added that many new players would be entering production in 2009, especially in the thin film business. "However, the current leaders -- QCells, Suntech and First Solar -- will increase their edge over the competition in terms of absolute production volumes," he said.

In general, it is a good thing that the industry is growing and that all of this capacity is coming online. However, this raises the question: can demand can keep up with the supply?

According to iSuppli, in 2009, the installation market will be flattening. In the sense, iSuppli projects that 4.2GW will be installed this year, or about 10 percent growth. However, this growth is much smaller in comparison to the previous years. Some of the reasons for slower growth in 2009 include changes in sustained feed-in tariffs and the global economic slowdown.

Hann added, "In H2-2010, module demand will probably return to the previous growth rates, of more than 20 percent per year."

Combining demand and supply, there is a massive oversupply of modules that has already been building up since early 2008. Back in 2008, this did not impact on the module prices as there was short term heavy demand from countries like Germany and Spain, from project developers and installation companies, etc. So, this was not noticeable earlier. However, in 2009, the oversupply situation is quite serious!

As a consequence, many suppliers will not be able to react to this situation in the short term. They will still need to run their factories to try and generate some revenue and satisfy the industry. Many had bet on some strong demand coming from USA and also China.

This year, the module prices will decline. Consequently, the declining prices will also create some additional demand. However, for the next two years, this fundamental oversupply situation will not change.

How far will prices drop?
So, what are the message for 2009? First, crystalline module prices will drop to about $2.50 per watt, and second, cost is going to be the differentiating factor! This was a point emphasized strongly by the iSuppli analysts.

Further, how should companies manage this situation, where supply is disconnected by demand? According to Dr. Wicht, there is 11.1GW of module supply vs. 4.2GW of installations. "We do not see that the demand is elastic and that everything will be good after the end of 2009. The gap is too large between demand and supply, and will last till end of 2010."

Installation capacity will surely become a bottleneck. There will be falling prices for silicon, as well as solar cells and modules. Also, the demand is not that elastic enough to absorb all modules produced.

Therefore, given this situation, what are the options for success, rather, what are the ideas to re-orient the solar PV business?

The first option could be to shut down 50 percent of production till price recovers. However, this is not a realistic option. Another could be to put expansion plans on hold. Yet another option for producers would be to become the best in class in production cost, an option, which is excellent, but difficult!

Probably, the best option would be for makers to integrate downstream. This includes new demand simulation in established markets as well as developing new markets.

Dr. Wicht said: "Anticipating bottlenecks are key for solar. The next bottlenecks are the bureaucracy and installation capacity. The production capacity would not be influential. Production cost and downstream integration are key." He advised solar PV producers to monitor their PV market demand and supply situation regularly.

Outlook for solar photovoltaics in 2009!

Friends and dear readers, this is my last blog post for 2008! Indeed, what a year this has been!!

Let me bid this year goodbye with a general outlook on the global solar photovoltaics industry for 2009.

iSuppli had recently put out a report on solar eclipse coming in 2009! I had blogged about the possible solar sunburn ahead, as well, earlier last week!

Another point that has interested me is: what happens to the top 20 global solar photovoltaic companies, based on iSuppli's analysis! This blog post has perhaps been the most popular in recent times.

I was very lucky to re-associate with Dr. Henning Wicht, Senior Director, Principal Analyst, iSuppli Deutschland GmbH, in Munich, Germany, for this discussion, thanks to the efforts of Jon Cassell and Debra Jaramilla!

How bad is solar?
The first and the most obvious question: how bad is the global solar market right now and why?

According to iSuppli, bringing an end to eight consecutive years of growth, global revenue for photovoltaic (PV), panels is likely to plunge by nearly 20 percent in 2009, as a massive oversupply causes prices to drop!

Worldwide revenue from shipments of panels will decline to $12.9 billion in 2009, down 19.1 percent from $15.9 billion in 2008. A drop of this magnitude has not occurred in the last 10 years and likely has not happened in the entire history of the solar industry.

Dr. Henning Wicht says that the upstream part of the solar business (cell, module, etc.) will suffer from price decline due to strong oversupply. The downstream side will benefit (installation, end-user, investor, etc.) by lower system prices.

Therefore, what can the solar players do to get over this coming bad phase in 2009? Well, three things: improve the cost structure, improve the sales side, and diversify downstream… These points hold strong for all fully integrated and non-integrated solar panel suppliers as well. By the way, fully integrated solar panel suppliers are likely to suffer less severe losses than non-integrated competitors.

