Will solar downturn lead to more mature PV industry?

The severe downturn in the global Photovoltaic (PV) market in 2009 actually could have a positive outcome for the worldwide solar industry, yielding a more mature and orderly supply chain when growth returns, according to iSuppli Corp.

Worldwide installations of PV systems will decline to 3.5 Gigawatts (GW) in 2009, down 32 percent from 5.2GW in 2008. With the average price per solar watt declining by 12 percent in 2009, global revenue generated by PV system installations will plunge by 40.2 percent to $18.2 billion, down from $30.5 billion in 2008.

The figures present iSuppli’s forecasts of global PV installations in terms of gigawatts and revenue.

Fig 1: Global Photovoltaic System Installation Forecast in Megawatts, 2008-2013Source: iSuppli, April 2009

“For years, the PV industry enjoyed vigorous double-digit annual growth in the 40 percent range, spurring a wild-west mentality among market participants,” said Dr. Henning Wicht, senior director and principal analyst for iSuppli. “An ever-rising flood of market participants attempted to capitalize on this growth, all hoping to claim a 10 percent share of market revenue by throwing more production capacity into the market. This overproduction situation, along with a decline in demand, will lead to the sharp, unprecedented fall in PV industry revenue in 2009.”

However, the 2009 PV downturn, like the PC shakeout of the mid 1980s, is likely to change the current market paradigm, cutting down on industry excesses and leading to a more mature market in 2010 and beyond.

Fig 2: Global Revenues Generated by Photovoltaic Installations 2008-2013 in Millions of US DollarsSource: iSuppli, April 2009

“The number of new suppliers entering and competing in the PV supply chain will decelerate and the rate of new capacity additions will slow, bringing a better balance between supply and demand in the future,” Wicht said.

Blame it on Spain
The single event most responsible for the 2009 PV market slowdown was a sharp decline in expected PV installations in Spain. Spain accounted for 50 percent of worldwide 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 (MW) loomed for projects qualifying for the above-market tariff. This set a well-defined deadline for growth in the Spanish market in 2009 and 2010.

While the Spanish situation is spurring a surge in excess inventory and falling prices for solar cells and systems, this will not stimulate sufficient demand to compensate for the lost sales in 2009. Even new and upgraded incentives for solar installations from nations including the United States and Japan—and attractive investment conditions in France, Italy, the Czech Republic, Greece and other countries—cannot compensate for the Spanish whiplash in 2009.

The Spanish impact will continue into 2010, restraining global revenue growth to 29.2 percent for the year. Beyond Spain, the PV market is being adversely impacted by the credit crunch.

“Power production investors and commercial entities are at least partially dependent upon debt financing,” Wicht noted. “Starting in the first quarter of 2009, many large and medium solar-installation projects went on hold as they awaited a thaw in bank credit flows.”

After the fall
After 2010, the fundamental drivers of PV demand will reassert themselves, bringing a 57.8 percent increase in revenue in 2011 and similar growth rates in 2012 and 2013.

“PV remains attractive because it continues to demonstrate a favorable Return on Investment (RoI),” Wicht said. “Furthermore, government incentives in the form of above-market feed-in-tariffs and tax breaks will remain in place, making the RoI equations viable through 2012. Cost reductions will lead to attractive RoI and payback periods even without governmental help after 2012.”

Furthermore, lower system prices will open up new markets by lowering incentives and subvention costs. The lower the PV system prices are, the lower the incentives will have to be. Developing regions will be big the beneficiaries of these lower prices and thus will grow faster than the global average, Wicht said.

Source: iSuppli, USA

Opportunities in India's solar/PV landscape: SEMI India

Solar/photovoltaics (PV) holds tremendous potential and promise for India, a fact not hidden from anyone. To further highlight its importance, SEMI India unveiled its first paper on Solar PV in India yesterday afternoon.

More action from Indian government needed
The meet called for more action from the government of India, a more closer industry-government collaboration, as well as the need for financial institutions to pay more attention to the solar/PV segment in India.

The photo here shows from left to right: Dr. Madhusudan V. Atre, President, Applied Materials India; Dr. J. Gururaja, Renewable Energy Action Forum & Executive President, SEMI India; K. Subramanya, CEO, Tata BP Solar; and Sathya Prasad, president, SEMI India.

