Why capex investment for c-Si expansion remains a safe bet

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Aligning with PV industry leaders with a long-term strategic roadmap is a given prerequisite for equipment adoption by every tool supplier, regardless of the segments their equipment serves. But realizing this in practice can be a different challenge altogether. Such has been the dilemma for many equipment suppliers seeking to break into the PV equipment supply chain or diversify from one customer group or cell technology to another.

And it gets all the more challenging for tool suppliers when digesting the plethora of headline announcements afforded to new PV start-ups, hefty VC investment rounds, hero data from research labs, or framework agreements calling out for large MW deliveries from as-yet unqualified technologies.

Fortunately during the period from 2006-2009, there was so much investment within the industry — especially at the midstream c-Si cell and thin-film panel stages of the value chain — that equipment was being purchased at record levels from a diverse set of tool builders. Short-term order books and backlogs looked great for key process tool suppliers selling to almost any c-Si, a-Si/uc-Si, CIGS, and CdTe manufacturer.

Within thin film, the supply chains got even more fragmented with widely varying glass panel sizes or flexible R2R-based technologies. But nobody was complaining too much back then!

Subsequently, the midstream manufacturing base today ranges from $100M thin-film fabs at single-digit utilization rates to newly installed GW-capacity c-Si fabs covering ingot/wafer/cell lines and running at near 100% utilization rates. Reporting from leading tool suppliers matches this reality, with repeat orders for c-Si based tools very much to the fore and forecast to remain like this well into 2011.

To gauge the effectiveness — or productivity — of equipment spending across the main technologies today within the industry, a particularly intuitive insight can be gleaned by looking simply at how much production has been enabled from all the tooling purchased during recent times.

The output then provides some pretty powerful metrics on technology maturity or equipment adoption: factors that directly affect the rate to which repeat equipment orders are then placed down through the supply chain.

Adapted from analysis contained within forthcoming Solarbuzz PV equipment report to be released at the start of October, the attached figure illustrates the above with illuminating clarity. For completeness here, and to capture equipment spending on technologies which have multiyear R&D-to-production cycle times, we fold in all cumulative spending back to 2000 and compare this to the cumulative production each year between 2005 and 2010.

Aside from the impact of First Solar’s rise to prominence – and the associated equipment utilized here – all eyes are firmly on the growth trajectories now for both a-Si/uc-Si and CIGS technologies which have been the recipients of significant investments. Putting aside the handful of players kitting out new a-Si/uc-Si and CIGS fabs today, follow-on orders for much of the thin-film supply chain will only come to fruition when these technologies start to gain market share and justify further expansion with additional capex spend. So up until now, the safe bet has been alignment with one of a dozen or so leading c-Si manufacturers or the above noted thin-film market leader.

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