There must be some way around to to bring about some balance within the current imbalance in the demand and supply situation. While Dr. Wicht agrees this is a difficult one to answer this early, he adds that supply and demand are diverging heavily. "With the current trajectories even in 2012, 100 percent more modules are produced than installed," he says. I promise to discuss this question again with the good Dr. in another six months time.

Word of wisdom
There are various support programs in place, and it is important to know whether they will continue to remain beneficial, both to support markets to become independent sustainable and to develop the regional industry.

Dr. Wicht believes the support programs are still required and beneficial. "If China, India, Mexico and other sunny regions would start to support solar installations, that could change the picture drastically," he notes.

A note of warning for new entrants in the solar photovoltaic space! Be aware that this warning has been earlier highlighted in the global semiconductor outlook for 2009! In tune with what the various analysts have maintained earlier, iSuppli also forsees newcomers in the solar photovoltaic line having problems in getting the required credit for their projects.

What next for Europe, emerging regions?
According to iSuppli, the short-term boost in demand from Spain and Germany has kept the installation companies busy, and solar orders and module prices high. But this boom is over. So, what's next for European players?

According to Dr. Wicht, Germany and Spain should continue their leading role as solar installation regions, even after the boom. France, Italy and Czech Republic are attractive, but still much smaller markets, he maintains.

iSuppli has also mentioned that the race to larger manufacturing scale comes to an end when the production is not sold anymore! In that case, what's the case for the emerging nations, like China and India? Aren't there buyers in such places?

Dr. Wicht says: "Demand in the traditional solar markets is not elastic enough to absorb all of the solar production. Potential new markets, for example, China and India, do not yet have installation capacities and administration to significantly change the global solar demand short term."

iSuppli also feels that the newer Chinese and Taiwanese suppliers will be hit particularly hard during 2009. The reason being, many suppliers have expanded their production capacities heavily without securing equally the sales/downstream part.

Global top 20 rankings to change?
Now to the most interesting part! Most of you have read about the top 20 global solar photovoltaic suppliers. Following the iSuppli warning of a 'solar eclipse' in 2009, there is every likelihood that there will be changes in that table!

Dr. Wicht adds, "However, the top 10 companies are typically better placed than the competition regarding their cost structures, downstream integration and vertical integration."

Obama's solar plans!
Now on to yet other interesting point! The US President-elect, Barack Obama's, New Energy for America plan could well have a significant impact on the US solar industry.

The plan's provisions include:

• A federal renewable portfolio standard (RPS) that requires 10 percent of electricity consumed in the US to come from renewable sources by 2012.
• A $150 billion investment over 10 years in research, technology demonstration and commercial deployment of clean energy technology.
• Extension of production tax credits for five years to encourage renewable energy production.
• A cap-and-trade system of carbon credits to provide an incentive for businesses to reduce greenhouse gas emissions.

Dr. Wicht says: "We all know that Obama is in favor of renewable energy. However, he will not change a 160 percent oversupply of solar panels in 2009."

Bumpy ride to grid parity?
On another note, and a pretty favorite one: Is it going to be a "bumpy road" to grid parity? How will the subsidies be kept going?

Dr. Wicht notes: "Subsidies will continue. It will always be a bumby road because the ramping cycles differ heavily among silicon, cells, modules and the installation capacity. Please remember that the installation business will now benefit from low module prices. It will recover some of the margins it has lost in the last years due to high module prices."

Also, up to when will polysilicon constraints last? iSuppli had earlier indicated PV strategy changes. According to Dr. Wicht, the polysilicon prices are coming down already. "Our indication from October 2008 seems to be fairly good," he says.

Lastly, will iSuppli be still sticking by solar, semicon investments being equal by 2010?

Dr. Wicht says: "Please let me cite again our interview in October: The investments for solar production raising up to several hundreds of Mio USD, up to 1 Bio $ per production site. That is coming close to a semiconductor fab. The total capex of semiconductor is still 10 times larger than PV. However, PV is rising much faster."

That will be all for this year, folks!

Look forward to sharing much more captivating moments in semiconductors, electronics, solar photovoltaics, telecom, etc., in 2009!

Wishing all of you a very happy, prosperous and successful 2009. Be safe and look after yourself! See you next year!! :)

Building a good solar ecosystem in India

Solar/PV has been doing the rounds consistently, and has probably now become one of the most hyped sectors.