Touching on the rationale for this SEMI paper on solar/PV's landscape in India, Dr. J. Gururaja, Renewable Energy Action Forum and Executive President, SEMI India, said it was meant to project the solar/PV industry's perspective: where we are and what needs to be done! This is a first account report and will be followed by many other such reports.

He said: "Solar in general, and PV in particular, can address the challenges that we face today. Solar/PV has a special attraction. It converts solar to electricity without involving any moving parts."

He added that although the industry has been looking at the potential, the markets have not been expanding as expected. "We need to see what can be done and achieved. This report is a stock-taking exercise," he pointed out.

Case for solar/PV in India
Sathya Prasad, president of SEMI India, touched upon the case for PV in India. These include:
* The existing power deficit situation in many parts of the country.
* India's brisk economic growth implies rising energy needs.
* Overdependence on coal for electricity generation -- limited coal reserves and CO2 emissions.
* Overdependence on oil and natural gas imports -- it accounts for 7 percent of GDP and consequent energy security concerns.

According to him, India is abundantly endowed with solar radiation. So far, so good!

Key PV opportunities for India
According to SEMI's paper, the key PV opportunities for India lie in off-grid applications and grid-connected PV. The off-grid applications include:
* Basic lighting and electrification of rural homes.
* Irrigation pump sets.
* Power back-up for cellular base station towers -- approximately, there will be 2.9 lakh base station towers by the end of 2009.
* Urban applications -- such as street lighting, etc.

The opportunities in grid-connected PV exist in:
* The current grid connected PV generation capacity is very small.
* Existing power deficit and huge projected future need.
* The cost point of PV has been declining continuously with technology improvements and scale.

Benefits of PV in India
The benefits of PV in India extend well beyond addressing energy needs. For instance, renewable energy technologies create more jobs than any fossil fuel based technologies. It also creates jobs across the value chain -- from R&D to manufacturing, installation and maintenance. Sathya Prasad highlighted MNRE's point that about 100,000 jobs could be created out of PV.

PV also has the capability of transforming lives. About 450 million Indians today manage with kerosene/other fuels for very basic lighting despite its significant health and safety risks. In this context, special mention needs to be made of the Aryavarta Grameen Bank's home electrification program.

Challenges for PV in India
Evidently, a bunch of opportunities are awaiting India in the solar/PV space. However, several challenges need to be overcome as well. These would be:
* Need for closer industry-government co-operation.
* Need for standards.
* Need for collaborative, goals driven R&D.
* Training and human resources development
* Need for financing infrastructure and models.

So, what are the recommendations of this paper on solar/PV landscape in India, and further call to action? These are:
* Need to evolve a common government-industry vision to make India a world leader in PV.
* Develop financing infrastructure and models that will motivate large-scale PV adoption and investments.
* Expand development of PV in off-grid applications.
* Accelerate grid-connected PV generation on a large scale.

Call for low carbon growth strategy
"Low carbon growth path is universal now. To make that happen, there needs to be a political will," advised K. Subramanya, CEO, Tata BP Solar, and chairman SEMI India PV Advisory Committee, while presenting his perspective on the solar/PV industry in India.

There has been little action on part of the government of India. "This needs to be implemented on the ground. We need policy and lifestyle innovation," he added. Subramanya cautioned that, "Too much of analysis will result in paralysis." According to him, separate budgets are required for a low carbon growth strategy. "Solar has tremendous potential. Even its learning curve is brilliant," Subramanya noted.

He added that if the European Union (EU) can make a low carbon journey so smoothly, then why not India? For instance, in Karnataka state alone, the demand is said to be 6700MW and a 10-11 percent peak shortage. We have 20-odd lakh Bhagya Jyoti and Kutir Jyoti units, and around 7,870-odd street lights. If a majority of these can be replaced by solar, it could lead to tremendous savings! This could be at least 57MW for a state like Karnataka. Apparently, all of this would require an investment of Rs. 52 crores and a payback time of two years.

"Why can't we develop a low-carbon growth path for every state in India? Imagine, what it can do for the other states," Subramanya highlighted. "If the power sector does not do well, it will hit the country's GDP!" Quite rightly so!!

