Update on silicon shortages [RE-wrenches]

[Joel Davidson]

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Allan is right about it being serious. Polysilicon production is a capital 
and energy intensive commodity industry like smelting steel only 
significantly higher purity is required. Capitalists don't want to buy into 
expensive low-profit commodity businesses so prices will keep climbing until 
it hits the fabricators' "build yer own factory" price point. A little 
downstream, semiconductor manufacturers like Intel build poly-to-wafer fabs 
at over $1 billion a pop as needed and get all the raw poly they can buy. Of 
course, they get a lot more for their processed wafers than PV companies. 
Changing the world is not cheap or easy.

----- Original Message ----- 
From: "Allan Sindelar" <allan at positiveenergysolar.com>
To: "New wrenches posting" <RE-wrenches at topica.com>
Sent: Monday, July 25, 2005 3:50 PM
Subject: Fw: Update on silicon shortages [RE-wrenches]


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MessageFolks, it's real and it's serious.
Allan at Positive Energy
SEMATECH Council Seeking Ways to Forestall Looming Polysilicon Shortage
Wednesday July 20, 3:00 pm ET

SAN FRANCISCO, CA--(MARKET WIRE)--Jul 20, 2005 -- Responding to rapidly 
rising demand for polysilicon from the booming photovoltaic market, the 
SEMATECH-led Critical Materials Council (CMC) will investigate strategies to 
help improve the short-term supply of polysilicon for the semiconductor 
industry.



The CMC's response grew out of a meeting last week at SEMICON West, in which 
polysilicon producers described operating at maximum capacity, and predicted 
shortfalls of semiconductor-quality polysilicon starting this year and 
extending into 2008. The CMC meeting was sponsored by SEMATECH and SEMI.

"Basically, everyone is running everything they have" to keep up with 
silicon demand, said Dave Keck, vice president of Advanced Silicon 
Materials, LLC. While the chip industry currently consumes about two-thirds 
of manufactured silicon, photovolotaics takes one-third and its appetite is 
growing about 30 percent a year.

"There is not enough polysilicon to support the growth of the photovoltaic 
industry after 2008," much less the increased needs of the semiconductor 
industry as it converts to 300 mm wafers, Keck said. He and other meeting 
participants predicted a polysilicon shortage of 4,000 metric tons this 
year, increasing to 6,000, 12,000 and 20,000 metric tons over the three 
years following.

Gary Homan, marketing vice president at Hemlock Semiconductor Corp., said 
the silicon industry's options for dealing with the oncoming crunch include 
incremental expansion of existing facilities; building new plants; 
identifying new materials for customer use; and forming consortia to tackle 
the issue on a unified basis.

"There is a lot of activity going on in the industry to try to address the 
polysilicon shortage, but there's still a lot of work ahead," Homan said. 
"We are probably underestimating the polysilicon demand" from 300 mm wafer 
conversion, he added, in which case "there are people who will not get 
supplied [with polysilicon] in the future." He also indicated during 
subsequent meeting discussions that the supply chain that supports 
polysilicon production is also facing capacity challenges.

The world's ravenous demand for silicon was quantified by Dan Tracy, Senior 
Director Industry Research & Statistics at SEMI, who estimated that 
producers will turn out 26,000 metric tons of polysilicon this year and 
29,000 metric tons in 2006. "There is strong demand out there for 
polysilicon" just from the semiconductor industry, which could have forty 
300 mm fabs in production around the world by 2006, he said.

Neil Gayle, a SEMATECH manager and CMC coordinator, said it's crucial for 
SEMATECH member companies -- which represent about half the world's 
semiconductor production -- to have access to remedies for a polysilicon 
shortage that some are already calling inevitable. He said the CMC, which 
provides a forum for SEMATECH members to assess the semiconductor supply 
chain and help assure a robust supplier base, is a natural vehicle for 
seeking such solutions.

"We'll investigate the possibilities for expanding the supply of 
polysilicon, and work with suppliers and manufacturers to try to develop a 
coordinated response," Gayle said. "Even if a polysilicon shortage is 
unavoidable, we may be able to find ways to soften the impact on our member 
companies and the industry."

SEMATECH is the world's catalyst for accelerating the commercialization of 
technology innovations into manufacturing solutions. By setting global 
direction, creating opportunities for flexible collaboration, and conducting 
strategic R&D, SEMATECH delivers significant leverage to our semiconductor 
and emerging technology partners. In short, we are accelerating the next 
technology revolution. For more information, please visit the SEMATECH 
website at www.sematech.org. AMRC, Advanced Materials Research Center, ATDF, 
the ATDF logo, ISMI and International SEMATECH Manufacturing Initiative are 
servicemarks of SEMATECH, Inc.

[Non-text portions of this message have been removed]

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