In fact, renewable energy has never ever had such a good time! As mentioned, a tremendous hype has already been built around solar photovoltaics. Several companies, in India, and elsewhere, have also jumped into the solar bandwagon.

So what are the reasons behind this 'sudden' interest in solar? According to Dr. Ashok Das, managing director, Solar Solutions, and a well know expert in this area, consumers do not yet drive the solar energy sector. Being energy, it is mostly driven by the government and its subsidies.

So, why has there been this 'sudden interest' in solar? There are two reasons.

First, the climate change issue started getting center stage at world forums, leading to policies and targets to cut global warming, and hence boosting renewable energy. Second, the soaring oil prices and continued dependence on a few countries for oil has led to the realization of the energy security.

There are several takeaways from the European experience with solar. Dr. Das says that Europe, particularly, has taken solar very seriously. They have been a leader in solar. "Germany, for instance, gave away all of the necessary subsidies to attain energy security. These subsidies have led to the solar boom. It has also led to an increased R&D to bring down the cost of solar energy."

Nevertheless, he adds there seems to be a bubble forming in this sector, like all other booms in the past. The industry will go through consolidation as the market matures.

And where does India stand in comparison? According to Dr. Das, steps are being taken to promote solar energy in India. "As of now, the feed-in tariff is Rs. 15 for photovoltaics and Rs. 12 for thermal solar. The government also announced a mandatory 5 percent renewable energy mix in the electricity production.

"The PMO (Prime Minister's Office) has also issued a National Action Plan that has plans for boosting solar. These subsidies are driving some of the increased activities in India."

He contends: "We need stronger lobbying so that better subsidies can come through. Therefore, most of the manufacturing activities in India are still driven by the export markets."

Surely, given the surge of investments in solar within India, there is every room for developing a very good ecosystem.

Dr. Das says: "Coming to the solar ecosystem, we already make solar products, as well as the modules. We also have the capability to make cells. The only part missing has been wafer, the silicon for solar.

"A few silicon factories should be coming up in India soon. So, India can easily establish the entire ecosystem for solar photovoltaics."

Postscript: More investments in solar today, in India. According to Hindu Business Line, there have been three additional investments worth Rs. 55,000 crores.

Vavasi Telegence to invest Rs 39,000 crore for solar PV and polysilicon unit; EPV Solar to invest Rs 4,000 crore for solar PV unit; and Lanco Solar to invest Rs 12,938-crore for solar PV and polysilicon unit.

A word of caution: It's advisable not to get carried away by all the success in solar. Solar is/was only part of the ecosystem units in the Indian semicon policy.

Don't forget semiconductors!

While this success in solar does augur well for the solar industry in India, don't think this is even close to what the Indian semicon policy, launched with fanfare last September, originally set out to achieve!

Synopsys' Dr Chi-Foon Chan on India, low power design and solar

There have been reports about the troubles within the EDA industry in recent times, especially those related with quarter sales. Interestingly, Synopsys has been the one sailing along fine! If that's not enough, it made its intention known of playing a role on the solar/PV segment, an area where lot of investments have been happening!

Given this scenario, I was fortuitous enough, rather, extremely lucky to be able to get into a conversation with Dr. Chi-Foon Chan, President and Chief Operating Officer, Synopsys Inc., during his recent visit to India.

On the state of the global semiconductor industry, he said, it was somewhere now in the low 10s [well below 10 percent]. The EDA industry is currently tracking below that level. However, Synopsys has been growing at around 10 percent. He said, "The technology challenges today are very high."

Synopsys has a substantial number of R&D population based out of India. Giving his assessment of the Indian semiconductor industry, Dr. Chan added: "Our main interest in India is largely talent and the academia. India can very well get more into the product development side. Even the outsourcing of designs have increased. Our capabilities, of the Indian team, have also increased."

As with any good semiconductor ecosystem, the Indian industry also needs a proactive industry association, a role played to near perfection by the ISA (India Semiconductor Association). Acknowledging the ISA's role, Dr. Chan said, "The ISA has also formed a very cohesive team."

There is little doubt about India's growing importance in technology strengths and managerial leadership. Dr. Chan added: "We are more on the high-end side and also track what others design. In India, the profiles of designs are definitely high-end in nature. This is largely due to the presence of a large number of MNCs. A very high percentage of designs are in the 45nm and 65nm process technology nodes."

