Polysilicon shortage squeezing solar, semi industries

By Richard Koman - September 5, 2006

By Richard Koman for SiliconValleyWatcher

As California pushes the solar industry forward with a landmark greenhouse gas emission law, the nascent industry is running aground against some surprising shoals - a shortage of super-pure polysilicon (it's 99.99999 percent pure), essential for the manufacture of both computer chips and solar cells.

Prices are soaring for the stuff, the Chronicle's Tom Abate reports. But semiconductor makers aren't too hard hit - for now - because they have long-term contracts. But over time, that could change. For solar companies, it's a crisis today.

"In 2003, polysilicon was going for $32 a kilogram (about 2.2 pounds). Now it's more like $75 to $80," said Richard Winegarner, whose Healdsburg consulting firm, Sage Concepts, tracks this rare product. Yet even at those prices, polysilicon is getting tough to find. "You have solar procurement people traveling around the world with suitcases full of cash," Winegarner said.

Today, Dow Chemical announced a new material that could substantially alleviate pressure on poly makers, according to EE Times. PV1101, like polysilicon, is derived from metallurgical silicon, but is not a replacement material. It can be blended with existing poly stocks to produce material for solar products. But it's not pure enough for semiconductors, however.

"The gap is so huge that we just hope to provide some help," a Dow executive said. "We hope that can bring an alternative solution that will help the [solar] industry to grow further. As far as we are concerned, this is just the first step. We need to start somewhere."

Polysilicon is an incredibly refined product. Only a few firms make it, plants cost $200 million and take three years to come online. New production is expected to come online in 2008 but will be cramped again by 2010, according to Hemlock Semiconductor. And the poly industry isn't racing to bring more production online, considering what happened the last time there was excess capacity.

"It was only three to four years ago when the semiconductor industry was holding what were called 'reverse auctions' where you essentially got all your suppliers on the phone and tried to squeeze more (price reductions) out of them,'' Winegarner said.
"When they were down and bleeding red, the semi guys came back and forced down the prices," Robert Bushman, who used to run a polysilicon recycler, said.

So while the semimakers aren't facing immediate shortages, they do appear to be worried.

In his latest polysilicon report, Winegarner notes that chip sales went up just 7 percent in the second quarter of 2006, while sales of silicon wafers -- the last immediate step between polysilicon and finished chips -- rose 22 percent. His conclusion: "The semiconductor guys are starting to hoard" supply.

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Comments (3)

vfsv:

We report regularly on wafer area shipped vs. SIA dollar sales. The last one went out August 19.

http://www.viewfromsiliconvalley.com/id248.html

Posted: September 6, 2006 12:17 PM

Mark Wendman:

I thought I might send you some interesting info and links indicating that this shortage and cost spike is slightly overblown in the medium term.

I am a silicon process engineer - 23yrs industry experience.

I wrote a short article describing more about the stealth firm Calisolar and why it will possibly have a significant impact on silicon photovoltaics... There is real innovation, rather than yet more of the same retreads....

Calisolar will with its innovation, permit using dirt cheap metallurgical grade silicon that has no supply issues for comparable solar cell efficiencies versus expensive semiconductor grade silicon...

http://mark-nano.blogspot.com/2006/07/eicke-webers-calisolar-improved.html

Posted: September 6, 2006 6:45 PM

Peter Duchon:

Cleaning up MG-Si for SoG-Si is all well and good, but novel processing technologies and scaling up these reactor vessels is where the real story is. For the cost of a long-term supply contract I could easily introduce to the world such low-cost high-volume SoG-Si feedstocks, but alas, my story is too good to be true and the world likes to suffer. A lot.

Posted: January 21, 2007 10:22 AM