Subramanya cited another example of solar water heaters in Karnataka. There are 32 lakh homes, of which about 5 lakh homes have solar water heaters. If more houses were to adopt these, it would result in a saving of 4,000MW of electricity! The Tata BP Solar CEO also called upon financial institutions to have a closer look at solar. Even the tariffs structure for solar/PV in India is not favorable enough.

He also touched upon US President Barack Obama's energy plan and the actions taken, since his coming to power, and drew a parallel with India's national action plan, which includes a solar mssion. This was released last June, but hardly any action has happened on the ground. So, there needs be changes on this front as well.

Four key aspects for solar/PV in India
Dr. Madhusudan V. Atre, president, Applied Materials India and vice chairman SEMI India PV Advisory Committee, highlighted four major aspects while presenting his perspective on the solar/PV industry. These are:
* See the advantage SEMI India brings to India. It can help bring costs down, due to the involvement of the PV Group.
* A point Dr. Atre had highlighted to me about a year back -- that solar/PV is a great way to trigger manufacturing in India. He said that the solar/PV ecosystem will be a very important step in setting up a semiconductor manufacturing ecosystem in the country.
* What wireless did to telecom -- perhaps, solar/PV has a similar aim! It can get rid of transmission lines and actually take power to the people!
* The Indian government-academia-industry would need to work hand-in-hand.

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.

Top 20 global solar photovoltaic companies

Alright folks! This has taken some time coming, but it is worth the wait! Presenting the Top 20 solar photovoltaic companies during Q1-2008. May I add here that I am extremely grateful to iSuppli's Jon Cassell for giving me this opportunity.

I was also fortunate enough to discuss this table with Dr. Henning Wicht, Senior Director, Principal Analyst, iSuppli Deutschland GmbH, in Munich, Germany.

Parameters for rankings
First up, what were the parameters used by iSuppli to determine the top 20? According to Dr. Wicht, the top 20 cell-companies have been ranked by production in 2007 and by announced production capacity 2010. He clarified, "Ranking by revenue is not applicable because many integrated manufactures publish compound revenues for cells, modules and systems."

Yes, there have been several announcements in the solar/PV space, in India, and globally, and some names could be missing here. However, the new cell manufacturing projects will be included as soon as they are announced.

Coming back to the topic, it is necessary to examine the role of subsidies. While photovoltaics have been getting cheaper, Dr. Wicht said that subsidies were still necessary to support the PV markets. "It shows that the time grid parity shortens faster than expected earlier. As an example, for Germany, the grid parity might be achieved in 2015, which is two years earlier than expected in 2007."

That is to say, the support programs are benefical, both to support markets to become independent sustainable and to develop the regional industry.

Global interest in solar/PV
Critically, there seems to have developed a sudden interest in solar/PV, starting late 2007, when this (solar) has been around for some time. How has this happened?

According to Dr. Wicht, raising CO2 levels generated through fossil energy, CO2 certificates, rising prices of fossil fuels, political dependency from oil exporting countries drove the Kyoto protocol to reduce CO2.

"Renewable energy is a major pillar to achieve that goal. European governments have been frontrunners to implement and execute that goal. That said, solar has been around for a while. Japan was the first significant market. However, on a global basis, it took off in Europe from 2005 onward," he noted.

With the spate of initiatives in solar/PV, can it not turn out to be a case of too many folks entering the same line?

Sure, over and undersupply happens along the supply chain! The iSuppli market research figures out imbalances, which drive prices/margins up and down.

Also, isn't there a chance of solar/PV getting commoditized, or has it already become one? Well, PV modules are a commodity product, said the analyst. The market is still in its infancy and it will continue to grow for the next 10 years and further. The overall saturation will come, but still some years to go.

Is solar helping semicon?
Some industry folks have been saying that the solar/PV initiatives are not really helping the overall semicon industry, a statement I agree with as well. Also, it may only be benefitting some of the equipment makers.

Dr. Wicht said: "Indeed, semicon fabs are not able to produce competitively solar cells and the solar need for semiconductor devices is rather low. The semiconductor companies, however diversify into PV, e.g., Qimonda with a new cell production. Intel is investing in several PV companies, LG is investing in Conergy, etc., or supplying devices for power conversion, e.g, National Semiconductor. However, the overall impact on the semicon devices market is rather low!