There is another significant indicator of India's growing importance, and that is the huge rise in the attendance of the SNUG. In 2000, this event attracted 180 people. However, in 2008, the SNUG attracted over 2,000 people.

Moving India to next level
Given the very high level of commitment on Synopsys' part toward India, there was a need to find out from Dr. Chan what exactly India needs to do to move to the next level in the value chain in the semiconductor ecosystem.

He advised: "India can do two to three things. One, for the system to grow, you need the government, academia and industry to grow together. India has all of the ingredients required to drive products."

Comparing India with China, he highlighted the fact that while in China, the local consumption was higher than local supply, that was not the case with India!

"Therefore, looking at merely the local market is not the only thing. Products developed here can also be targeted at the Middle East and Southeast Asia." He was quite forthright in his analysis, adding: "Industries start when you find markets. The skill sets are already present here. There can well be multiple startups."

Dr. Chan also touched upon the fab vs. fabless issue, noting that there could well be more of fabless companies in India. "Building a fab requires lot of capital. Also, consolidation will continue to happen."

What role does Dr. Chan see Synopsys playing in the Indian context? He said: "Synopsys will continue to be a catalyst for the industry. A healthy design industry in India continues to help us. We also work well with the Indian universities. Having more people from the universities will always help. We also invest a lot in application support. The application team also trains others. I now look forward to seeing more fabless companies here and India to become even more global."

On low power design
India is also a centre of expertise in low power design, given that low power is hugely important in today's electronics ecosystem. Dr. Chan commented that low power has always been the number one design issue. It cannot be taken care of at one single stage.

He added: "A slightly new concept that has emerged is low-power verification. There are so many schemes for attacking low power, such as multiple voltage islands. We (Synopsys) are spending a lot of effort in low power.

"As a designer, you require detailed analysis. Low-power verification is now coming up. Another area is testing. As an example, if so much power is required, how do you have the power cut from the tool you are using to test? From a Synopsys point of view, we are involved in several points, such as front-end synthesis, testing, sign-off, verification, etc. We are trying to put in a whole lot of methodologies."

Synopsys in solar
EDA may be able to help by lowering power requirements and leakage on better products. Especially, the Synopsys' TCAD product can be used to create more efficient and effective solar cells. Now, this is not a new development anymore. Synopsys, along with Magma, have already made known their intentions about setting foot in the solar/PV space.

On the TCAD, Dr. Chan said: "We have a very strong position in the TCAD, commercially. Now, it is one of our most critical elements in high-performance. Our TCAD is among the strongest in the EDA industry.

"In solar, it does not have to be a complicated place-and-route, etc. From an entire solar industry point of view, we have now used some effort from TCAD into this space. Heat transfer issues, etc., are more in the EDA space."

I will continue my conversation with Synopsys on its solar initiative sometime later. Keep watching this space, folks

Magma's YieldManager could make solar 'rock'!

Make no mistake, folks! The EDA guys are getting their act together to penetrate the solar/PV segment!! Magma's YieldManager is a great example of that effort! Yes, we all know the troubles of the EDA industry as well as of the key players. However, let's not ignore this initiative from Magma!

Recently, Magma Design Automation Inc. announced the development of a new yield enhancement software system, the YieldManager software system, which is customized for solar fabs to improve conversion efficiency, increase yield and reduce the manufacturing costs of solar cells.

Magma is collaborating with Pegasus Semiconductor-Solar to refine the product specifications and test the new product, based on Magma's YieldManager.

This is an interesting development, especially from the point of view of the solar/PV industry! Even more significant is the entrance of the EDA community [the one being Synopsys] into solar/PV, a segment, which has witnessed a substantial amount of investments worldwide, and specifically, in India.

It was fun catching up with Ankush Oberai, VP, Failure Analysis Business Unit, Magma Design Automation, in Silicon Valley, to find out more about the YieldManager software system, what it can do for the solar/PV industry, and why Magma decided to venture into an 'unchartered territory'.

The first and most obvious thing, why YieldManager?

Ankush Oberoi says that in semiconductors, yield impacting parameters which are regularly monitored are mostly extrinsic, i.e., from outside, such as particles, over-exposure, under-exposure and miss-processing. In solar cells, the yield impacting parameters are mostly intrinsic, that is, something built into the solar cell material which can NOT be easily seen. Thus, a different "eye" is needed to see the solar parameters. The "eye" is the YieldManager here!!!

