Solar Cell Outsourcing to Foundries
As stated in a recent article,the case supporting the increasing trend towards a fab-less outsourcingmodel for semiconductors was laid out.
The question is whether thistrend is likely to spread throughout the solar cell industryas well. Major foundries such as the Taiwan Semiconductor ManufacturingCompany are ramping up process lines at this time hoping to attractbusiness from companies without sufficient resources and capital forthe production of solar cells. In order to deal with this potentialoutsourcing issue, a review of the dynamics of the solar cell market isnecessary to draw a prediction. There are actually many differencesbetween the role of government and the flow of capital with respect tothese two markets, even though many semiconductor companies such asToshiba also produce solar cells. For the sake of clarity, thisdiscussion is not in reference to solar panel distributor or installercompanies such as SolarCity, which never produced panels in the first place.
In the case of semiconductors, ie. microchips, there is significantlyless government spending in the U.S. from both a research anddevelopment (R&D) and end-user subsidy perspective compared tosolar cells, which reap the benefit of enormous stimulus funding and numerous tax credit programsfor customers globally. Moreover, President Obama’s proposed 2011budget allocates a 34 percent increase from $225 million to $302million in solar funding by the federal government, $152 million ofthat total, the largest chunk, dedicated to photovoltaic (PV) solar cells, while Chinais also moving in a similar direction. Out of the approximately 394solar cell companies globally, especially those in the U.S., a muchhigher percentage are considered small businesses compared to theadvanced semiconductor market.
Thus, these domestic solar companies will be eligible for the slew ofjob creation tax incentive and loan programs being considered inCongressional legislation to strengthen the U.S. economy. Furthermore, clean energy manufacturinghas been proclaimed a high priority of the Obama Administration for thecountry’s economic competitiveness in this decade, which will elevatesupport for bills such as the Solar Technology Roadmap Act and the Solar Manufacturing Jobs Creation Act.
In addition, the overall capital costsfor developing the most advanced microchip technology at a company suchas Samsung or Intel is orders of magnitude higher compared to thelatest high-efficiency PV solar technology. It costs as much as $5billion to fully equip a modern high performance microchip facility,while most PV companies spend less than $100 million on R&D. What’smore, the solar cell industry is much more fragmented, since there isless commonality across companies in terms of materials, design, andprocessing methods, which vary from traditional silicon films andsubstrates to flexible substrates or virtually exotic materials.In comparison, high performance semiconductors benefit from astreamlined supply chain and many common fabrication steps, mainly oncrystalline silicon substrates. Thus, it is more difficult for a solarpanel company to outsource solar cell production to a foundry,especially in the case of highly innovative materials and designs.
Even though there is an analogous trend in terms of Moore’s Law betweenshrinking the dimensions of transistor for a microchip and thethickness of a solar cell with respect to scaling from one generationto the next, the capital budget to make that happen is orders ofmagnitude different. As more countries, including the U.S., invest in clean energysuch as solar manufacturing for its economic, environmental andnational security benefits, it is less likely that companies willfollow the pervasive fabless outsourcing model of the semiconductorindustry. However, the U.S. will lose a major manufacturing opportunityto foreign lands without the proper incentives to retain and attract new solar manufacturing operations.
For more info: One way to learn more about this and related topics would be to attend the 3rd Annual AEE Solar Dealer Conferencein Mesa, Arizona scheduled for this week. In order to anonymouslyreceive FREE email alerts on future green technology and businessarticles, please subscribe on my homepage and/or follow me on Twitter. If one is interested in a consultation on this or another green business topic, please click on the "Request a Consultation with this Author" link located toward the bottom of this GLG network site.
Brian Coppa, Ph.D., has authored many pending U.S. patents,international peer-reviewed journal articles, and industry analysespublications concerning electronic materials and devices and greentechnology, which have received numerous prestigious citations andgarnered numerous invited presentations across the U.S. He is a leadingsenior consultant for GLG Inc. regarding alternative energy andmicroelectronic applications.
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