Solar, semicon on par?
iSuppli made a forecast some time back regarding investments in solar and semiconductors being on par by 2010.

The investments for solar cell 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.

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.

Xilinx on microprocessor trends, solar/PV

This semicon blog will basically examine the key trends in microprocessors, as well as whether companies such as Xilinx -- a key player in FPGAs -- has any kind of role to play in the solar/PV domain.

For the record, this is the concluding part of the discussion with Vincent Ratford, Senior Vice President, Solutions Development Group, Xilinx.

First, on to solar/PV! We have been reading and hearing a lot about the rapid advances being made in solar/PV. With so much investments in solar/PV happening globally, is there a role for Xilinx to play in this segment?

Ratford said: "Perhaps! Our devices are great for prototyping new ideas and often find their way into new markets. In base stations, our devices are used to reduce the power up to 50 percent. In signal processing applications, we have a decided performance/power advantage vs. discrete signal processors. Many of these 'Green' applications require some form of signal and embedded processing." Interesting, and this point needs some further examination!

Another area of main concern within the global semiconductor industry is low-power design. According to Ratford, there are a variety of ways to save system power.

He added: "We are designing features in our new products that will reduce active and standby power. We also have power-estimation and optimization tools. I would say, there is a lot more to be done in this area at all levels, software, IP and silicon."

Ratford was however, tight-lipped about Xilinx's product roadmap beyond the Virtex V. Obviously, we need to remain very tuned toward this!

Key microprocessor trends
Now this is another interesting area. A few weeks ago, I had received a great article from Texas Instruments, which mentioned about five key microprocessor trends today.

Microprocessors have always been among the key areas of interest for semiconductor design and development. On being quizzed on what could be the five major trends for microprocessors, Xilinx's Ratford said: "For our embedded customers it is:

* Rising adoption of Linux.
* Increasing use of multi-core and some multi-processing.
* Accelerating trend to increase the connectivity, bandwidth and reduce the latency between the processor and the FPGA.
* Improve the OOBE (Out of the Box Experience) for non-FPGA developers.
* Reduce power.

Before signing off, my thoughts also veered toward LTE and TD-SCDMA, one 4G and the other, a 3G technology. Both these technologies have been very much in the news lately, especially, TD-SCDMA, which is currently in use at the Beijing Olympics.

As expected, Xilinx has also forayed into both LTE and TD-SCDMA spaces!

Ratford said: "Yes, we have complete reference designs for LTE and TD-SCDMA and have secured most of the prototype sockets for these air interface standards with Virtex-5. We have a very strong IP portfolio for the radio shelf and baseband and our Sytem Generator and AccelDSP tools are used extensively."

Get ready for building integrated photovoltaics (BIPV)

Building integrated photovoltaics or BIPV! Hey folks, prepare yourself to hear more about this term and the technology for quite some time to come! Solar/PV will be the next big story in India, and BIPV should be right up there at the top!

While BIPV is not yet talked about a lot in India, though, it may surprise many that there has been a deployment in India, I am sure that BIPV will be doing the rounds very soon.

There's another interesting angle to the BIPV, rather, solar story. Can EDA play a role here? I will examine this angle some time later.

First, what is BIPV? According to PV Resources, BIPV is merely photovoltaic systems integrated with an object's building phase. They are built/constructed along with an object, or planned together with the object. Yet, they could be built later on.

The following BIPV systems are said to be recognized:

* Facade or roof systems added after the building was built.
* Facade integrated photovoltaic systems built along with an object.
* Roof-integrated photovoltaic systems built along with an object.
* "Shadow-Voltaic" - PV systems also used as shadowing systems, built along with an object or added later.

If there are more, kindly share the information with me!

Now, to India. Just recently, Dr. Madhu Atre, president, Applied Materials India, referred to the use of BIPV during a discussion. He said that for energy-efficient glass, you could save on AC costs, etc., by using building integrated photovoltaics (BIPV). I hope we take serious note of what Dr. Atre said!

Didn't they say green IT was the most used and abused term? We really love talking so much about green IT. Well, here's an outstanding example, and actually, an example very few have really bothered to look at, so far, at least.

Staying with India, very few know that SunTechnics India, a brand of Conergy Group, a leading supplier of solar system integration, completed the design and installation of India's first green housing project facilitated with building-integrated solar power.