It would NOT be either inspection tools or litho optical proximity correction (OPC) detector. The solar cell efficiency is directly influenced by electro-physics of solar materials. A YieldManger is required to monitor any changes in those efficiency impacting parameters.

The most important parameter is the lifetime of current-generating carriers. As the solar energy generates the "hole-electron" pairs, they are collected separately as electricity.

If the solar material is "dirty" with many crystalline boundaries as in thin film solar cells, the solar generated hole-electrons get pulled into those crystalline boundaries and do not contribute to the electricity generation.

"Thus, if we can find a solar yield management system to detect the very subtle change in carrier lifetime, then we are at home with a greatest Home Run in solar cell business," he contends.

Given the EDA background, why did Magma decide on a yield management technology?

He adds that yield management technology was acquired by Magma as part of the Knights Technology acquisition in Nov 2006. Magma's Fab Business Unit (formerly, Knights Technology) is a pioneer (since 1994) in yield management for semiconductor technology.

The product is deployed and used in leading fabs around the world to help manage production wafer yield. Yield management has also been deployed for mask making and LCD productions.

It would be interesting to know how Magma's new product will allow solar fabs to better monitor all metrology, inspection and performance data throughout the manufacturing process.

Oberoi says: "For Si wafer solar cell, the most important parameter to monitor is the solar conversion efficiency impacting parameters. An example would be a carrier lifetime.

"If the carrier lifetime fluctuates more than normal, the solar Yield Manager will quickly examine all of the key data, i.e., metrology, inspection and performance data, to pinpoint out potential root-causes of the fluctuation problem."

For thin film solar cell, particles, laser cutting integrity and film thickness uniformity would be main things to monitor. Those data are quite similarly collected, as in semiconductors, and would be monitored as similar ways. The Solar Yield Manager would do well as proven in semiconductors in this case.

Next, it is important to find out how will the YieldManager enable fab operators to identify and correct root causes of solar-efficiency and yield degradation caused by subtle fab processing fluctuations or instability.

According to Oberoi, the carrier lifetime, which could be caused by various factors, is the most critical parameter to monitor for achieving and maintaining the good solar conversion efficiency.

He says: "As the Solar Yield Manager carefully monitors those factors, blindly committing ~400,000 wafers a day can be eliminated, when critical process instability starts appearing and persists. The solar conversion efficiency impacting factors could be monitored differently by different solar fabs."

Some fabs may not have capabilities to monitor those factors. The Solar Yield Manager would define those metrology and performance tool requirements, when released.

It is also interesting to learn how improving the energy conversion efficiency, reducing the manufacturing costs and increasing the yield of silicon wafer-based solar cells are critical to the growth of the solar market.

Currently, the Si wafer for solar cell costs $2~$2.5/watt due to the severe shortage of Si. The selling price of a solar cell is $3~$3.5/watt, that is, the material cost is 60~70 percent of the solar cell price.

No market or industry would prevail with the 60~70 percent material cost, adds Oberoi. Thus, every milli-watt squeezed out of a solar cell would be very critically important for proliferation of solar industry.

In order to increase the power output of a solar cell, the solar conversion efficiency must be maximized. Once maximized, sustaining the good solar efficiency is the name of the game in the solar cell manufacturing business.

The effective manufacturing cost will be drastically lowered, if bad solar cells with poor solar efficiency is minimally produced. That is, some fabs will use ~400,000 wafers a day to generate ~500 M-Watt a year, whereas some ~450,000 wafers to do the same with poorer solar efficiency.

Innovation in the solar fabrication process must be accelerated, and today, no other enterprise-wide yield enhancement software exists for solar fabs.

Oberoi says: "Solar cell is an old technology, but a very new industry, simply because not enough money was being invested. Now, money is pouring into the solar industry and products like solar Yield will start to appear. It is not known yet that anyone commercially has tried to develop a similar product."

Global estimate of solar/PV industry
There are several publications with recent estimates. The annual solar cell installation in the world: Germany ~46 percent, Japan ~23 percent, USA ~9 percent, Spain ~6 percent, Italy ~4 percent, the rest of Europe ~1 percent, the rest of Asia, including India and China ~6 percent, and the rest of world ~5 percent in 2006.

Magma is currently in the design and implementation stages of the product and plan to have version 1.0 of the product commercially available in Q1-09. The company has targeted solar fabs based in Asia that are eager for early implementation of the solar yield product.

Right then: those planning or having solar fabs! Now's the time to test that home run theory with the YieldManager.