Last week, the big kahuna of polycrystalline silicon, Hemlock Semiconductor (HSC), said it will spend a cool billion dollars over the next four years to expand raw-poly manufacturing capacity at its Michigan facilities.
This is the second expansion news from HSC (a j.v. of Dow Corning, SEH, and Mitsubishi Materials) in the past 18 months, as the company is already ramping $500 million of new factory space---about 17,000 metric tons of potential capacity--- which should come online in early 2008. The two output-enhancing moves will combine to push HSC's total polysilicon production to 36,000 metric tons when the latest expansion comes online in 2010.
Although the capacity push will benefit both semiconductor and solar-cell customers, the real surge in demand has come from the photovoltaic side. The poly supply has been dangerously close to falling behind the demand curve, according to many market watchers, with stories of shortages not uncommon. Aside from Hemlock, polysilicon suppliers such as REC and Tokuyama have announced capacity builds in recent months.
For an expert's perspective on the Hemlock news and the polysilicon arena in general, I reached out to Lara Chamness, a senior market analyst at SEMI. Here's what she had to say.
"By 2010, the announced worldwide poly capacity is expected to be around 123,000 metric tons/year. That is up from an estimated 36,000 for this year. If the 2010 scenario plays out, Hemlock will account for about 30% of the worldwide poly supply.
"We expect the current top suppliers to remain the top suppliers: Hemlock, REC, Wacker, Tokuyama, and MEMC, but there will be some new kids, assuming the announcements play out: Prime Solar (HQ in Australia, site in Bitterfeld, Germany), M. Setek (Soma, Japan), and Jiangsu Photovoltaic Industry Development Co (JPID) (Yunnan Province, China). This year, the 'traditional' poly suppliers account for about 95% of the market in terms of capacity. By 2010 it looks like the traditional suppliers will account for about 70% of the market. But remember the entire market will be much bigger!
"A big chunk of the capacity is expected to come online in 2008, with a second surge in 2009, and then a third, smaller wave in 2010. Again, I'm relying heavily on public announcements. It remains to be seen if they will play out or not.
"Regarding a 'shortage,' I really don't have an answer [since] I have a very limited view into what is happening in the solar industry. What I do know is that silicon wafers for semiconductor are still shipping at record volumes. My research has indicated that almost all new capacity coming online will be for solar, as the solar suppliers are stepping up and are ponying up substantial sums of money to ensure supply.
"From what I can tell the traditional players are setting up their operations so they can swing over to semi or solar---just to keep their options open (they don't want a repeat of the 1990s). Because of this ability to swing plant operations, pinning down a semi/solar breakout would be pretty darn difficult. The traditional poly guys will sell to whomever will pay but SGS is really trying to limit itself to the solar industry, although they are honoring current contracts with SEMI folks.
"Will there be enough poly to go around? Again, because of my limited view into what is happening on the solar side, I really can't say. A lot of the solar industry's demand for poly will depend on continuing government incentives and the price of oil/geopolitical stability. There also has been some chatter about potential market saturation in solar's two larger markets: Japan and Germany."
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