The 58 kilowatt project was developed in partnership with the West Bengal Renewable Energy Development Agency (WBREDA) as an initiative in solar architecture for the Rabi Rashmi Abasan eco-friendly housing complex at New Town Kolkata, of all places! Power will be fed into the public grid and facilitate electricity needs for 25 residential buildings and a community center.

If anyone has any doubts about the scope and power of solar or BIPV, take a look at Nanomarkets' report, which predicts that the market for BIPV will reach over $4.0 billion in revenues by 2013 and surpass $8 billion in 2015.

Late last month, I had written about certain steps Karnataka and the other states could adopt as part of a semicon policy.

Do include BIPV in your plans!

Actually, BIPV is very much part of the Indian semicon policy as well. West Bengal is probably the first state to have successfully implemented BIPV in a project. Congratulations are due!

Practical to take solar/PV route: Dr. Atre, Applied

Solar/PV is perhaps, a practical route for India to enter manufacturing, contends Dr. Madhusudan V. Atre, president, Applied Materials India. Alternatively, another way to enter this field could be by having solar farms.

According to Dr. Atre, India has a strong potential for manufacturing. The Indian scenario has the talent pool and an emerging middle class, along with the presence of system design and chip design companies. Only a fab seems to be the missing piece from this ecosystem!

Benefits of a fab include: fuels economic productivity, contributes to GDP and adds to national growth, creates jobs, helps set up the other expertise necessary for an ecosystem, and closes the loop between market, design, manufacture, test, customer.

Indian fab scenario
Commenting on the Indian scenario, Dr. Atre, says: "For PV, about $200-500mn is needed for a fab. If we can enter into manufacturing via the solar/PV route, the scale of investment required would be much less [than the investment needed for a wafer IC fab]. This can be practical route to enter manufacturing in India, and less complexity is involved, as compared to an IC fab." Another way of entering manufacturing is by having solar farms.

Applied's external face in India involves: Take leadership role in industry bodies; work with the government on various semiconductor and manufacturing policies; look for potential investments in start-ups; work with the academia on collaborative research in nanomanufacturing; be sponsors in key conferences; drive corporate social responsibility programs; and help enable semiconductor and solar manufacturing in India.

Touching on some emerging areas of interest, Dr. Atre highlights that packaging is very important in semiconductors. "We may look at some company in packaging R&D. We have invested a bit in Tessolve," he says. "We would also like to see the success of the nanotech lab in IIT-Mumbai, and see how it can help India." On a global scale, he notes that Applied would be setting up two-three SunFab lines with Masdar in Abu Dhabi, UAE.

Applied Materials in India
Headquartered in Bangalore, Applied has been present in the country for over five years. It has approximately 1,500 employees and associates. A liaison office was originally set up in May 2002. Applied Materials India Pvt Ltd (AMIPL) was set up in July 2003, and operations started in November 2003 with cost + model. It consolidated all Applied operations in Bangalore into ITPL (~92,000sqft). It also merged Brooks Chennai (~100RFTs) into Applied India operations. Applied currently has R&D centers in Bangalore and Chennai.

Next, Applied established site operations in Delhi (~5000 sqft) to support Moser Baer. Its key partners are Satyam, Wipro and TCS, on various aspects of engineering and software services. In Delhi, Applied has 25-30 people to support Moser Baer, where it has the first SunFab line up and running.

In Mumbai, it has set up a nanomanufacturing lab with IIT-Mumbai. "We have put in equipment worth $7-8 million there, and do R&D projects," adds Dr. Atre. The nano lab at IIT-Mumbai was inaugurated in November 2007 by Mike Splinter, president and CEO, Applied Materials.

Applied is also involved in the potential upgrade of SCL. "We are working with some other companies on how we can upgrade SCL. We are more at the backend to set up some capabilities," he says.

Applied Ventures makes investment in emerging technologies and companies. It has funded a couple of companies in the semi start-up stage. Applied Ventures looks at global investments.

Moser Baer is Applied's first customer in India. It has a 35-40MW assembly line. This is the first time that 5+m2 solar panels will be coming out. The panel will now have to be taken up to the production ramp. Dr. Atre adds that Europe was much advanced in solar/PV. Germany, especially, was far advanced in the implementation aspect, as well as Italy and Spain.

