Semiconductor Companies and Solar Energy

An article in today's SJ Mercury News highlights a growing number of semiconductor companies are eyeing the solar energy market:

... ``It makes sense for companies in the semiconductor industry to focus on solar,'' said David Edwards, an analyst at investment firm Think Equity in San Francisco. ``The industry is large enough, it's economically viable as a business, and the growth potential is compelling.''

Last week, Applied Materials, the world's biggest maker of semiconductor manufacturing equipment, announced that it was launching a major push to sell the machines that make solar cells in factories that resemble chip plants.

``Our aim with this strategy is to bring the cost of building solar cells down,'' said Mike Splinter, chief executive of Applied Materials in Santa Clara. ``We think it enables the solar market to grow faster. We are going to see an explosion in the factory growth.'

... Splinter said that Applied Materials hopes its solar equipment manufacturing business will grow into a $500 million enterprise by 2010. Market researchers estimate that the overall solar equipment market will grow from $1 billion in 2006 to $3 billion in 2010. That opportunity explains why Applied spent $484 million on a solar acquisition in May.

Another long-term Silicon Valley company, Cypress Semiconductor, has also jumped on its chance to diversify into solar with last year's spinoff of its SunPower solar cell manufacturing division. Last year SunPower staged the valley's most successful initial public offering in terms of a first-day return.

Dick Swanson, chief technology officer and founder of SunPower, says the solar industry began consuming more silicon than the semiconductor industry in 2001. His company continues to expand manufacturing in the Philippines, where it is adding a factory next year with much more capacity than its first one.

Meanwhile, the solar-cell market leader, Japan's Sharp Electronics, expects to expand its capacity for producing solar cells at a rate that is faster than the market's growth, said Ron Kenedi, vice president of the solar energy solutions group within Sharp Electronics.

``We are really bullish on the market,'' Kenedi said.

So is Silicon Valley about to be renamed Solar Valley? Not necessarily. On average, the solar industry generates about $8 in revenue for every silicon wafer it consumes, Swanson said. By contrast, some silicon wafers can generate thousands of dollars in revenue.