Nanomanufacturing simplified
Nannomanufacturing, as per Wikipedia, is "the near-term industrial-scale manufacture of nanotechnology-based objects, with emphasis on low cost and reliability." To manufacture at this level requires a lot of expertise, skills, etc., says Dr. Atre. Cost is definitely an important driver, and so is reliability, he adds. According to him, nanomanufacturing technology combines the two core strengths of Applied: nano + manufacturing.

Applied's vision has been to apply nanomanufacturing technology to improve the way people live. Its mission: To lead the Nanomanufacturing technology revolution with innovations that transform markets, create opportunities, and offer a cleaner, brighter future to people around the world.

Applied Materials is a global leader in nanomanufacturing technology solutions with a broad portfolio of innovative equipment, service and software products for fabrication of: semiconductor chips, flat panel displays (using TFTs), solar photovoltaic cells and modules (in crystalline and thin film vectors), flexible electronics, and energy efficient glass (BIPV). The last three categories fall under EE or the Environment and Energy Division.

Dr. Atre says: "We have the SunFab line for solar/PV. In flexible electronics, as an example, you can have solar cells wrapped around an object." As for energy-efficient glass, you can save on AC costs, etc., by using building integrated photovoltaics.

Core capabilities
Applied's core capabilities include: commercialize sophisticated systems and thin-film engineering, besides a global culture. "Our technological strengths include semiconductors, solar/PV cells and FPDs. We have nanomanufacturing technology as the common theme." Touching on the loss per watt, he says it is currently around $14, which needs to come down to at least $2 or one-fourth.

Applied makes systems used to produce virtually every new microchip in the world, taking care of thermal, etching, inspection, PVD, CVD and CMP. For LCD flat panel display systems, Applied offers a variety of systems, such as PECVD systems, e-beam array testers, PVD systems and color filter sputtering systems.

The processing panels can be up to 2.2x2.5 meters. For solar manufacturing, Applied offers crystalline silicon, flexible PV and thin-film line, or the Applied SunFab lines. For architectural glass and flexible electronics, it offers both glass and Web coating systems.

"We have three key businesses, silicon systems, displays and energy and environmental solutions," said Dr. Atre. These are supported by Applied Global Services.

Applied's goals for 2010 include: Expanded revenue streams, to become a $13-15 billion company; increased operating efficiency, with margins >25 percent, and increased cash flow, about >20 percent of revenue.

Has the Indian silicon wafer fab story gone astray?

The recent news of the Hyderabad Fab City giants -- SemIndia Fab Pvt Ltd and Nano-Tech Silicon India Pvt Ltd -- being served notice by the local state government and to explain the reasons for their delay in setting up the Fab City in Shamshabad on the outskirts of Hyderabad, does not come as a surprise at all!

Setting up of a silicon wafer fab takes up a lot of time and money, and I am not sure how this bit is perceived by many. Also, the rate of return is not exactly immediate! Maybe, it is time for everyone to realize that semiconductor is a very different industry from any other, and there is a need to understand how it really functions! Besides, one needs to keep an eye on the global semiconductor industry and associate movements there with what kind of value would a fab in India bring to the world.

This May, I'd done a reality check on where the global semiconductor is placed. Several folks have contacted me since, pointing out my accuracy. While it is good to be spot on with the assessment of the global (and Indian) semiconductor industry, the assessments should serve as a warning for the global (and Indian) semiconductor industry -- that it is not going to be an easy ride ahead!

On the same note, I had earlier questioned whether this was the right timing for setting up fabs in India. Perhaps, there is a need to examine whether we started on the fab path a bit too late! If we are found to be wrong or hasty in our assessment, let us feel no anguish in accepting that! This is not the first time such a thing will happen in the semiconductor industry, nor will it be the last. Having said that, if a wafer fab or two do start functioning in India later in 2009 or beyond, that would be exemplary!

Let us hope that the Indian silicon wafer fab story does not go astray for the overall benefit of the Indian semiconductor industry. There is a need on part of the Indian semicon planners to integrate clear vision with careful planning.

Yes, several solar fabs are coming up globally, and investments in solar/PV are rising as well in India, but that was along expected lines.

It was also pointed out earlier that investments in photovoltaics (PV) had somewhat eased the pressure on capital equipment makers and spend. In fact, 2007 is now well documented as the year when the PV industry emerged as a key opportunity for the subsystems suppliers and provided a timely boost in sales for those actively addressing this market.

Perhaps, here lies an opportunity for India, and I'm repeating this to the extent of sounding boring!

Further, even though it has been quite a while since the Indian semicon policy was announced, some feel that India should continue to focus on design services and embedded -- its well known strengths, rather than go after something as mature as wafer fabs. We don't have to 'force ourselves to believe' that we are good at product development? We are not!

Yes, like most things, it can change, but that would need great effort on part of all industry stakeholders. The question is: are we ready to bring about that change?

Top 10 global semicon predictions -- where are we today

It is always interesting to write semicon blogs! Lots of people come up to me with their own comments, insights, requests, etc. One such request came from a friend in Taiwan, who's involved with the semiconductor industry.

I was asked forthrightly what I thought of the top 10 global predictions, which I had blogged/written about some time back late last year.

Top 10 semicon predictions
For those who came in late, here are the 10 global predictions on semiconductors made at that time (late December 2007.

1. Semiconductor firms may have to face a recession year in an election year.
2. DRAM market looks weak in 2008.
3. NAND market will remain hot.
4. Power will remain a major issue.
5. EDA has to catch up.
6. Need to solve embedded (software crisis?) dilemma.
7. Consolidation in the fab space.
8. Capital equipment guys will continue to move to other market.
9. Spend on capital equipment to drop.
10. Mini fabs in developing countries.

Well, lot of water has flowed since those predictions were made. Let's see how things stand, as of now. The updated predictions would look something like these:

1. There have been signs of recession, but the industry has faced it well, so far. In fact, Future Horizons feels that if there is going to be a global economic recession, the chip industry (but not all companies) is in the best shape possible to weather the ensuing storm.

2. Memory market is changing slightly as well, though people are very cautious. According to Converge, memory market prices appear to be stabilizing. iSuppli has predicted a poor year for DRAM though!

3. NAND Flash could show some recovery later this year. Yes, Q1-08 QoQ sales seems to have slipped, but the market remains hopeful of a recovery. Even iSuppli warned of NAND Flash slowdown in 2008, while Apple slashed its NAND order forecast significantly for 2008! Keep those fingers crossed!!

4. Power remains a big issue, and will continue to be so. This will remain as we move up newer technology process nodes.

5. EDA is seemingly catching up with 45nm designs. Magma, Synopsys, and the other leading EDA vendors are said to be playing big roles in 45nm designs.

6. Fabless companies are gaining in strength. No doubt about it! The 2007 semicon rankings show that. Also, Qualcomm is now the leader in the top wireless semicon suppliers, displacing Texas Instruments.

7. There have been consilidations (or long term alliances) in: a) fab space b) DRAM space. In the fab space, Intel, Samsung and TSMC have combined to go with 450mm wafer fab line by 2012. And in the DRAM space, there have been new camps, such as Elpida-Qimonda, and Nanya-Micron partnering to take on Samsung. With the global semiconductor market seeing steady decline in growth rate, which would continue, look forward to more consolidations.

8. Investments in photovoltaics (PV) have eased the pressure on capital equipment makers and spend somewhat. In fact, 2007 will be remembered as the year when the PV industry emerged as a key opportunity for subsystems suppliers and provided a timely boost in sales for those companies actively addressing this market. Perhaps, here lies an opportunity for India.

9. Mini fabs -- these are yet to happen; so far talks only. In India, a single silicon wafer fab has yet to start functioning, even though it has been quite a while since the semicon policy was announced. Conversely, some feel that India should focus on design, rather than go after something as mature as having wafer fabs. However, several solar fabs -- from Moser Baer, Videocon, Reliance, etc., are quite likely.

10. Moving to 45nm from 32nm is posing more design challenges than thought. This is largely due to the use of new materials. Well, 45nm will herald a totally different structure -- metal gate/high-k/thin FET/deep trench design, etc. It will herald a new way of system design as well.

Now, I am not a semicon expert by any long distance, and welcome comments, suggestions, improvements from you all.